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Screening for Insider Stocks: Singapore, Thailand, India, Indonesia

Writer's picture: Tian Khean NgTian Khean Ng

Introduction

In this post, we try our hand at screening for Insider stocks- i.e. stocks where some investors (whether existing shareholders or non-shareholders) have access to confidential information that may impact the price of a stock (positively or negatively) but is not publicly available. Here we explore the case of positive insider news. Thus, insiders will want to accumulate the stock stealthily.   

Screening Criteria

# Stocks are traded in the local currency, but for screening I have normalized all currency items to USD to make inter-comparison possible.

The screening criteria reflects some of the characteristics of Insider stocks viz (1) small market capitalization because insiders would not have the capability to have impact on big market capitalization (2) Small float shares/outstanding shares % that makes it  easier to control the stock price  (3) 6-month price change greater than normal (4) Trading volume positive each day though not high.

Results of screen. The full list is in the xlsx to be downloaded. I have sorted the stocks ranked by least % of float shares/outstanding and selected the 4 below for discussion: A brief description below is followed by a Table of their basic fundamentals. # All numbers are for latest 12 months. Download the full list of stocks here:



1.     Thailand SET: The Siam Cement Public Company Limited, together with its subsidiaries, operates in the cement and building materials, chemicals, and packaging businesses in Thailand and internationally. The company operates through Cement-Building Materials Business, Chemicals Business, Packaging Business, and Others segments.

2.     India BSE: Lloyds Metals and Energy Limited manufactures and sells sponge iron products in India. The company operates in three segments, Sponge Iron, Power, and Mining. It also offers direct sponge iron; and by-products, such as char, fly ash, ESP dust, bed materials, and iron ore fines. The company is involved in the generation and distribution of power. Lloyds Metals and Energy Limited was incorporated in 1977 and is based in Mumbai, India.

3.     Indonesia IDXPT Saratoga Investama Sedaya Tbk is an Indonesia-based investment company. The Company is focused on investing in the growing energy sector, precious metals, technology infrastructure, healthcare products and services, specialty logistics and distribution, and the digital space.

4.     Singapore SGX: Fraser and Neave, Limited is primarily engaged in the manufacturing and distribution of food and beverage, in Singapore, Malaysia, Thailand, Vietnam, and internationally. The company operates through Beverages, Dairies, Printing and Publishing, and Others segments. Fraser and Neave, Limited was founded in 1883 and is headquartered in Singapore. The company is a subsidiary of TCC Assets Limited a Thailand investment holding and real estate company.

 

 

Price/Earnings

 

Price/Book

Net Debt/Total Capital

EV/EBITDA

5-yr Revenue CAGR

Siam City Cement

34.4

O.6

50.2%

25.6

0.9%

Lloyds Metals and Energy

40

10.3

-1.8%

28.5

68.7%

Saratoga Investama Sedaya

4.9

0.5

-183%

-3.9

Not Meaningful

Fraser & Neave Limited

12.9

0.7

18%

2.1

2.6%

Definitions

Price/Earnings: Indicates the multiple of earnings that stock investors are willing to pay for one share of the firm.

Price/Book: Compares a firm's market value of equity to the amount of common equity listed on the balance sheet.

Net Debt/Total Capital: A ratio that measures the level of the net debt relative to the market value of total capital. Net debt is the sum of all long-term debt fields minus cash and short-term investments.

EV/EBITDA: Measures the dollars in Enterprise Value for each dollar of EBITDA over the last twelve months. A "good" EV/EBITDA ratio generally falls below 10, indicating a potentially undervalued company, but the ideal number varies significantly depending on the industry and should be compared to similar companies within that sector

5-yr Revenue CAGR: Revenue CAGR (5y) measures the five-year compound annual growth rate in Revenue.

Rationale for selection of Fraser & Neave as the only sensible stock to buy.

We follow the wise adage of “If it’s too good to be true, it probably is too good to be true.

·       Price/Earnings of the other three either too high (34.4, 40) or too low (4.9)

·       Net Debt/Total Capital is either too high (50.2%) or negative (-1.8%, -183%). Negative Net Debt/Total Capital might mean the company has very little or no operating business.

·       A good EV/EBITDA is usually around 10 but 25.6 or 28.5 or negative (-3.9)

·       50-year CAGR for the other three don’t look right when considering their other 4 fundamentals.

·       Fraser & Neave is former Blue Chip and constituent of Singapore’s Straits Times Index. You can expect the numbers on well-regulated Singapore Exchange to be trustworthy.


Our Models 1-20 days ahead Forecast Trend for the 4 companies.


Support and Resistance (in the local trading currency)

 

Support

Resistance

Siam City Cement

163.85

169.50

Lloyds Metals & Energy

1202.23

1266.25

Fraser & Neave

1.33

1.40

Saratoga Investama Sedaya

2237.84

2454.75

Lloyds Metals & Energy and Siam City Cement Forecast Trend shows unpredictability or perhaps even manipulation. Saratoga Investama Sedaya shows same pattern as Fraser & Neave but take a look at Saratoga in the Table below. All the results of our arsenal of models have gone awry. We use MAD (Mean Average deviation) as our metric. Usually, MAD is below 1 Here all MAD are above 10! So the Forecast Trend of Saratoga Investama Sedaya is not reliable.




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