Select Group takeover

Friday, 25 March 2016 12:52

Posted by owq stocks 0 comments

I bought Select at around the beginning of the year, hoping to enjoy its wonderful cash flows for years down the road. Alas, it was not to be. Out of the blue, a trading halt was called, leaving me wondering whether it was going to be good or bad news. Soon the cash offer came. $0.525 a share.

It is close to a 30% gain on my cost, but I'm not sure whether to be happy or sad. At $0.525, the trailing FY15 PE is 5.25/5.02 = 10.46. Of course, this takes into account the government grants, but I still think the business is worth more than that. It is quite a high ROE business with room for growth. I would say that the PE firm got it for quite a bargain. Of course they would only highlight that 0.525 gives a high premium over the tangible assets.

Anyway, as a minority investor I can only look, suck thumb and just sell. Don't think there's any good alternative to Select in SGX. I have been looking at Neo Group for a long time, but don't think it's value for money right now. So for the time being, I put some of the proceeds into Design Studio. The rest I'm thinking of using for my REIT allocation. Looking at First REIT (which I sold earlier) as well as Frasers Comm Trust.

Is SGX really a monopoly?

Friday, 18 March 2016 21:09

Posted by owq stocks 0 comments

I have seen people talking about buying SGX because it's a monopoly. Is it really? Sure, if we're talking about flotation in Singapore only. The market is so much bigger than that. SGX is competing against the world for listings and derivatives. And companies have many other ways to raise capital. Local companies can choose to list in other countries, a popular destination being ASX.

However, is it a good company? I haven't done much research on it, but it definitely has awesome operating metrics with high ROE and margins. Is it selling at a good price? That I'm not so sure. I think there are better alternatives at the moment.