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4 Stocks This Week [13 Feb 2017 to 17 Feb 2017]

We look at the performances of DBS, Parkway Life REIT, iFast Corporation and Lippo Malls Indonesia Retail Trust.

Some people have asked whether we could elaborate some more on why they should buy or sell some of the stocks featured on our 4 Stocks This Week column lately. We just want to reiterate that this column is not meant to get people to buy or sell these stocks, it is merely meant to feature stocks that have come to our attention and hopefully drive more interest in the local stock market.

If you have any stocks that you think are interesting and want to feature them here, do drop us an email or comment on this post on our Facebook page.

This Valentine’s week has brought greater cheer to the stock markets. A gauge of the health of world’s equities, the Morgan Stanley Capital International (MSCI) All-Country World Index, hit intraday record highs, as did the major benchmark indexes in the USA.

Over in Singapore, the Straits Times Index (STI) similarly continues to inch upward, hovering at its 52-week highs. This week, it remained flat, opening and closing at $3.12 on Monday (13 February 2017) and Friday (17 February 2017) respectively. For 2017, the STI remains in good health, increasing close to 8.0%.

#1 DBS Group Holdings Ltd

In a past edition of our 4 Stock This Week column, we featured DBS, stating that its results release on 16 February makes it a prime candidate to be appear here once more.

Its results were below market expectations. Its revenue came in at $11.5 billion in 2016, 6% higher than the $10.8 billion it posted in 2015. However, its net profit, came in 5% lower than 2015’s $4.5 billion at $4.2 billion.

The lower net profit was mainly due to more money being set aside for non-performing loans which had risen to over 1.4% as at the end of 2016 compared to 0.9% as at the end of 2015. The bulk to these were from the troubled oil & gas and related services industries.

DBS’ share price was at $18.91 at the start of the week and closed $0.31, or 1.6%, down at $18.60. Interestingly, its shares fell on Tuesday (14 February 2017) rather than when it released its below expected results on Thursday (16 February 2017). This is the date Oversea Chinese Banking Corp (OCBC) released its results, which were also below expectations. This shows how people can, and do, infer companies’ results based on its peers’ performances.

Overall, DBS’ share price has performed well having risen approximately 41.5% in the last 52-weeks. However, after the release of its results, CIMB ($17.66), Maybank Kim Eng ($18.13), OCBC ($18.99) and RHB ($19.80) issued a “Hold” call on the bank’s shares.

Also Read: Banks Are Cutting Jobs In Singapore, And Why These Jobs Lost Are Unlikely To Ever Return

DBS share price chart (1-week)

Source: Yahoo! Finance/ Google Finance

#2 Parkway Life REIT

Parkway Life REIT appears on our list as they announced their acquisition of five nursing home properties worth close to $59.5 million in Japan on Friday (17 January 2017). These properties were acquired at a 9.1% discount to their valuations.

This is interesting as the REIT has, as recently as December 2016, divested four nursing homes in Japan at a price which was 4.8% above market valuation (at the time).

The important thing to note here is that this represents asset recycling initiatives of the management to ensure they realise good value when possible and acquire properties which are undervalued. Significantly, this acquisition will also allow it to break into a new territory in Japan, the Yamaguchi Prefecture.

On the downside, if this kind of buying and selling does not deliver good value down the road, it will only add an added strain on shareholders’ returns as they have to foot higher management fees commonly associated with transactions.

On the whole, Parkway Life REIT’s share price has also performed stably. It has delivered a 12.5% return in the last one year and a 2.1% return in the year-to-date. In the past one week, opening at $2.45 on Monday (13 February 2017) and closing at $2.41 on Friday (17 February 2017), it shed roughly 1.6% of its value.

As the latest announcement was made on Friday after trading hours, Monday’s opening will reflect this new information.

Also Read: How REITs In Singapore Performed in 2016

Parkway Life REIT share price chart (1-week)

Source: Yahoo! Finance/ Google Finance

#3 iFast Corporation Ltd

iFast released its latest full year results on Friday (17 February 2017) in the morning. It detailed a 5.6% decrease in revenue to $80.6 million in 2016 from $85.3 million in 2015. It also posted a 55.0% decrease in profit to $5.4 million in 2016 from $12.1 million in 2015. This was mainly due to losses in its recently assembled China office and higher staff cost and impairment losses.

Investors have to consider whether its business expansion in China will pay dividends. As a way to gauge this, it has already done well in Singapore, and has turned in profits in its Hong Kong and Malaysia markets. It also has an Indian business which has managed to win business traction with assets under administration of close to $355.3 million there. If its China business flourishes, it could be a game-changer for the company.

Between Monday (13 February 2017) and Friday (17 February 2017), iFast increased by $0.005 to $0.855 from $0.850. Interestingly, in the lead up to its results release, its share price rose to $0.875 on Thursday (16 February 2017) before coming back down on Friday (17 February 2017).

Year-to-date, it has delivered a 1.2% return. However, in the past 52 weeks, it has posted a negative 29.7% return.

Also Read: Fundsupermart Is Making Big Waves (Again) With FSMOne, And History Is Repeating Itself

iFast share price chart (1-week)

Source: Yahoo! Finance/ Google Finance

#4 Lippo Malls Indonesia Retail Trust

LMIRT (in short) released its results on Wednesday (15 February 2017). It posted an 8.7% increase in revenue in 2016 to $188.1 million from $173.0 million in 2015. Its distribution per share in 2016 also increased by 10% to 3.41 cents in 2016, compared to 3.10 cents in 2015.

This was bolstered by the acquisitions of quality properties in Indonesia – Palembang Icon and Lippo Plaza batu – as well as positive rental reversions of its existing properties.

Owning 20 retail malls across Indonesia and seven other retail properties within other malls, LMIRT holds a diverse mix of malls in its portfolio. LMIRT’s properties are also well-managed with 94.3% of its space occupied. LMIRT’s current gearing of 31.5% is well under the 45% benchmark, which allows it to continue acquiring in the future.

In the past week, its shares moved up marginally from $0.390 to $03.95 – meaning market participants expected this healthy set of results. Based on its share price of $0.395 on Friday (17 February 2017), it offers a yield of over 8.6%.

In the past 52 weeks, it has delivered a return of 42.6% while its year-to-date return is at a more modest 6.8%.

LMIRT share price chart (1-week)

Source: Yahoo! Finance/ Google Finance

4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.

Read Also:  4 Stocks This Week [30 Jan 2017 to 3 Feb 2017]



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4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.