Singapore Exchange (SGX) – Fundamental & Intrinsic Value

Base on latest FY2009 Financial Report

  • PE = 29.4
  • Dividend Yield = 3.07%
  • NAV = $0.7326
  • Net Earning = 51.4%
  • Current Ratio = 1.928
  • ROA = 21.6%
  • ROE = 39.3%

Stock Background

  • 3 Years High = $16.3
  • Current Price = $8.47

Intrinsic Value Calculaton

PE Model

  • Fair value PE, base on FY2010 Forward EPS $0.37843 (Average EPS of 2007, 2008 and 2009)
  • Intrinsic Value = $5.68
  • PEG = 1.49

Discounted EPS Model

  • EPS Growth Rate = capped at 15%
  • Discount Rate = 5%
  • 2010F EPS = $0.3783 (Average EPS of past three years)
  • Intrinsic Value = $6.46

DCF Model

  • 2010F Net Operating Cash Flow = $380.429 Million (Average Net Operating Cash Flow for past three years)
  • Growth Rate = capped at 15%
  • Discount Rate= 5%
  • Number of Shares = 1,062.062 Million
  • Intrinsic Value = $6.11

SGX stock price is currently overvalue and furthermore a double top has been formed in stock chart. I am waiting SGX to retrace back to about $7.00 (61.8% Fibonacci Retracement Level) and re-assess the entry point again. SGX is a good stock for long term investment due to its monopolistic business and long term growth prospect in Singapore (as APAC key financial hub).

United States Natural Gas Fund (UNG)

United States Natural Gas Fund (UNG) is an ETF to track the Natural Gas prices of Futures contract. Natural Gas is energy commodity and the price is influenced by the supply and demand condition. The ETF price has been beaten down 81% since its historical high of $63.48.

I am preparing to long the stocks as the economy will recover eventually and the energy consumption will increase in the long run. Furthermore, natural gas consumption will increase in the coming winter and this energy commodity price is expected to go up.

UNG is breaking out from its down trend channel and going to test $12.22 resistance level (61.8% Fibonacci Retracement). If it breaks and stay above the resistance turned support line, the stock price will probably be moving upward. The stock price is currently above its 20D & 50D MA support lines. If the stock price fails to break the resistance, it may move down to about $9.00 level.

UNG has just to trigger a “Parabolic Stop and Reverse” buy signal on the daily chart. MACD, RSI and Stochastic are very close to show bullish convergence.

My investment plan
Entry point = about $12. If the stock price fails to break the resistance and retrace back to $9.00, I will buy more and do a dollar cost averaging down.
Investment Time Frame =  1 to 3 years.

SingTel – Fundamental & Intrinsic Value

Base on latest 2009 full year financial report:

  • PE = 14.9
  • Dividend Yield = 3.87%
  • NAV = $1.39
  • Net Earning = 23.1% (26.7% in 2008)
  • Current Ratio = 0.74 (Similar industry is 0.55) 
  • ROA = 10.4% (Base on 2009 Full Year)
  • ROE = 16.8% (base on 2009 Full Year)
 
 

Stock Background

  • Historical high = about $4.10
  • Current Price = $3.23
 
  
 
 
Intrinsic Value Calculation
PE Model
  • Fair value PE = 15, intrinsic value= $3.24 (base on EPS $0.21648)
  • EPS Growth Rate = 11.3%
  • PEG = 1.32  

DCF Model
 I use Free Cash Flow instead of Net Operating Cash Flow to calculate the intrinsic value. The reason is SingTel is a telecommunication company which need to continuously invest in the networking infrastructure to generate revenue and profit constantly. The intrinsic value is $2.45.

 

 

Discounted EPS Model

  • EPS Growth Rate = 11.3%
  • Discount Rate = 5%
  • 2009A EPS = $0.21648
  • Intrinsic Value = $3.02

Regardless of which method to calculate the intrinsic value, SingTel seems to at its fair value or over value (base on Free Cash Flow DCF Model). Furthermore, the stock price moves sideway for the past 10+ years. I will not buy SingTel unless the stock price falls below $2.50 and there is an increase in dividend yield in future.