Comparison Of Selection Between Individual Portfolio

Published Date: 02 Nov 2017

Student Name: Zheng Xinyuan

Student ID: 1101007914

Matriculation No.: 20037840

Date: 12th April 2013

Word Count: 1510

Table of Contents

Page No.

1

Introduction

2

2

Performance of 10 initial stocks

2

3

Comparison of selection between individual portfolio and group’s portfolio

4

4

Learning point/outcome

5

5

Reflection on the group’s acceptance of your stock suggestions

7

Introduction

This is a reflective report for individual assignment. There are four parts of this report, which were Performance of 10 initial stocks, Comparison of selection between individual portfolio and group’s portfolio, Learning point/outcome, and Reflection on the group’s acceptance of your stock suggestions. It will explain the detail of these four parts as follow.

Performance of 10 initial stocks

SGD 100million Portfolio

Entry Date

12-Mar-13

12-Mar-13

12-Mar-13

12-Mar-13

12-Mar-13

12-Mar-13

12-Mar-13

12-Mar-13

12-Mar-13

12-Mar-13

Stock Name

BRC Asia

Bonvests

Keppel

StarHub

DBS

Noble

Olam

Oversea - Chinese Banking

Singapore Press

SEMBCorp

Share Price

0.19

1.12

11.89

4.17

15.47

1.19

1.67

10.35

4.31

5.19

No. of Share

52,631,578

8,928,571

841,042

2,398,081

646,412

8,403,361

5,988,023

966,183

2,320,185

1,926,782

Total Cost

10,000,000

10,000,000

10,000,000

10,000,000

10,000,000

10,000,000

10,000,000

10,000,000

10,000,000

10,000,000

100,000,000

Price/Earning

7.19

11.33

9.62

20.1

9.91

17.35

10.64

9.17

18.99

12.42

Present Date

8-Apr-13

8-Apr-13

8-Apr-13

8-Apr-13

8-Apr-13

8-Apr-13

8-Apr-13

8-Apr-13

8-Apr-13

8-Apr-13

Stock Price

0.18

1.14

11.16

4.37

15.65

1.17

1.65

10.58

4.6

5.08

Market Value

9,473,684.04

10,178,570.94

9,386,028.72

10,479,613.97

10,116,347.80

9,831,932.37

9,880,237.95

10,222,216.14

10,672,851.00

9,788,052.56

100,029,535.49

Profit(Loss)

-526,315.96

178,570.94

-613,971.28

479,613.97

116,347.80

-168,067.63

-119,762.05

222,216.14

672,851.00

-211,947.44

29,535.49

Table 1. The detail information of 10 stocks

The table 1 shows the performance of 10 stocks which were my initial chosen stocks from 12 March 2013 to 8 April 2013. Each of the stocks was allocated $10,000,000. To the final result profit/loss, half of the stocks were loss. Especially the BRC Asia Limited and the Kepple Crop Ltd lost most, which lost $526,315.96 and $613,971.28 respectively. Fortunately, the half of the stocks left performed better than the lost part, especially two companies that StarHub and Singapore Press Holding performed strongly during one month time. Finally, this portfolio earned $29,535.49 at the end date.

At the beginning of choosing stocks, I think, with the global real estate market recovery, the property industry in Singapore will be driven by this trend. And shipping & marine industry is also important for Singapore, which a large number of resources from outside to Singapore are depended on shipping & marine. It has enough reason to choose stocks in these two industries. But the performance of the most loss two companies that belong to property industry and shipping & marine industry were not well than the expectation. The stock price of BRC Asia Limited was from 0.19 to 0.18 and the stock price of Kepple Crop Ltd was from 11.89 to 11.16. It evidence that there are a lot of uncertainty in stock market.

As we can know, Singapore is one of the finance centers in Asia. So the banking & finance industry can be a good investment goal. In fact, during this month the performance of finance industry is good, which I chose two stocks that DBS Group Holdings Ltd and Oversea-Chinese Banking Corp Ltd in this industry. The stock price of DBS Group Holdings Ltd was from15.47 to 15.65 and the stock price of Oversea-Chinese Banking Corp Ltd was from 10.35 to 10.58. These two stocks earned $116, 347.80 and $222,216.14 respectively.

The telecommunication industry and the publish industry performed strongly. The two most profit stocks belong to these two industries. The stock price of StarHub was from 4.17 to 4.37 and the stock price of Singapore Press Holding was from 4.31to 4.6. The profits of them were $479,613.28 by StarHub and $672,851.00 by Singapore Press Holding.

