There are generally two groups of investors in the stock market: Institutional investors and retail investors. The former are typically large investment organisations, such as hedge funds, mutual funds, unit trust companies, sovereign wealth funds, insurance companies and so on. The latter are individual investors, like you and me. Institutional investors tend to possess vastly greater resources than individual investors when researching stocks. Hence it may be useful to keep a close eye on what institutional investors are doing, as a way to generate ideas. But, some investors may believe in the wisdom of the crowd. For such investors, what…
There are generally two groups of investors in the stock market: Institutional investors and retail investors.
The former are typically large investment organisations, such as hedge funds, mutual funds, unit trust companies, sovereign wealth funds, insurance companies and so on. The latter are individual investors, like you and me.
Institutional investors tend to possess vastly greater resources than individual investors when researching stocks. Hence it may be useful to keep a close eye on what institutional investors are doing, as a way to generate ideas.
But, some investors may believe in the wisdom of the crowd. For such investors, what other retail investors are buying or selling may be useful to know.
In this article, I will look at three Singapore stocks that have seen the highest net purchases in dollar value by retail investors in the month ended March 2018. They are: DBS Group Holdings Ltd (SGX: D05), Keppel Corporation Limited (SGX: BN4), and Jardine Cycle & Carriage Ltd (SGX: C07).
Source: Singapore Exchange; SGX Stock Facts
DBS likely needs no introduction, as its one of the three major banks based out of Singapore. The bank is one of the best performing stocks in the Straits Times Index (SGX: STI) for the last 12 months. During that period, DBS’s share price had climbed by 57% while the index had increased by just 13.8%.
One of the main drivers of DBS’s strong return may have been its financial performance. In its latest earnings update, which was for the fourth quarter of 2017, DBS reported a 31% year-on-year increase in net profit to S$1.19 billion. The bank’s book value per share also grew at a respectable rate of 5.8% to S$17.85. Looking ahead, DBS expects loans growth of between 7% and 8% in 2018, and an improvement in its net interest margin.
Keppel Corp is a conglomerate with a few major business segments: Offshore and Marine; Property; Infrastructure; and Investment.
In contrast to the strong performance of DBS, Keppel Corp had a difficult year in 2017. The conglomerate’s revenue and net profit for the year both came in lower compared to 2016. The former fell by 12% to S$5.96 billion while the latter sank by 72% to S$217 million. Despite the lower net profit, Keppel Corp raised its full-year dividend in 2017 to S$0.22 per share, up 10% from 2016’s dividend of S$0.20 per share.
Fortunately, Keppel Corp’s latest earnings update, for the first quarter of 2018, looked a lot better. The company posted a 17.8% year-on-year increase in revenue to S$1.47 billion, which led to a 33.7% jump in net profit to S$337.5 million. Keppel Corp ended 2018’s first quarter with S$2.7 billion in cash and S$7.86 billion in total borrowings, which translates to a net debt position of S$5.1 billion. This is an improvement from the end debt of S$5.5 billion seen at the end of 2017.
Jardine C&C is a bona fide conglomerate. In 2017, 81% of the company’s underlying profit came from the Indonesia-listed Astra.
Astra operates in Indonesia and itself has seven different business segments: Automotive; Financial Services; Heavy Equipment & Mining; Agribusiness; Infrastructure & Logistics; Information Technology; and Property.
In 2017, Jardine Cycle & Carriage reported a strong business performance, with its revenue up by 12% to US$17.70 billion, and its net profit attributable to shareholders climbing 15.5% to US$811 million. Astra International, which reported 28% growth in underlying profitability in 2017, was a big factor in Jardine Cycle & Carriage’s performance. Astra International’s contribution was partially dampened by a decline in the Direct Motor Interests’ underlying profitability, which fell 25% to US$125 million.
Regarding Jardine Cycle & Carriage’s future, this is what its chairman, Ben Keswick, shared in the latest earnings update:
“After a satisfactory overall result in 2017, Astra should continue to benefit in 2018 from improving economic conditions and stable commodity prices, although the competition seen in the car market is expected to intensify. The Group’s Direct Motor Interests will continue to face challenges, while its Other Strategic Interests are expected to produce growth.”
Following the crowd 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. The Motley Fool Singapore has a recommendation for DBS Group Holdings.