Case Study 1: Gap Down - Design Studio publish a profit warning during Chinese New Year eve after the market close. Immediately on 19 Feb 2018, the first trading day after CNY, it share price was Gap Down.
Design Studio Group Ltd. Announces the Earnings Guidance
for the Fourth Quarter Ended December 31, 2017
Source: Singapore Exchange
Type: Corporate Guidance - New/Confirmed
From: 15/Feb/2018
Design Studio Group Ltd. announced the earnings guidance for the fourth quarter ended December 31, 2017. For the period, the company is expected to report a significant loss which will adversely impact the fiscal 2017 performance.
Case Study 2: Up Up and Away
DBS report its result during the US market plunge due to the Feb interest rate hike. When the whole market plunge, DBS price also drop but regains its uptrend soon due to its good result and dividends.
DBS reported record net profit of $4.390 billion in FY17, up 4% from $4.238 billion in FY16. Its 4Q17 net profit was up 33% YoY to $1.218 billion. DBS Group Holdings Ltd. proposed the final one-tier tax exempt dividend of SGD 0.60 per ordinary share for the year ended 31 December 2017. One-tier tax exempt special dividend of SGD 0.50 per share. The dividend will be will be paid on 15 May 2018, if approved by shareholders at the 2018 AGM. Record date will be 7 May 2018.
Read here: STI 2018 Feb 06 Drop 76.55 points Due To US Stock Plunge
Case Study 3: Good Fundamental but Poor Future Outlook
Stock market are forward looking and it move about 6 months ahead of the economy. Beside looking at its fundamental, as an investor, you need to look at its competitors. When you read news that the government is opening up opportunities to new entrants, then you should stay away from those companies. Ever since Uber and Grab enter into Singapore to compete with ComfortDelgro Taxi business, its share price have been going downwards as this was their most profitable sector. Gone are the days where ComfortDelgro can increase its Taxi price of passengers and rental of drivers whenever they like.
How about its rail and bus business?
Their rail and bus businesses which form 70% of their business are still profitable. However, competitions are intensive due to new players and they have to keep tendering for the businesses as they are just contractor to the government. Furthermore, they have no pricing power as public transport prices are now determine by the government.
Conclusion
Yes, fundamental good companies will fall together during a bear market. However, their falls in stock price means that you can accumulate cheap during that fearful period and they will SOAR once the market turn bullish again. Bear, Bull, Bear, Bull, Up, Down, Up, Down and the stock market cycle will keep repeating itself. Remember fundamental good companies are 'VALUE FOR MONEY' during bearish time and you must be bold enough to be prepared to buy them during those fearful time.
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