The left stocks in different industries performed differently. The stock price of Bonvests Holdings Limited in hotel industry was from 1.12 to 1.14, and the profit of this stock was $178,570.94. The stock price of Noble Group Ltd in diversified machinery industry was from 1.19 to 1.17, and the loss of this stock was $168,067.63. The stock price of Olam International Ltd in food industry was from 1.67 to 1.65, and the loss of this stock was $119,762.05. The stock price of SEMBCorp Industries Ltd in Diversified Utilities industry was from 5.19 to 5.08, and the loss of this stock was $221,947.44.

Comparison of selection between individual portfolio and group’s portfolio

According to the table 1 above and the data of group’s portfolio, group’s original portfolio did better than my portfolio. The profit of group’s portfolio was $2,873,511.9, while the profit of my portfolio was just $29,535.49.

Compare the Annualised Return between individual and group:

Individual 1-month Return: (100,029,535.49-100,000,000)/100,000,000=0.00029=0.029%

Individual Annualised Return: (1+0.029%)13 - 1=0.00377=0.377%

Group 1-month Return: (102,873,511.9-100,000,000)/100,000,000=0.0287=2.87%

Group Annualised Return: (1+2.87%)13 - 1=0.4446=44.46%

The Group Annualised Return was better than individual Annualised Return, which the Group Annualised Return was 44.46% while the individual Annualised Return just 0.377%.

Learning point/outcome

In today's financial marketplace, a well-maintained portfolio is vital to any investor's success. As an individual investor, you need to know how to determine an asset allocation that best conforms to your personal investment goals and strategies.

When trying to figure out which valuation method to use to value a stock for the first time, most investors will quickly discover the overwhelming number of valuation techniques available to them today. There are the simple to use ones, such as the comparable method, and there are the more involved methods, such as the discounted cash flow model. Which one should you use? Unfortunately, there is no one method that is best suited for every situation. Each stock is different, and each industry sector has unique properties that may require varying valuation approaches.

Valuation methods typically fall into two main categories: absolute and relative valuation models. Absolute valuation models attempt to find the intrinsic or "true" value of an investment based only on fundamentals. Looking at fundamentals simply mean you would only focus on such things as dividends, cash flow and growth rate for a single company, and not worry about any other companies. Valuation models that fall into this category include the dividend discount model, discounted cash flow model, residual income models and asset-based models.

The dividend discount model (DDM) is one of the most basic of the absolute valuation models. The dividend model calculates the "true" value of a firm based on the dividends the company pays its shareholders. The justification for using dividends to value a company is that dividends represent the actual cash flows going to the shareholder, thus valuing the present value of these cash flows should give you a value for how much the shares should be worth. So, the first thing you should check if you want to use this method is if the company actually pays a dividend.

What if the company doesn't pay a dividend or its dividend pattern is irregular? In this case, move on to check if the company fits the criteria to use the discounted cash flow model. Instead of looking at dividends, the DCF model uses a firm's discounted future cash flows to value the business. The big advantage of this approach is that it can be used with a wide variety of firms that don't pay dividends, and even for companies that do pay dividends, such as company XYZ in the previous example.

The last method we'll look at is sort of a catch-all method that can be used if you are unable to value the company using any of the other models, or if you simply don't want to spend the time crunching the numbers. The method doesn't attempt to find an intrinsic value for the stock like the previous two valuation methods do; it simply compares the stock's price multiples to a benchmark to determine if the stock is relatively undervalued or overvalued. The rationale for this is based off of the Law of One Price, which states that two similar assets should sell for similar prices. The intuitive nature of this method is one of the reasons it is so popular.

Reflection on the group’s acceptance of your stock suggestions

There were four stocks I recommend in group. They are Bonvests Holdings Limited, Noble Group Ltd, Singapore Press Holdings Limited, and SEMBCorp Industries Ltd. In my individual performance of these four stocks, there were half of them profit. Bonvests Holdings Limited was invested 20,000,000, which was the most investment at the beginning in group. The stock price of Bonvests Holdings Limited in hotel industry was from 1.12 to 1.14 in a month time. Another one of the profit stocks was Singapore Press Holdings Limited. The stock price of Singapore Press Holding was from 4.31to 4.6, which the amount of increase was biggest. The left two stocks were loss. The stock price of Noble Group Ltd was from 1.19 to 1.17, and the loss of this stock was $168,067.63. The stock price of SEMBCorp Industries Ltd was from 5.19 to 5.08, and the loss of this stock was $221,947.44.

According to the data above, my stock suggestions are good but not perfect. The stock of the Bonvests Holdings Limited and the Singapore Press Holdings Limited was profit, especially the change rate of the Singapore Press Holdings Limited was +6.97%. However, there were also two of the stocks I recommend reducing the stock price.