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 (among the top ten stocks) that have seen the highest net purchases in dollar value by institutional investors in for the week ended 24 August 2018. They are: Singapore Telecommunications Limited (SGX: Z74), DBS Group Holdings Ltd (SGX: D05) and CapitaLand Limited (SGX: C31).
Source: SGX; SGX StockFacts (as of 24 August 2018)
The first company on the list is Singtel, one of the local telcos.
In the company’s financial results for the first quarter ended 30 June 2018, revenue was down 0.5% year-on-year to S$4.1 billion. EBITDA (earnings before interest tax depreciation and amortisation) for the quarter declined 2.7% year-on-year to S$1.2 billion. Similarly, net profit declined 6.6% year-on-year to S$832 million. Excluding exceptional items, underlying net profit declined 19.3% year-on-year to S$733 million.
Chua Sock Koong, Singtel’s group CEO, made the following comments:
“This quarter’s results reflect the resilience of our core business against intense competition and increasing business headwinds. The Group continued to record data growth and Optus made gains in both the consumer and enterprise markets, bolstered by our quality networks, differentiated content and comprehensive ICT capabilities. Our overall focus on digitalisation and automation has also improved customer engagement and delivered productivity gains and cost savings.
We start the year with 23% of Group revenue from ICT and digital businesses and we expect contributions from these businesses to rise further as we continue to build capabilities in these new growth areas. Our digital marketing arm Amobee recently acquired the assets of Videology, an ad-tech platform provider for advanced TV and video advertising.”
The second company on the list is local bank DBS Group.
For the quarter ended 30 June 2018, total income grew by 10% from a year ago to S$3.20 billion. Net interest income (income from loans) rose 18% year-on-year to S$2.22 billion, driven by improvement in net interest margin and loan volume growth. Similarly, net fee income increased by 11% to S$706 million due to growth in wealth management and cards. As a result, net profit jumped 20% to S$1.37 billion.
For the first half of 2018, DBS Group declared an interim dividend per share of 60 cents, up 82% from the 33 cents declared for the first half of 2017.
The final company to be featured is CapitaLand.
As a quick introduction, CapitaLand is a real estate developer and owner and is one of the largest companies on the Singapore stock market. Its diversified global real estate portfolio includes integrated developments, shopping malls, serviced residences, offices and homes.
In the latest quarter ended 30 June 2018, CapitaLand reported that revenue was up 35.3% year-on-year to S$1,342.4 million. This was mostly due to accounting changes as the group consolidated CapitaLand Mall Trust (SGX: C38U), CapitaLand Retail China Trust (SGX: AU8U) and RCS Trust (a special purpose trust that holds Raffles City Singapore) into its results.
Earnings before interest and tax increased 36.6% year-on-year. The increase was due to the consolidation activities mentioned earlier, higher contribution from newly acquired and opened properties, as well as higher fair value gains from revaluation of investment properties in Singapore, China and Europe.
Lim Ming Yan, president and group CEO of CapitaLand, commented:
“CapitaLand continued to make solid progress in strategy execution in 1H 2018. In the first six months, we divested assets worth S$3.11 billion and redeployed S$1.8 billion into new investments, exceeding our full year capital recycling target of S$3 billion. In terms of capital allocation, we remain disciplined and focused on ensuring a 50:50 balance between emerging and developed markets, while targeting an optimal mix between trading and investment properties. …
Our strengths as a developer and asset owner, underpinned by best-in-class operating platforms, put us in a strong position to grow Group managed real estate assets to S$100 billion by 2020.”
The Foolish conclusion
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. Motley Fool has recommendations for DBS Group Holdings Ltd, CapitaLand Mall Trust and CapitaLand Retail China Trust.