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 disposal in dollar value by institutional investors in August 2018. They are: DBS Group Holdings Ltd (SGX: D05), Genting Singapore Ltd (SGX: G13) and Thai Beverage Public Company Limited (SGX: Y92).
Source: Singapore Exchange; SGX StockFacts (as of 3 September 2018)
The company with the highest net disposal by institutional investors in August was our local bank, DBS.
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.
DBS CEO Piyush Gupta commented:
“The record first-half earnings demonstrate once again the breadth and quality of our franchise, while the higher returns demonstrate the improved profitability of our businesses as interest rates and credit costs normalise. The industry accolades we were recently awarded, including the World’s Best Digital Bank by Euromoney for a second time in three years, attest to the strides we have made in delivering customer value. Amidst heightened uncertainty and market volatility, business momentum was sustained in the second quarter. While there are gathering clouds, the region’s prospects remain intact, enabling us to continue capturing growth opportunities and generating stronger shareholder returns in the coming quarters.”
The second company that saw its shares sold off by institutional investors was Genting Singapore. As a quick introduction, Genting Singapore is the operator of the integrated resort, Resorts World Sentosa. Among the resort’s many attractions are one of Singapore’s two casinos and the Universal Studios Singapore theme park.
For its latest quarter, Genting Singapore announced that revenue was down by 6% year-on-year to S$560.3 million while operating profit improved by 1% year-on-year to S$228.4 million. Similarly, net profit grew by 3% year-on-year to S$177.6 million. Segment wise, gaming revenue declined by 8% year-on-year to S$406.1 million. On the other hand, non-gaming revenue was up by 1% year-on-year to S$153.5 million.
The last company is Thai Beverage, a conglomerate operating in four different segments, namely, Spirits, Beer, Food, and Food Beverages.
For the quarter ended 30 June 2018, Thai Beverage reported that revenue was up 34.1% year-on-year to THB 60.7 billion while net profit dropped 56.5% year-on-year to THB 6.6 billion. Excluding one-off items, net profit would have dropped by 1.4% instead. EBITDA (earnings before interest, tax, depreciation and amortization) for the quarter declined by 39.2% to THB 10.8 billion. Excluding non-recurring event, EBITDA would have improved by 16.7% year-on-year.
As of 30 June 2018, the company had THB 235.3 billion in total debt, and THB 13.0 billion in cash and cash equivalents, translating to a net debt position of THB 222.2 billion. In contrast, at the end of September 2017, the company had THB 30.7 billion in net debt while in March 2018, it had a net debt position of THB 214.1 billion.
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 Singapore has a recommendation for DBS Group Holdings Ltd.