Saturday, August 21, 2021

2021 Singapore Dividend List using Poems Stock Screen

When we first starting discussing screens more than 10 years ago, there were no good screens out there for retail investors. But technology advances, today we can easily screen for stuff. Just google "stock screener" and you get tonnes of screens. Even screens for ETFs! It is true that most would be made for the US and other big markets. But still, you can get good stuff.

I have been using poems as described in last year's post. This year, I would also be showing the poems screen. Singapore has been hit badly by the pandemic and we do get a lot of interesting results. So, this year's screen will be the first time in a long while we discuss Singapore stocks.

Here's the criteria I used for this year's screen.

I have focused on ROE and ROA (which are proxies for ROIC or return on invested capital) for this year to as these two metrics are really key in assessing both the quality of the business and the quality of the management. ROA of 10% means for every $100 I invested into the asset base of the business, I will get back $10. This is a decent return for most businesses when it's sustainable. 

As such, I would say that ROE and ROA drive the screen, while Operating Margin, Dividend Yield are really just cherries on the pudding. Remember, while we are looking for good dividends, it is what makes good company capable of paying good dividends that is important. Lastly, I have the market cap cut off at SGD100m.

These are the names ranked by market cap: Thai Beverage at SGD17.5bn, ST Engineering at SGD12.2bn and Keppel and so on and so forth. Nothing really stands out in this first part. Some of the names are repeated from last year as well while some others dropped off (Jardine Cycle and Carriage and SIA Engineering) mainly due to their inability to maintain paying 3% dividend. I continue to own Vicom which was discussed a couple of years back. 

First part of Singapore's 2021 Dividend List

The second part of this year's Singapore screen have a few interesting names: Boustead, Silverlake and Propnex. All three names generate extremely high ROEs without using too much leverage. We know this because ROA is also good at high teens. Most importantly, valuations are not stretched. Silverlake Axis trades at 4.6x PER!

That said, Silverlake Axis was issued with a short seller report back in 2015 which caused the stock to crash after that. It never recovered. It has been 6 years now but nothing was ever brought to light. So, did they really commit accounting fraud? If so, then the regulators should have clamped down and got the company delisted. If not, why is the stock price so weak after so many years? Inexplicable. In such cases, perhaps it is easier to just stay away. 

If anyone have any insights, would love to hear more in the comments section.

Second part of Singapore's 2021 Dividend List

I do not own any of these names. So Silverlake is not so great but I have been told many times that Boustead and Propnex are good companies. Boustead was built by a legendary entrepreneur called FF Wong. It was a darling midcap until 2014 when it's share price was almost two dollars. It has since derated quite a bit. I have not looked at it recently, but if its core engineering services business is not being disrupted, it should do okay.

Propnex is just the right business in the right place. Singapore's national pastime is to buy and sell properties. This stock IPO at 50c and is now at 1.5. How I wished I took my friend's advice to look at it seriously back then. It is after all the largest property agent in Singapore. It is not shown here but this is a highly FCF generative business making SGD30-40m against its market cap of SGD500+m. What's more: it has SGD100+m in cash and no debt. If it corrects 20%, I think this is a buy.

As usual, here's the past lists:

2020 Dividend List
2019 Dividend List
2018 Dividend List - Part 4
2018 Dividend List - Part 3
2018 Dividend List - Part 2
2018 Dividend List - Part 1
2017 Oct Dividend List - Part 2
2017 Oct Dividend List - Part 1

Huat Ah!

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