ETSI 6 mar 2015

Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to
parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2015. All Rights Reserved. For internal circulation only.
Speakers: Daniel Cheong
Robin Chan
Tan PH

• Understanding how the stock
market works1
• Understanding common corporate
actions like bonus shares, share
consolidation, rights issues.
2
• Trading and Investing
Strategies3
• Dos and Don’ts4
• Beside stocks and shares5
Topics

Understanding how the
Singapore Stock Market
works

SGX
Broking
Hse A
Broking
Hse C
Broking
Hse B
Buy
Buy
Buy
Sell
Sell
Sell
Q

SGX
BROKING HOUSE
CDP
CDP: Central Depository Pte Ltd (Securities Account)
Trading Acct
Buy /
Sell Payment /
Receipt
Update of shares holdings
Update of
Corporate
Actions (Eg,
Dividends)
Market Info, Trade details
Settlements
Apply for CDP
Internet pin!

Basic Trading Information
 Before 19 Jan 2015: Lot Size: 1000 shares
 From 19 Jan 2015: Lot Size: 100 shares
 Trading Hours: 9am to 5pm continuous
(Pre-opening: 8.30am to 8.58/8.59am)
(Pre-closing: 5pm to 5.04/5.05pm)
Normal tradingPre-Opening
Pre-
Closing
8.30am
8.58am
8.59am
9am 5pm
5.04pm
5.05pm
Orders submission/withdrawal
Orders matching
Orders matching only
at 8.58 or 8.59
(opening price)
Orders matching only
at 5.04 or 5.05
(closing price)

 Transaction costs:
Trading Fee: 0.0075%
Clearing Fee: 0.0325%
Brokerage Fee: 0.28% - 0.5% (min $25-$40)
GST on above fees
Contract value < $9000 : Total transaction fee ~ $27 to $31 per contract
Contract value $10000 : Total transaction fee ~ $35 per contract
• Amalgamation: Same counter, same market, same type, same side, same day
• Lower brokerage rate for larger contract value. Eg, > $50K

Trading fee, Clearing fee and GST still apply
Total about $12 for max scenario

 SGX Markets:
 Ready Market
 Unit Share Market
 Buy-In Market
Unit Share Market: Lot size 1; for trade qty of 1-99
Brokerage $10
Buy-in Market:
• For SGX to conduct “buying-in” of shares being ‘shorted’
• Accessible via brokers
• Immediate settlement

SGX Watchlist
The Exchange will place a Company on the SGX Watchlist, if it
records:—
(i) pre-tax losses for the three most recently completed consecutive
financial years (excluding exceptional or non-recurrent income and
extraordinary items); and
(ii) an average daily market capitalisation of less than $40 million over the
last 120 market.
Companies on Watchlist are given two years to improve their
financials to be granted removal from Watchlist. Failing which, the
company might be asked to delist.

SGX Watchlist
Where to see which are the companies that are currently on
watchlist?
- SGX Website
- POEMS price information (special symbol ˄)

SGX Watchlist
New! The Exchange will place a Company on the SGX Watchlist, if
:—
the volume weighted average price of their shares for the 6 months
preceding the date of review is less than S$0.20 (Min Trading Price
requirement) . First review date is 1 Mar 2016.
Only companies listed on the SGX Mainboard are subjected to this
rule. They have 36 months to exit from the Watchlist, failing which,
the company might be asked to delist.

Understanding Some
Common Corporate
Actions

Some common corporate actions
Dividends
Profits
Dividends
Shareholders

Bonus Shares
1,000,000
shares
1,500,000
shares
1 for 2 bonus
shares
10,000 10,000
+ (10,000 ÷ 2)
5,000

Shares Split
Eg, 1 into 3 Split
Before: 1000 shares After: 3000 shares
 Each share becomes more affordable
 Improve liquidity

Shares Consolidation
Eg, 5 for 1
Consolidation
Before: 5000 shares
After: 1000 shares
 Increase ‘profile’ of stocks
 To meet regulatory requirement (Min trading price)

