Singapore Exchange (SGX)

[Art or Science]

in my watch list as well.. Given that it has no/little debt. Historical P/E for the last few years ranges from a low of 15+ in 2008 to a high of 33+ in 2007. etc..

Am also thinking of how SGX are competing and can compete with regional bourse like HK or even KL..

[Temperament]

SGP may be can compete with KL but it's very difficult with HK. HK always has GOD FATHER (aka CHINA).

[csl123]

Like most things in life, "Begin with the end in Mind". We should always start with a story, before any investment.

For me, SGX is a stalwart, base on Peter Lynch terminology. Stalwarts are stocks that generally buy for a desired gain, then sell and repeat the process with similar stories.

(vested)

I believe that SGX has the following characteristics which it very desirable for long term investors.

Strategically
1) Monopoly (Singapore is only big enough for one exchange in the next 20 yrs, IMO)
2) Capital flowing into Singapore dollar perceived as a safe haven currency. Equities and other instruments will benefit from this trend.

Financially
1) Strong operating cash flow and free cash flow
2) Consistent Dividend Payout

However, entering a position at the right valuation is still important.

I agreed with most of the points, but let me add-on few more.

SGX's earning CAGR over the last 3 years was 1.6%, and over the last 5 years was -6.8%. The last peak was 2007, and last bottom was 2009. Will SGX go thru the same cycle again? It will and should be.

I am still in the process to convince myself that SGX is a grower that worth a long term holding of 10 years or longer.

(vested)

I will just want to point out that SGX during its peak sells at S$14-$16. Given a dividend of ~S$0.3 per year in today's terms, the yield is 2%. Even after 7 yrs, the stock has hardly went above S$10. Many investors are still in the red (including dividends) after so many years.

Good stock at a bad price will still make an investor lose money.

[Belg]

Like most things in life, "Begin with the end in Mind". We should always start with a story, before any investment.

For me, SGX is a stalwart, base on Peter Lynch terminology. Stalwarts are stocks that generally buy for a desired gain, then sell and repeat the process with similar stories.

(vested)

I believe that SGX has the following characteristics which it very desirable for long term investors.

Strategically
1) Monopoly (Singapore is only big enough for one exchange in the next 20 yrs, IMO)
2) Capital flowing into Singapore dollar perceived as a safe haven currency. Equities and other instruments will benefit from this trend.

Financially
1) Strong operating cash flow and free cash flow
2) Consistent Dividend Payout

However, entering a position at the right valuation is still important.

I agreed with most of the points, but let me add-on few more.

SGX's earning CAGR over the last 3 years was 1.6%, and over the last 5 years was -6.8%. The last peak was 2007, and last bottom was 2009. Will SGX go thru the same cycle again? It will and should be.

I am still in the process to convince myself that SGX is a grower that worth a long term holding of 10 years or longer.

(vested)

I will just want to point out that SGX during its peak sells at S$14-$16. Given a dividend of ~S$0.3 per year in today's terms, the yield is 2%. Even after 7 yrs, the stock has hardly went above S$10. Many investors are still in the red (including dividends) after so many years.

Good stock at a bad price will still make an investor lose money.

Buy low sell high, it wouldn't go wrong. Good advice as 80% of majority lose while 20% thrives in this environment.

[HitandRun]

Given that the volatility of electricity is fairly low in Singapore.....

I'm surprised by your statement. I had done some research on energy storage a few years ago using the USEP volatility as data point and I remembered to the contrary.

So I went to look at the USEP on the EMC again.

EMC Price Information

The half-hourly USEP looks sufficiently volatile to me. Gut feels tells me that it is probably more volatile than WTI or Brent Crude futures. What is your complaint about volatility?


P.S. USEP = Uniform Singapore Energy Price => Energy pricing at wholesale level (layman definition)

[CityFarmer]

Like most things in life, "Begin with the end in Mind". We should always start with a story, before any investment.

For me, SGX is a stalwart, base on Peter Lynch terminology. Stalwarts are stocks that generally buy for a desired gain, then sell and repeat the process with similar stories.

(vested)

I believe that SGX has the following characteristics which it very desirable for long term investors.

Strategically
1) Monopoly (Singapore is only big enough for one exchange in the next 20 yrs, IMO)
2) Capital flowing into Singapore dollar perceived as a safe haven currency. Equities and other instruments will benefit from this trend.

Financially
1) Strong operating cash flow and free cash flow
2) Consistent Dividend Payout

However, entering a position at the right valuation is still important.

I agreed with most of the points, but let me add-on few more.

SGX's earning CAGR over the last 3 years was 1.6%, and over the last 5 years was -6.8%. The last peak was 2007, and last bottom was 2009. Will SGX go thru the same cycle again? It will and should be.

I am still in the process to convince myself that SGX is a grower that worth a long term holding of 10 years or longer.

