There are many ways to find investment ideas. Some useful ways are to screen for stocks or to look at a list of stocks near their 52-week lows to sieve out potential bargains. Studying what institutional investors have been buying or selling is another avenue. Institutional investors are typically large investment organisations, such as hedge funds, mutual funds, unit trust companies, sovereign wealth funds, insurance companies and so on. These investors tend to possess vastly greater resources than individual investors like you and me when researching stocks. Hence, it may be useful to keep a close eye on what they…
There are many ways to find investment ideas. Some useful ways are to screen for stocks or to look at a list of stocks near their 52-week lows to sieve out potential bargains. Studying what institutional investors have been buying or selling is another avenue.
Institutional investors are typically large investment organisations, such as hedge funds, mutual funds, unit trust companies, sovereign wealth funds, insurance companies and so on. These investors tend to possess vastly greater resources than individual investors like you and me when researching stocks. Hence, it may be useful to keep a close eye on what they are doing, as a way to generate ideas.
In this article, I will look at three Singapore stocks that have seen the highest net purchases in dollar value by institutional investors in the week ended 30 March 2018. They are: Venture Corporation Ltd (SGX: V03), Sembcorp Marine Ltd (SGX: S51), and Singapore Technologies Engineering Ltd (SGX: S63).
Source: Singapore Exchange; SGX Stock Facts (as of 6 April 2018)
Venture is an electronics manufacturing services provider with expertise in a wide range of activities that include printing & imaging, networking & communications, retail store solutions & industrial, computer peripherals & data storage, and others.
In its latest earnings update, which was for the fourth quarter of 2017, Venture reported a 27.1% year-on-year increase in revenue to S$1.09 billion. The company’s bottom-line performance was even stronger, as its profit attributable to shareholders surged by 164.5% to S$143.0 million. Looking ahead, Venture said in its latest earnings update that its business environment “may remain volatile.” However, the company “remains confident that it is well placed to create significant value for the benefit of its partners.”
Sembcorp Marine specialises in providing turnkey solutions for offshore assets such as rigs and floaters, and repair/upgrade services on vessels, marine, and offshore structures.
The company’s latest earnings update was also for 2017’s fourth quarter. Sembcorp Marine did not enjoy a good quarter. Revenue fell by 21.1% year-on-year to S$655.0 million, and its profit attributable to shareholders of S$34.3 million in the fourth quarter of 2016 became a loss of S$33.8 million. In its earnings update, Sembcorp Marine said that there are signs of improvement in its business environment, but the immediate outlook is still tough:
“Global exploration and production (E&P) capex spending continues to show signs of improvement, underpinned by higher oil prices.
Offshore rigs utilization and day rates have stabilized, but rig orders recovery may take some time as the oversupply in most drilling segments have yet to re-balance.
The production segment remains encouraging and we are responding to increasing enquiries and tenders for innovative engineering solutions.
We continue to make progress in our efforts to develop and commercialize our Gravifloat technology for near-shore gas infrastructure solutions.
Demand for repairs and upgrades, especially for LNG carriers and cruise ships remains strong. Regulations on ballast water treatment requirements coming into force in the foreseeable future will further underpin the potential of this segment.
However, the immediate outlook remains challenging. It will take some time for capex spending to translate into new orders. Industry activities remain low and competition for orders remains intense. Sembcorp Marine will continue to further strengthen its balance sheet and actively pursue the conversion of enquires into new orders.”
ST Engineering is one of the Singapore market’s largest conglomerates. It has four main business segments: Aerospace, Electronics, Land Systems, and Marine.
The fourth quarter of 2017, which was the reporting period for ST Engineering’s latest earnings update, was not the best for the conglomerate too. Its revenue for the reporting quarter was S$1.70 billion, down 6% from 2016’s fourth quarter. Moreover, its net profit was flat at S$168.5 million. But, the future looks brighter for ST Engineering. The company’s order book at end-2017 was S$13.2 billion, 14% higher than at end-2016. It also said the following:
“Over the next few years, growth is expected to come from the Aerospace sector as its A330 and A320 passenger-to-freighter conversion programmes gain momentum, and from the more expansive smart city offerings emanating from the Electronics and Land Systems sectors in Singapore and overseas. Industry conditions for the Marine sector are likely to remain weak in 2018, but the Group will continue to focus on strengthening its operational efficiency.”
Looking at what institutional investors are doing could be a useful tool in your toolkit when sourcing for investment ideas. But do note that the information presented here is by no means a recommendation to take any action on the stocks mentioned. Instead, it should be viewed only as a useful starting point for further research.
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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 Lawrence Nga doesn’t own shares in any companies mentioned.