Q
Assuming you are currently holding 1m shares of a company of
share price $0.001 (worth $1000)
Can you lose more than $1000?
YES! If the company do a shares consolidation

Rights Issues
Rights – entitlement given to existing shareholders to buy more
shares at a predetermined price at a predetermined ratio.
 Asking shareholders for more fund
Company ABC
2,000,000
shares
To raise $1m,
1 for 2 Rights issue at
$1 for each Right share
(new share)
Every 2 share you own,
you can buy another 1 at
$1 each.
3,000,000
shares

Rights Issues
1 for 2 Rights issue at $1 for each Right share
10,000
Shares
10,000
Shares
5,000
Rights
10,000
Shares
5,000
Shares
5,000 x $1 = $5000

Rights Issues
10,000
Shares
5,000
Rights
Rights, if not exercised, can be sold in the market
during the ‘Rights trading period’
Need to have a Singapore mailing address! Else, register a ‘Rights
Mailing Addr’ with CDP

Case Studies – Rights Issues
Company Year Details Current
Share Price
OCBC 2014 1 FOR 8 @ $7.65 ~ $10.50
2005 1 FOR 5 @ $5
Share Price
United Engrs 2013 1 FOR 1 @ $1.50 ~ $2.80
2009 3 FOR 5 @ $1

Case Studies – Rights Issues
Share Price
TIGER
AIRWAYS
2014 85 FOR 100 @
$0.20
~ $0.30
2013 1 FOR 5 @ $0.47
2011 1 FOR 2 @ $0.58
Share Price
S I2I 2011 1 FOR 1 @ $0.055 ~ $0.004
2010 1 FOR 1 @ $0.10
2006 1 FOR 4 @ $0.16
Others: Digiland, Next-Gen Sat, Stratech Sys

Where to find? - www.sgx.com

Where to find?

Ex-Date and Book Closure Date (Record Date)
SGX Settlement cycle: T+3
20
Jan
13
14 15 16 1917 18
Last day to buy
for entitlement
Ex-Date
Book Closure
Date

Trading and Investing
Strategies

Trading and Investing Strategies

Trading Strategies
 Chart:
 Support and Resistance
 Trend
 Technical indicators
 Volume and Momentum
 Be aware of ‘Buy on rumours (anticipation), sell on facts’

Trading Strategies – Support / Resistance

Trading Strategies – Trend

Trading Strategies – Technical Indicators

Trading Strategies
- Volume and momentum
- Case study: SMRT
- Buy on rumours (anticipation), sell on facts
(sell on rumours, buy on facts)

5 Min

Investing Strategies
1) Growth
High growth companies at the beginning of the cycle –
• High Price Earning ratio (PE)
• High Price to Book Value (P/BV)
• Little or no dividends
More suitable for aggressive, young investors as risk is higher
Benefits
 can be very rewarding as share price can appreciate many times.
Risks
 Revenue/profit growth might slow unexpectedly – can result in sharp
drop in share price as earlier expectation might be too high.
 Non-profitable companies might be marketed as growth companies.

Case studies
• Silverlake
• Osim
• Super Gp
1) Growth

2) Value
Occurs during major shock/crisis when price of the stock falls
significantly while fundamental of the company remain little or
unaffected; or, Undiscovered gem not realized by the market
• Low PE
• Low Price to Operating Cash Flow (P/OCF)
• Low Price to Book
More suitable for patient investors
Benefits
 can be very rewarding as share price can recover fairly quickly or
appreciate quickly as more investors discover the value of the stock.
Risks
 Share price can remain at depressed levels till the market “discover”
the value, or existing substantial shareholders do something to unlock
shareholders’ value.

2) Value
Case studies
• Hong Fok
• Valuetronics

3) High dividend yield
Companies in a mature industry;
REITs, Business Trust
- Look at the company's sustainability in maintaining or even
increasing the dividend payout ( look at OCF )
More suitable for less aggressive, long-term investors
Benefits
 Stock price tends to be less volatile
 Consistent returns from dividends
Risks
 Might underperform during market bull-run (Risk-on scenario)
 Share price may adjust downwards in reaction to any upside in interest
rates.
 For highly-geared companies, in an increasing interest rate
environment, dividends payout may be impacted.

