Chanced upon an article on 26th Jul 2019 titled SPH’s shares drop to a 25-year low, becomes worst performer on MSCI Singapore. Went to bring up the price chart and this is what was found.
The only historical price data I've was from 1998, anything prior to that I do not have. Maybe SPH wasn't listed on SGX prior to that. Nevertheless, since 1998 till now that is 21 years and indeed the price of $2.22 -- intra-day on 26th Jul 2019 was even lower than the low in 2009 of $2.40 due to the global financial crisis. All times low since 1998 can't be FAKE news !
The above chart did not have any price adjustment for dividend payout during those periods and if cater for dividend, the picture looks slightly different.
As shown above, after price adjustment for dividend, $2.22 still higher than the low of $1.29 in 2009, the low of $1.24 in 2001 and the low of $1.16 in 1998 in which those 3 were Singapore economy recession year. Is that a good news ? On the surface might be but if dig deep into the technical aspect, afraid it is not.
I blogged SPH -- A No No For Me ............. on 21st Sep 2017 after a friend seek me for advice on her investment in SPH after the price plunge. I did an Elliott wave analysis on that then and reproduced as follow the chart then. My advice to my friend then was to cut loss in case you wonder.
Looking at that and what it is of today (above chart), it can conclude that the wave count back in 2017 was correct. The A and B wave have formed and now the C wave. So is that a good sign since C wave is the bottom of a Elliott wave count ? Afraid the answer is not a YES. What was being analysed was just a stretch from 2009. Given the duration since 2009 till now (10 years period), the wave 1,2,3,4,5,A,B,C should be a Elliott wave Cycle degree. If this is elevated to the SuperCycle degree, that stretch could either be a SuperCycle wave 1 and 2 or the SuperCycle wave 5 and A-B-C.
If now is SuperCycle wave 2 then this is where the good news might come in as downside is limited and it shall not fall below $1.29. However, if it is the case of SuperCycle correction wave after wave 5 then good luck much more downside will follow. What is seen so far for this case is just the sub-level of the SuperCycle wave A or W (if it turns out to be a combination structure). The B/X and C/Y will follow next and it will definitely break below the low of $1.29 in 2009.
So which is which ? Afraid despite Elliott wave analysis could give very accurate technical analysis, it is still after all analysing the possibilities for the price movement. What dictates the price movement going forward is none other than fundamental. Fundamental of the global and nation economy and fundamental of the company. While SPH management team can't do anything due to global and nation fundamental, they have absolutely the control over the company fundamental.
In the blog in 2017 4 key areas were being pinpointed which I personally felt will affect the company fundamental going forward (Management Team, Monopoly Business, Quality of Business and Diversifying in Business). Till today, I've seen nothing much have changed in the aspect of fundamental relating to those 4 areas. With the onus of another global crisis coming and Singapore economy nearing the step of recession, it is very hard to convince what SPH price movement now is in SuperCycle degree wave 2. Remember in times of another economy crisis, nothing will be spared !
Some might disagree with my analysis probably bringing out those financial ratios, metrics to argue. For sure SPH management will do that if question them about the fundamental of the company. Let put it this way.
Running a company is growing its business to produce the financial ratios and metrics and not using the financial ratios and metrics to dictate how the business should be grown. Investing in a stock is not just fixation on the financial ratios and metrics alone.
One last thing, GOOD LUCK to long-term investors of SPH, hopefully the dividends collected all these years is able to get back your initial vested capital from this "WHITE ELEPHANT".
