Are You Ready for an Epic Change Happening to Singapore’s Stock Market on 19 January 2015?

What’s happening on 19 January 2015 you might ask? Well, if you are an active reader of The Motley Singapore, you might have remembered that my colleagues and I had wrote about Singapore Exchange Limited’s (SGX: S68) plan to reduce the board lot size of listed securities from 1,000 to 100 – and this change has been scheduled to happen on 19 January.

The move opens up many more possible investment opportunities for retail investors like you and me. According to Singapore Exchange’s chief executive Magnus Bocker:

“The reduced board lot size will benefit all investors and make it easier to invest in blue chips and index component stocks which tend to be higher-priced. It will also allow institutional investors to better manage their risk exposures through finer asset allocation of funds.”

So with only 11 days to go, it’s perhaps a good time time for us to take a closer look at some of the high-priced shares that would soon become a lot more affordable.

The Jardines

There’re quite a handful of companies within the sprawling Jardine Matheson Group which is listed in Singapore, but there are four in particular which carry really high share prices. These shares are namely Jardine Matheson Holdings Limited (SGX: J36), Jardine Strategic Holdings Limited (SGX: J37), Jardine Cycle & Carriage Limited (SGX: C07), and Dairy Farm International Holdings Ltd (SGX: D01)

Company Share price (as of 7 January 2015)
Jardine Matheson US$59.34
Jardine Strategic US$33.60
Jardine C&C S$39.70
Dairy Farm US$9.00

Source: S&P Capital IQ

From the table above, it’s obvious to see how all four firms would have cost investors tens of thousands of dollars for just one lot. But soon, they’d be a lot more affordable.

Jardine Matheson and Jardine Strategic are both conglomerates and interestingly, both actually own huge stakes in each other. Jardine Strategic owns 56% of Jardine Matheson, while Jardine Matheson actually owns 83% of Jardine Strategic in return.

As a result of these cross-holdings, both conglomerates actually own significant chunks of all the other companies within the Jardine Matheson Group. Although this complex web of ownership may cause headaches for some investors, their track record has been good to say the least – both have grown their annual dividends in each calendar year since at least 2003.

Meanwhile, Jardine Cycle & Carriage’s also another conglomerate – but its status as such comes from it owning just over 50% of Indonesian conglomerate Astra. In fact, Astra is a very important part of Jardine Cycle & Carriage; the former accounts for more than 90% of the latter’s sales and profit.

Jardine Cycle & Carriage also has an impressive track record with growing its dividend. In 2003, it paid out 8.72 US cents per share; by 2013, that pay-out has jumped more than 10-fold to 108 US cents.

We now come to hypermarket and supermarket retailer Dairy Farm International Holdings, which currently runs close to 6,000 different retail outlets across Asia. In what seems like a tradition for the Jardine group of companies, Dairy Farm also has an impressive track record with growing its ordinary dividends. To that point, my colleague Chong Ser Jing recently wrote that the company’s “regular dividend had actually grown by a compounded annual rate of 18% from US$0.046 per share in 2003 [to US$0.23 in 2013].”

Despite having to cough up more cash to fund its growing dividends, Dairy Farm has actually seen its balance sheet improve tremendously over the years. At the end of 2007, the company had US$396 million in cash and US$479 million in total borrowings; as of 30 June 2014, these figures have changed to US$656 million and US$88 million respectively.

The banks

Singapore’s home to some of the region’s largest banks in DBS Group Holdings Ltd (SGX: D05), Oversea-Chinese Banking Corp. Limited (SGX: O39) and United Overseas Bank Ltd (SGX: U11). And unfortunately for individual investors, the trio carry share prices that seem to reflect their size. As you can see in the table below, an investment into one lot of any of the three banks would also set an individual back by least S$10,000.

Company Share price (as of 7 January 2015)
DBS S$19.80
OCBC S$10.19
UOB S$23.44

Source: S&P Capital IQ

During the Great Financial Crisis of 2007-09, a great many Western banks suffered, with some having collapsed completely into bankruptcy. But, the local trio of DBS, OCBC, and UOB saw their banking business hold up admirably with only relatively slight falls in both their profit and dividends.

The trio have also been very efficient operationally as can be seen by their low costs over the years. In addition, as Ser Jing pointed out, the local banking trio have also traditionally been prudent when it comes to taking financial risks.

Foolish Summary

When it comes to investing, having more choices can only be good news. Kudos to stock exchange operator Singapore Exchange for putting in the the effort to make the market more accessible to retail investors.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim does not own any companies listed above.