(vested)

I will just want to point out that SGX during its peak sells at S$14-$16. Given a dividend of ~S$0.3 per year in today's terms, the yield is 2%. Even after 7 yrs, the stock has hardly went above S$10. Many investors are still in the red (including dividends) after so many years.

Good stock at a bad price will still make an investor lose money.

The story will likely repeat in the near future. May I conclude that we shouldn't hold it too long a term? May be shorter than the cycle of 7-10 years, or much shorter?

[Temperament]

Like most things in life, "Begin with the end in Mind". We should always start with a story, before any investment.

For me, SGX is a stalwart, base on Peter Lynch terminology. Stalwarts are stocks that generally buy for a desired gain, then sell and repeat the process with similar stories.

(vested)

I believe that SGX has the following characteristics which it very desirable for long term investors.

Strategically
1) Monopoly (Singapore is only big enough for one exchange in the next 20 yrs, IMO)
2) Capital flowing into Singapore dollar perceived as a safe haven currency. Equities and other instruments will benefit from this trend.

Financially
1) Strong operating cash flow and free cash flow
2) Consistent Dividend Payout

However, entering a position at the right valuation is still important.

I agreed with most of the points, but let me add-on few more.

SGX's earning CAGR over the last 3 years was 1.6%, and over the last 5 years was -6.8%. The last peak was 2007, and last bottom was 2009. Will SGX go thru the same cycle again? It will and should be.

I am still in the process to convince myself that SGX is a grower that worth a long term holding of 10 years or longer.

(vested)

I will just want to point out that SGX during its peak sells at S$14-$16. Given a dividend of ~S$0.3 per year in today's terms, the yield is 2%. Even after 7 yrs, the stock has hardly went above S$10. Many investors are still in the red (including dividends) after so many years.

Good stock at a bad price will still make an investor lose money.

Buy low sell high, it wouldn't go wrong. Good advice as 80% of majority lose while 20% thrives in this environment.

Isn't what the Gurus say is the "Motherhood statement of all kinds of investments"? --- "When you buy is more important than what you buy"? But for me i think what you buy should be as important as i am no "insider". Neither am i a good trader or speculator. Always lose money one.

[AlphaQuant]

Given that the volatility of electricity is fairly low in Singapore.....

I'm surprised by your statement. I had done some research on energy storage a few years ago using the USEP volatility as data point and I remembered to the contrary.

So I went to look at the USEP on the EMC again.

EMC Price Information

The half-hourly USEP looks sufficiently volatile to me. Gut feels tells me that it is probably more volatile than WTI or Brent Crude futures.

that's quite interesting, didn't know the info is available.

Depending on the dataset, i calculated the annualised realised volatility to be ard 60%, so somewhat comparable to that for WTI. So Hit&Run is right to say that electrical price (if measured by USEP) is actually quite volatile. I guess there's a difference in perception between wholesale vs consumer prices.

annualised realised for the STI for the past 1y is only 5% fyg.

[CityFarmer]

Given that the volatility of electricity is fairly low in Singapore.....

I'm surprised by your statement. I had done some research on energy storage a few years ago using the USEP volatility as data point and I remembered to the contrary.

So I went to look at the USEP on the EMC again.

EMC Price Information

The half-hourly USEP looks sufficiently volatile to me. Gut feels tells me that it is probably more volatile than WTI or Brent Crude futures.

that's quite interesting, didn't know the info is available.

Depending on the dataset, i calculated the annualised realised volatility to be ard 60%, so somewhat comparable to that for WTI. So Hit&Run is right to say that electrical price (if measured by USEP) is actually quite volatile. I guess there's a difference in perception between wholesale vs consumer prices.

annualised realised for the STI for the past 1y is only 5% fyg.

It might not be a perception, but a tangible result of regulating retail price base on the weighted average price cap (WAPC).

[csl123]

[/quote]

The story will likely repeat in the near future. May I conclude that we shouldn't hold it too long a term? May be shorter than the cycle of 7-10 years, or much shorter?
[/quote]

It really depends on the investment objective. There are many ways to reach the objective. I am not sure if the story will repeat itself in the near future, but during the euphoria days in 2007, trading volume exploded without a good understand of the fundamentals.

For me, the fundamentals can be estimated using various methods. I used valuation methods with a good mos added at the end of the valuation exercise. Personally, I used EV = NPV + TV + cash - debt to value the business and it still fall short of the existing share price. This stock did not cross my hurdle rate which is my required rate of return. No go for me.

However, another friend of mine just wanted to have a 4% yield for her portfolio. SGX is defensive in nature and she won't lose sleep because this will probably be the only exchange in Singapore for the next 30 yrs. Fits her portfolio perfectly.

Basically, going back to the value of the business is more important about how long to hold the stock. You will dispose the position only when the fundamentals and the assumptions have changed.