Yesterday i attended a seminar by OSK Investment Bank at Cititel Penang. OSK has its partner from Singapore (DMG) and subsidiary from Indonesia (PT OSK NusaDana) giving some insights in stock investing at their countries. I have never directly invest into foreign stock exchange, except indirectly through unit trust.
Well, i have always stick myself to investing in Bursa, as it is free from forex risk and i'm only familiar with companies in Malaysia. However, bursa (actually calling the old name KLCI sounds nicer) current market PE of 19.7% is at premium of 12 years average PE of 16.63%, suggesting that it is likely that stock price is somewhat ahead of fundamental. That's why i think it is not bad to divest a bit to foreign country. In fact i have just made my first foray to Hong Kong, having transfered some money to Public Bank Hong Kong. However i find it somewhat weird to have to search HK stock by stock number. It is still hard for me to browse for information easily. So i haven't done anything yet.
Back to yesterday talk. For Singapore, sectors like REIT and transportation is covered. I haven't invested into neither of this two sectors before, as such what the analyst mention during the talk does serve the purpose for me to see how they value such stocks. I found that the presenter, a he, likes to use P/B to compare REIT. He highlighted some stocks, namely CDL, cambridge and suntec reit. Singapore is currently having an office supply and demand mismatch, and rent has come down a lot since the heyday in 2007. The matter is complicated by another more than 4 million sq feet of new office space next year, with at most 1.2 million sq feet of space to be taken up. Hence, all the reit he recommended is in the industrial and retail. An interesting is that retail demand has maintained somewhat strongly. Not sure if we should take this as a sign that perhaps directly investing into retail consumer stocks are good or not. In fact, personally i have always like consumer stocks as their product i can see in shopping malls and i'm the direct user. For example, one will still see Padini (a garment & fashion franchisee in Malaysia) shops are still pack with people. I haven't been to Singapore of late, but i still remember how jam pack the retail malls shoplots are when there are the so called 'SALE' going on. Check out on Singapore SALES, which is happening now :) Back to the island state stock, the last stock mentioned by the analyst is SMRT. It has defensive business with dividend yield in the region of 5%. Its growth correlates strongly and will be underpinned by the continuous population growth. It is a not exciting play though. The reason the analyst bring out such defensive stocks is that he feels that the market is bit 'hot' right now, with lots of carry trade from foreign country such as US, where interest is to remain low well into 2010, as mentioned by Bernanke. As such it is more cautious to take a defensive position.
Selena from DMG is the second presenter who is presenting stocks on SGX. She covers plantation. SGX plantation companies are somewhat 'new', as all the while Malaysia is more famous for plantation stocks, with giants such as Sime Darby (huge in size but with mediorce ROE and efficiency) and IOI. At first i find it somewhat weird to try to listen to someone talking on plantation stocks from a country that has no oil palm plantation at all. It is noteworthy to know, however, that some giant plantation counters does list on SGX, like Wilmar (with operation spanning the bulk of South east asia and China) and some Indonesian plantation player. However, those stocks does not enjoy valuation as high as their Malaysian counterpart. Anyhow, she does provide some good insights. Since i am not well verse with plantation companies (although i used to have IOIcorp for some short time). She cover from basics of the palm oil production, like CPO comes from the fruit, and palm kernel oil comes from the brown color 'kernel'. CPO has a very strong correlation with crude oil movement, and recently the southern oscillation index has a strong -16, suggesting a likely El Nino that will affects CPO yield and hence its price. CPO also has a demand higher than supply. High demand growth is seen from China and India, with India having 12.7 kg/capita and 5.3 million tonne annual consumption, china having 22.4 kg/capita and 5.8 million tonne. US at 54.2 kg/capita and 0.9 million tonne and Europe 58.2kg/capital at 5.1 million tonne. The figure are interesting, say China is continuing to reach the level of kg/capita as Europe, the demand for CPO easily double. India's growth is expected to be 12 years behind that of China, but combined, the two giants will consumes more than what the current market player can supply. As such, over long term, CPO should be viable. I have always don't know how to judge the cyclic nature of plantation counters but looking at such market demand supply situation gives me some form of interest to relook into the counters. i have no interest, though, to look at plantation counters in SGX, including the First Resources that she recommended.
The analyst from Indonesia give me some feel on the Indonesia stock market, which is very much different from bursa and SGX. They have many mining companies in the top 10 biggest blue chip companies, at which Malaysia has none (to be fair, Petronas is one big company in Malaysia but it is not listed). The other bluechips are the traditional stocks, such as banks and telco. Of the many stocks that he fly us through, none is consumer stocks, which puzzles me. Indonesia is one of the world country with highest population at 234 million yet consumer stocks are no where near the blue chips? Well, actually i'm too bias, Unilever is in their top 10, which is a multinational manufacturer of food, home care, and personal products. The analyst recommended Inco, which mine for nickel and offers the world highest grade nickel. The big 3 cement players (one national, one from Swiss and another from some European country i can't remember) are also expected to do well due to less competition. Some very 'fresh' thoughts are that over the last 12 years, Indonesia has only built 12km of toll highway annually, suggesting how underdeveloped the country infrastructure is. NPL of the banks are pretty high, at 4.6% level generally. Inflation is low at 2% however take note that it has a high of 12% few years ago. He cites the country as politically stable, but to me that is different story. Anyhow, i think my minimal exposure to Indonesia via my unit trust is good enough.
The last analyst is from Malaysia, and he is talking on Genting Singapore, which has seen a 87% rise in stock price YTD. It is noteworthy to note that it is trading at 50% premium to its peer (the other casino gaming counter), although Genting enjoys a much less competition, in fact it is duopoly in Singapore (which is expected to have 6.2million chinese captive market) and its parent monopoly in Malaysia (2.2 million captive chinese market). It is surprising that he has put a much higher expectation on Genting Singapore than its Malaysian parent, with growth expectation in the region of 40%, and matching that of Macau. He does cautious investor that of all the 3 last listed stock on Macau, 2 of them see price dropping post casino commencement of operation. The 'support line' of Genting Singapore is at 87cent level (currently it is $1.29)
End of the story is that OSK has done a good job at organizing such seminar, which on top of trying to have bringing more business, is beneficial to the customers. Recently bursa has also organized some talks via some investment banks. I'll try to attend one locally to see how good it is. But from the topic it seems rather plain vanilla.