3) High dividend yield
Case studies
• Telcos
• SPH, ST Engg
• REITs

Dos and Don’ts

Do
 know the business model of the company invested
 be aware of the industry cycle (oil, electronics, property cycle)
 be prepared to CUT LOSS when the original purpose for buying the
company’s shares is no longer valid.
 attend the AGM/EGM if possible and ask any questions during the
meeting ( the only chance for YOU as a shareholder to meet up with
management and size them up). If management integrity comes to
question, avoid investing the company at all cost even if the financial
statements shows rosy numbers.
 be aware of the power of compounding - May be better to participate in
DRIP
 exercise proper money management (preserve your capital so as to
enable you to fight another day)

DRIP (Dividend Re-Investment Program)
• Reducing purchasing power of cash
• Reinvest dividends into more shares
(reinvestment price is lower than current market
price)
• On assumption company will continue to do
well

DRIP (Dividend Re-Investment Program)
Assuming you have invested 10,000 shares of Company Sunhub, at a total cost
Of $10K ($1 per share);
Sunhub pays a dividends of $0.05 per share every year, and offer DRIP.
Option 1 (Take cash):
10000 10000 10000
$500 $500
…….
$500
Year 2Year 1 Year 5 10000
($10K)
$2.5K
Option 2 (DRIP at $1):
……. $12.76K10000
Year 1
$500
500
10500 10500
Year 2
$525
525
11025 12155
Year 5
$608
608
12763

Don’t
 let emotion control your behaviour i.e, do not fall in love with a
particular stock - you might end up not wanting to sell even if the original
purpose for purchasing is not longer valid
 trade too frequently as this would tend to cloud emotions and add to
transaction costs
 use monies that is needed for other purposes in the near term (say
to buy a property) to invest
 be taken in by high dividends promised by special investment
instruments say a trust or structured products. ( Ask oneself about the
sustainability in maintaining or increasing the dividend payout.) - case
study

Business Trust
- Cash-generating assets can be monetised
- Certain cash-generating assets are depreciating over the years (eg,
Utilities) or subjected to industrial cycles (eg, Ships)
- Like returning capital to shareholder, instead of investment returns
(profits)
$0.0000
$0.0200
$0.0400
$0.0600
$0.0800
$0.1000
$0.1200
2008 2009 2010 2011 2012 2013
FSL Trust
DPS

Beside stocks and shares

Beside Stocks and Shares
Shares
Company
warrants
Structured
warrants
ETFs
REITs /
Business
Trusts
Preference
Shares /
Perpetuals
Retail
Bonds
@
@

Beside Stocks and Shares
Examples of:
 Company Warrants
 REITs / Business Trust
 Exchange Traded Funds (ETF)
 Preference Shares / Perpetuals
 Retail Bonds

In the Nutshell: Company Warrants
Company warrants are issued by companies on their own ordinary shares to raise capital for themselves.
Their value depends on the value of the ordinary share which is the underlying security. Warrants cost a fraction of the
price of their underlying security and give the buyer the right (but not the obligation) to buy this underlying security at a
predetermined price (the Strike or Exercise Price) on or before a predetermined date (the "Expiry" Date).
[Defined by TD Direct Investing]

In the Nutshell: Company Warrants
(Example: TechOil&Gas)
PROPOSED RENOUNCEABLE NON-UNDERWRITTEN RIGHTS ISSUE OF UP TO 89,805,082 WARRANTS (THE “WARRANTS”) AT
AN ISSUE PRICE OF S$0.125 FOR EACH WARRANT, EACH WARRANT CARRYING THE RIGHT TO SUBSCRIBE FOR ONE (1)
NEW ORDINARY SHARE (EACH, A “NEW SHARE”) IN THE CAPITAL OF THE COMPANY AT AN EXERCISE PRICE OF S$0.250
FOR EACH NEW SHARE
Simplistic Understanding:
Cost of Warrant: S$0.28
Strike Price (2016-12-09) @ S$0.25
Exercise Cost: S$0.28 + S$0.25 = S$0.53

