Have you ever wondered how our FTSE Straits Times Index has been performing lately? I did a study all the way back to the performance of STI, represented by SPDR Straits Times Index ETF. The study detailed what were the returns if an investor invested at different years and finally, we valued it based on the closing price as of 30 September 2016. The results were shocking and maybe disappointing.
|Date||Price as of 1 Jan of Respective Years||Price as of 30 Sep 16||Index Gains / Losses %||Compounded Annual Growth Rate|
At best, you would have gotten the timing right by investing in our FTSE Straits Times Index on 1 January 2009 where you would have enjoyed a 9.37% CAGR since then.
What about the companies that we might see in our daily lives and we might not know that they are publicly listed companies.? How do they fare as compared to our Straits Times Index ETF?
Let’s consider 5 companies. Their compounded annual growth rate is measured from 1 January 2015 to 30 September 2016 including dividends.
SATS – 36.99% CAGR
SATS provides gateway services and food solutions in Singapore, Japan, and internationally. The company’s gateway services comprise airfreight, baggage, ramp handling, passenger, aviation security, cargo, warehousing, perishables and cruise handling, and terminal management services, as well as ground handling and in-flight catering services. It served over 40 million passengers and 1.5 million tonnes of annual capacity per year. 57% of its revenue comes from Food Solutions, and the remaining belongs Gateway Services. You may want to check out whether your next in-flight meal is prepared by SATS! Did you know that SATS, under SFI, is also an integrated food logistics and catering supplier to factories, schools, hospitals and army camps?
Sheng Siong Group – 33.51% CAGR
With a market capitalization of S$1.6 billion, Sheng Siong Group operates supermarkets in Singapore. The company’s stores offer an assortment of live, fresh, and chilled produce, such as seafood, meat, and vegetables; and packaged, processed, frozen, and/or preserved food products, as well as general merchandise, including toiletries and essential household products. As of 2Q FY2016, Sheng Siong runs 41 stores covering 434,800 square feet of retail area. It managed to increase its gross profit margin from 18.7% in FY2008 to 26.1% in 2Q FY2016. Sheng Siong also enjoys lower rental costs because of their deliberate strategy to plant their stores among the heartlands, especially HDB flats. According to HDB Annual Report 2014/2015, the number of dwelling units is expected to increase over the years including the upcoming 700-hectrares Tengah estate. Did you know Sheng Siong has a program called The Sheng Siong Show that airs on Channel 8?
Nam Lee Pressed Metal Industries – 32.18% CAGR
With a market capitalization of S$96.5 million, Nam Lee Pressed Metal Industries designs, fabricates, supplies, and installs steel and aluminum products in Singapore and Malaysia. It operates through four segments: Aluminum, Mild Steel, Stainless Steel, and Others. The company’s steel and aluminum products comprise gates, door frames, staircase nosing and hand-railings, laundry racks, letter boxes, sliding windows and doors, and curtain walls for flats and houses. It also offers aluminum NT mainframes for container refrigeration units, grilles, drying racks, hoppers, and other metal and steel-based products. Notably, Nam Lee has a multi-year contract with Carrier Refrigeration for aluminum frames used for refrigerated containers. Did you know Nam Lee provided architectural metal works for The Pinnacle @ Duxton project in Singapore?
Nordic Group – 61.88% CAGR
With a market capitalization of S$88.5 million, Nordic Group provides solutions in areas of systems integration; maintenance, repair, overhaul, and trading; precision engineering; scaffolding; and insulation in China, Singapore, and internationally. The company’s System Integration division turns systems into solutions by providing flow, automation, and navigation solutions that include valve remote control systems, tank gauging systems, integrated monitoring, and alarm control systems. Executive Chairman Chang Yeh Hong owns 53.5% of Nordic, follow by Executive Director Lin Choon Hin who owns 11.2%. While the oil and gas industry in the doldrums, did you know Nordic’s services are still necessary and continue to earn a net profit margin of 14% as of 2Q FY2016? They are part of maintenance expenses spent by major petrochemical companies such as Exxon Mobil and Chevron.
Health Management International – 47.80% CAGR
Health Management International (HMI) provides healthcare services in Singapore, Malaysia, Indonesia, and Cambodia. The company owns and operates Regency Specialist Hospital, a 218-bed tertiary care hospital in Johor, Malaysia; and Mahkota Medical Centre, a 288-bed tertiary care hospital in Malacca, Malaysia. Further, the company owns and operates the HMI Institute of Health Sciences in Singapore that provides healthcare training and education services. HMI serves more than 400,000 patients a year and over 200 practicing consultants. Did you know HMI hospitals are amongst the first few hospitals approved by the Singapore Ministry of Health for Singapore residents to use their Medisave for hospitalization and day surgeries overseas?
Are these businesses hard to understand? Can we take advantage of our daily interaction with these companies when we spot a financial crisis and make MASSIVE profits during a market recovery – one that way exceeds the performance of FTSE STI Index? The answer is YES!
To put things in better perspective, I’ve calculated the difference between investing $10,000 in a STI that compounds at 9.37% versus an active approach of investing that compounds at 20%. The results are shocking and even motivate you to start learning about investing RIGHT away!
At the end of 20 years, the difference is $323,400 or 6.4 times! This sum could mean everything between needing to work and CHOOSING to work.
Here’s a chance to take a footstep into learning more about investing from us.
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*disclaimer: This article and its contents contain opinions and ideas of its Trainers. It is not a recommendation to purchase or sell securities of any of the companies or investments herein discussed. The article is written with the understanding that its author is not engaged in rendering legal, accounting, investment or other professional services. If the participant requires expert financial or other assistance or legal advice, a Competent Professional should be consulted. The author will not guarantee the accuracy of the information contained in the article.