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.
Today, I’m looking at three Singapore stocks (among the top 10 stocks) that have seen the highest net purchases in dollar value by institutional investors for the week ended 12 April 2019. They are: SATS Ltd (SGX: S58), Hour Glass Ltd (SGX: AGS), and Singapore Telecommunications Limited (SGX: Z74).
Sources: Singapore Exchange; SGX Stock Facts
The company with the highest net acquisition by institutional investors last week was SATS, a company providing food solutions and gateway services solutions.
For the quarter ended 31 December 2018, SATS reported that revenue was up by 5.5% year on year to S$464.0 million. Operating profit was down marginally by 0.6% to S$65.3 million, mainly due to higher expenditure. Associates and joint ventures’ profit after-tax contribution jumped by 51.1% to S$20.7 million, driven by stronger performance in gateway services, offset partially by weaker performance in food solutions. Similarly, net profit attributable to shareholders for the quarter grew by 3.5% to S$68.9 million, driven by higher revenue and stronger contribution from associates and joint ventures.
The company also provided the following outlook guidance:
“Despite the slowdown in the global economy, increasing volumes in the aviation industry and strong demand for convenient food in Asian cities are creating growth opportunities for SATS. We are well-positioned to extend our market leadership in Asia Pacific, especially in the large, dynamic markets.
China is a key market for us for scale and connectivity, and we have invested in ground and cargo handling, and catering operations at the new Daxing International Airport in Beijing. Furthermore, we are building new central kitchens in China to supply fast casual restaurant chains in key cities.
At the same time, our new ground and cargo handling ventures in India and Malaysia are already growing profitably.
We continue to enhance the sustainability of our business by digitalising our operations, developing our people, and building new capabilities while seeking acquisitions that can help us accelerate the implementation of our strategy to feed and connect Asia.”
Next on the list is Hour Glass Ltd (SGX: AGS), a company that’s in the business of retailing luxury watches. It has a network of over 40 stores in Singapore, Malaysia, Thailand, Japan, Hong Kong, and Australia. It is an official retailer of some of the world’s finest brands, such as Audemars Piguet, Cartier, Hublot, IWC, Patek Philippe, Richard Mille, Rolex, Sinn, TAG Heuer, and more.
For the quarter ended 31 December 2018, Hour Glass’s revenue grew by 3% year on year to S$188.9 million. Similarly, net profit attributable to shareholders improved by 29% to S$18.3 million. The surge in net profit was due to an increase in its associates’ contribution to Hour Glass’s underlying performance.
As for its outlook, here’s what the company had to say:
“Global economic shifts continue to impair consumer sentiment. Barring any unforeseen circumstances, the Group expects to be profitable for the financial year.”
The other company with significant institutional buying last week was Singapore Telecommunications Limited, or SingTel, a company that needs little introduction. It’s the major local telecom player in Singapore. The other two are StarHub Ltd and M1 Ltd.
In the quarter ended 31 December 2018, SingTel reported that revenue was up 0.9% year-on-year at S$4.6 billion. Yet, EBITDA (earnings before interest tax depreciation and amortisation) for the quarter declined 10.6% year-on-year to S$ 1.2 billion. Also, the group share of associates’ pre-tax earnings was down 32.9% year-on-year to S$371 million. Consequently, net profit declined 14.2% year-on-year to S$823 million. Excluding exceptional items, underlying net profit declined 28.4% year-on-year to S$ 680 million. The lower underlying net profit was due to weaker performance in the group’s own business and lower share of associates’ earnings.
Chua Sock Koong, SingTel’s group CEO, commented:
“We have stayed the course despite heightened competition and challenging market and economic conditions. We’ve continued to add postpaid mobile customers across our core business in both Singapore and Australia while making positive strides in the ICT and digital space. We remain focused on investing in networks and building our digital capabilities – areas that are important to our customers and our future success. We will also step up on managing costs, growing revenues and driving efficiencies through increased digitalisation efforts.”
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. The Motley Fool Singapore recommends SATS Ltd.