In the Nutshell: REITS & Business Trusts
REIT is a vehicle for investment in a portfolio of real estate assets, usually established with a view to generating
income for unit holders.
Business Trusts are business enterprises set up as trusts, instead of companies. Purchasers of units in the
business trusts, being beneficiaries of the trust, hold beneficial interest in assets of the Business Trust.
REITS Business Trusts
Distributions 90% of income No Specific Requirement
Gearing 35% Limit for unrated; or
60% if rated by rating
agencies
No Cap
Examples Mapletree
Logs/Comm/Ind/GCC,
Cache, Ascendas,
CapitaMalls, Ascott
HPH, APTT, Croesus,
Accordia Golf, CitySpring
Typical Yield
(in Q1 2015)
5%~7% p.a. 7%~9% p.a.

In the Nutshell: ETF
Exchange Traded Funds (ETFs) are open-ended investment funds listed and traded intraday on a
stock exchange. They aim to track the performance of an index and provide access to a wide variety of markets
and asset classes.

Listed Fixed Income

Listed Fixed Income
Counter Name Code Last Board Lot
Last Done
25FEB15
Genting SP5.125%Perp P9GZ 1,000 1.057
CapMallTrb3.08%210220 TY6Z 1,000 1.015
CapMallA3.8%b220112 PW3Z 1,000 1.026
LTA n4.17%160510 L07Z 10,000 1.04
SIA 2.15%b150930 MA6Z 1,000 1.016
Tigerair 2%PerpC S3TB 1,000 0.7
OCBC Bk 4.2%NCPS O15 1,000 1.05
DBS Bk 4.7% NCPS MU7 100 106.5
OCC 5.1% NCPS GG0 CD 100 106.95
Hyflux 6% CPS N2H 10 106.8
CITYDEV NCCPS C70 1,000 1.055
OCC 3.93% NCPS O31 10 101.3
UE P U05 1,000 1.9-

Interpretating Perpetuals
Case Study: OCC 5.1%NCPS
Market Price: S$107 (25FEB2015)

Coupon Payments

Real Investment Example (Entered in Q1 2014)

Case Study: OCBC 4.2%NCPS
Market Price: S$1.025 (04MAR2015)

Case Study: OCBC 4.2%NCPS
Yield-to-Next-Call (@1.025 on 4th March 2015)
OCBC have discretion to call back the preference shares at each payment date after 14 July 2013

Case Study: Hyflux 6% CPS
Market Price: S$106.8 (25FEB2015)

Case Study: Hyflux 6% CPS
Yield-to-Next-Call (@ S$106.8 on 25FEB2015)

A Glimpse of Institutional Fixed Income
Pricing Dated 09 FEB 2015
Perpetuals
Multiples of SGD 250,000 per ticket

Benefits & Risks of Fixed Income Securities

Investment Custodian
i) Liase directly with Phillip (your Remisier) on all corporate actions.
ii) Shares holdings are updated and your Remisier can assist to check your
holdings.
iii) Higher trading limits*
Improve your trading/investing experience
Investment Margin
i) Liase directly with Phillip (your Remisier) on all corporate actions.
ii) Shares holdings are updated and your Remisier can assist to check your
holdings.
iii) Increased purchasing power
useful for foreigners residing outside of Singapore , or anyone who wishes to
enjoy the convenience and benefits of liaising with only one single custodian
for all their shares.

Account maintenance fee
S$16.05 per quarter (waived if there is at least one trade (local or
foreign) in the quarter
Corporate action fee
Cash Dividend: 1% on net dividend subject to min S$1.07 capped
at S$53.50 + Foreign fees and taxes (if
applicable)
Others: S$10.70 + Foreign fees and taxes (if applicable)

www.sharesinterest.com
www.facebook.com/sg.sharesinterest

Questions

ETSI 6 mar 2015

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