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My Stock Portfolio Selection
My Stock Portfolio Selection
MY STOCK PORTFOLIO
SELECTION
8 CRITERIA OF STOCK PORTFOLIO SELECTION
James Bong
CONTENTS
_________________________________________________________________________________
I.
Introduction
II.
III.
IV.
My Analysis on SingPost
V.
Conclusion
13
VI.
Appendix
14
VII.
Foot Notes/Acknowledgement/Bibliographies/
21
DISCLAIMER
The strategies outlined in this PDF document may not be suitable for every individual, and are not guaranteed or
warranted, whether expressed or implied, to produce any particular results. The author is not a license investment advisor
and thus information contained on this PDF document should not be taken as investment advice. The thoughts and
opinions and ideas expressed in this PDF document do not constitute investment advice and specific professional advice
may be necessary. No warranty (whether expressed or implied) is made with respect to the accuracy, adequacy, reliability,
suitability, applicability or completeness of the information contained herein, and both the author and publisher
specifically disclaim any responsibility or liability for any damages, lost profits, losses or risks, whether personal or
otherwise, which is incurred as a consequence, whether directly or indirectly, of the use and application of any contents of
this PDF document.
http://www.corporateinformation.com/Company-Advanced-Search.aspx
Notes:
1. As the above table is meant for illustrative purposes, the percentage return in investment
does not include commission paid.
2. In real setting, commission paid must be included in calculating the percentage return in
investment.
REVENUE
31-3-06
31-3-07
31-3-08
31-3-09
31-3-10
31-3-11
31-3-12
412.8
436.0
470.9
479.2
523.5
563.9
578.5
NETT
INCOME
123.3
139.8
149.3
148.8
165.0
161.0
142.0
EPS
DIVIDEND
0.065
0.073
0.076
0.078
0.085
0.083
0.074
0.10*
0.0625
0.0625
0.0625
0.0625
0.0625
0.0625
2007
Ex-Date
1st Qt
2nd Qt
3rd Qt
4th Qt
Total
Ex-Date
Mth/Yr
Ex-Date
Mth/Yr
Dividend
Ex-Date
0.0625
Mth/Yr
Ex-Date
0.0625
Quarter
Dividend
Dividend
Dividend
0.0625
Financial Year
2010
2009
1st Qt
2nd Qt
3rd Qt
4th Qt
Total
1 Qt
2nd Qt
3rd Qt
4th Qt
Total
Mth/Yr
0.10
Quarter
st
Dividend
2008
2011
Mth/Yr
Ex-Date
0.0625
Dividend
0.0625
Financial Year
2013
2012
Mth/Yr
Ex-Date
Dividend
Mth/Yr
30.6.12
17.8.12
0.0125
30.6.13
30.9.12
12.11.12
0.0125
30.9.13
31.12.12
7.2.13
0.0125
31.12.13
31.3.12
2.7.13
0.0125
31.3.13
Ex-Date
0.0625
6
Dividend
Mth/Yr
Ex-Date
Dividend
31-3-09
303.0
251.40
1.20
31-3-10
503.0
292.9
1.71
31-3-11
503.0
326.10
1.54
31-3-12
505.7
659.8
0.76
31-3-09
148.80
251.40
59.19%
31-3-10
165.00
292.9
56.33%
31-3-11
161.00
326.10
49.37%
31-3-12
142.00
659.8
21.52%
31-3-09
148.80
770.20
19.32%
31-3-10
165.00
1074.9
15.35%
31-3-11
161.00
1092.9
14.73%
31-3-12
142.00
1430.20
9.93%
31-3-09
155.80
479.20
32.51%
31-3-10
196.10
523.50
37.46%
31-3-11
174.60
563.90
30.96%
31-3-12
150.50
578.50
26.02%
BETA
0.48
YEAR
BETA
YEAE
BETA
P=D/(kg)
P = Reference price
It serves as a possible entry point for long term conservative dividend investors.
D = Future Dollar Dividend one year from now.
Use the historical dividend payment track record as a gauge
K = Cost of Equity {risk free rate + ( beta x equity risk premium)}
Risk free rate equals to 10 year government bond yield average 3% (Singapore)
Beta use 1, actual beta can be obtained at www.reuters.com
Equity risk premium for Singapore is about 6%.
g = Perpetual Growth Rate In Dividend
Use long term economic growth rate of a develop economy (GDP growth rate), usually
3%(For STI stock)
Calculation of Denominator:
K g = {risk free rate + (beta x equity risk premium}} g
ACKNOWLEGEMENT;
The above format is adopted from Secrets of Dividend Investors by Mark Lin (Page 40 to page 43).
STEP A: DETERMINING K
Risk Free Rate + (Beta x Equity Risk Premium)
K (Cost of Equity) =
3% + (1 x 6%)
9%
STEP B: DETERMINING K - G
9% - 3%
KG=
6%
STEP C: DETERMINING INTRINSIC VALUE
Current Year Dividend/(K G)
INTRINSIC VALUE =
0.0625 / 0.06 (6%)
S$ 1.04
8
2.
2012 faces domestic decline in mailing income, but management has remedied the situation by
accelerating its transformation into digital services, e-commerce businesses, and growth in
regional logistics and e-fulfillment.
3.
4.
Though EPS is reducing, dividend payment is still consistent at S$0.0625 per share annually. It is
still providing an attractive income.
Criteria No. 2:
Except for the year ended 31-3-2012 when special dividend was declared, SingPost had been paying
consistent dividend of $0.0625 for year 2007 to year 2012, and details are as follow:
3.
4.
5.
6.
7.
Criteria 8 :
A. Type of Valuation:
Determining intrinsic value is one of the most difficult hurdles as there is no one-fix-all valuation
method. In my selection of stock portfolio, I use three methods of valuation named:
Discounted cash flow valuation method (by Adam Khoo)
Value.Able valuation method (by Roger Montgomery)
Perpetuity DDM valuation method (by Mark Lin)
B.
C.
10
B.
11
Dec 10
Dec 12
Dec 10
Dec 12
12
13
APPENDIX
14
REVENUE
NETT
INCOME
EPS
DIVIDEND
Ex-Date
Dividend
Mth/Yr
Ex-Date
Dividend
Mth/Yr
Ex-Date
Dividend
Mth/Yr
Ex-Date
Dividend
Mth/Yr
Ex-Date
Dividend
st
1 Qt
2nd Qt
3rd Qt
4th Qt
Total
Financial Year
Quarter
Mth/Yr
Ex-Date
Dividend
Mth/Yr
Ex-Date
Dividend
1st Qt
2nd Qt
3rd Qt
4th Qt
Total
Financial Year
Quarter
Mth/Yr
Ex-Date
Dividend
Mth/Yr
Ex-Date
1st Qt
2nd Qt
3rd Qt
4th Qt
Total
15
Dividend
BETA
YEAR
BETA
16
YEAE
BETA
17
P=D/(kg)
P = Reference price
It serves as a possible entry point for long term conservative dividend investors.
D = Future Dollar Dividend one year from now.
Use the historical dividend payment track record as a gauge
K = Cost of Equity {risk free rate + ( beta x equity risk premium)}
Risk free rate equals to 10 year government bond yield average 3% (Singapore)
Beta use 1, actual beta can be obtained at www.reuters.com
Equity risk premium for Singapore is about 6%.
g = Perpetual Growth Rate In Dividend
Use long term economic growth rate of a develop economy (GDP growth rate), usually
3%(For STI stock)
Calculation of Denominator:
K g = {risk free rate + (beta x equity risk premium}} g
ACKNOWLEGEMENT;
The above format is adopted from Secrets of Dividend Investors by Mark Lin ( Page 40 to page 43).
STEP A: DETERMINING K
Risk Free Rate + (Beta x Equity Risk Premium)
K (Cost of Equity) =
STEP B: DETERMINING K - G
KG=
STEP C: DETERMINING INTRINSIC VALUE
Current Year Dividend/(K G)
INTRINSIC VALUE =
18
COUNTER
DATE OF VALUAION
ACKNOWLEGEMENT:
The below-mentioned discounted cash flow valuation method is adopted from Adam Khoos
PROFIT FROM THE PANIC page 97 TO 127.
VALUATION YEAR:
Year
Projected CF
Discount Rate
Discounted CF
Year
Projected CF
Discount Rate
Discounted CF
CF:
1
0.95
0.91
0.86
0.82
10
0.71
0.68
0.64
0.61
INTRINSIC VALUE
DCF
TOTAL SHARES
19
GROWTH:
5
0.78
6
0.75
TOTAL:
YEAR
FORECAST RESULT*
FORMULA
AMT.
20
2.
3.
Roger Montgomey. Value.Able. My 2 cents Worth Publishing: Australia, 2010. Page 19.
4.
5.
ACKNOWLEDGEMENT
Data for SingPost is taken from Thomson Reuters (in Million Singapore Dollar)
BIBLIOGRAPHIES:
1. Mark Lin, Secrets of Dividend Investors, Singapore: Rank Book 2010.
2.
Adam Khoo, Profit from the Panic, Singapore: Adam Khoo Learning 2008.
3.
21