Gordon Growth Model – A great method to value dividend stocks

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Gordon Growth Model

Introduction The Gordon Growth Model, commonly known as GGM, is a simplified form of the dividend discount model that is used for estimating the intrinsic value of dividend-paying stocks. The GGM is a straight-forward but effective model that calculates the intrinsic value of a stock based on the present value of its future dividends, which … Read more

Why Dividends are Important to Investors

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Featured Image - Why Dividends are Important to Investors

As a retail investor, the importance of dividends cannot be overstated. While stocks that don’t pay dividends might have their merits, prioritizing dividend investments can provide you with many benefits that can contribute to long-term wealth creation. In this article, we’ll explore why dividends are important for retail investors and how they can enhance your … Read more

Sasseur REIT (CRPU.SI) – Estimating the Intrinsic Value, Return on Investment and Margin of Safety using the Dividend Discount Model

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Sasseur Reit intrinsic value

Summary

This article looks at the valuation of Sasseur Reit shares listed on the Singapore Exchange (Ticker: CRPU.SI). The Dividend Discount Model is used to estimate the share’s Intrinsic Value, Expected Return on Investment, and its Margin of Safety.

Introduction to Sasseur Reit

Sasseur REIT is a Singapore Exchange Mainboard-listed real estate investment trust (REIT) (SGX). It is Asia’s first publicly traded outlet mall REIT, with four outlets in China. Sponsored by Sasseur Cayman Holding Limited (Sponsor), a leading outlet operator with 16 outlets in operation as of 31 December 2022 – four of which are in Sasseur REIT’s portfolio.

Sasseur REIT is well positioned to benefit from China’s rapidly expanding outlet sector, which is being driven by rising consumption from the country’s rapidly expanding middle class. As of December 31, 2022, Sasseur REIT’s portfolio included four locations in Chongqing, Bishan, Hefei, and Kunming, with a total asset value of RMB 8.495 billion.

Dividend Discount Model

The dividend discount model is one of several methods for determining stock value. The procedure is similar to the discounted cash flow model, except that dividends are substituted for free cash flow as the cash flowing to the investor. One advantage of this method is that dividend information is easily accessible from the company’s financial reports. It is also my preferred method for valuing dividend-paying stocks. Dividends are tangible income for the investor and represent the return on investment. Dividend cash allows the investor to reinvest the proceeds in the same stock or in other, more appealing stocks, achieving the all-important compounding effect.

In the following discussion, the Dividend Discount Model is used to determine the Intrinsic Value, Expected Return on Investment, and Margin of Safety of Sasseur Reit (CRPU.SI) shares listed on the Singapore Exchange.

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Estimating the Intrinsic Value, Return on Investment and Margin of Safety of Chongqing Rural Commercial Bank using the Dividend Discount Model

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Chongqing Rural Commercial Bank (3618.HK)

Summary

This article looks at the valuation of Chongqing Rural Commercial Bank shares listed on the Stock Exchange of Hong Kong (Ticker: 03618.HK). The Dividend Discount Model is used to estimate the share’s Intrinsic Value, Expected Return on Investment, and its Margin of Safety.

Introduction to Chongqing Rural Commercial Bank

Chongqing Rural Commercial Bank Co., Ltd., formerly Chongqing Rural Credit Cooperative, was founded in 1951 and has a 70-year history. Chongqing was selected as one of the first batch of pilot provinces and cities for the nationwide rural credit cooperative reform in 2003.

The rural commercial bank was established in 2008 as a limited liability joint stock company to acquire all assets and liabilities of 38 County (District) Rural Credit Cooperative Unions.

The bank’s H-share was successfully listed on the Main Board of the Hong Kong Stock Exchange in 2010, making it the first listed rural commercial bank in China as well as the first listed bank in western China.

The bank successfully listed on the main board of the Shanghai Stock Exchange in 2019, becoming China’s first rural commercial bank with A+H dual listing and the first bank with A+H dual listing in western China.

The main businesses of the bank are corporate finance, inclusive finance, retail finance, and financial markets:

  • The corporate finance business primarily offers a wide range of corporate finance products and services to businesses and public institutions, government agencies, and financial institutions, such as corporate loans and deposits, trade financing loans, bills, and guarantees.
  • The primary business of Inclusive Finance is to provide financial services to new agricultural business entities such as small and micro enterprises, farmers, and farmers’ professional cooperatives.
  • The retail finance business consists of personal loan and deposit business, bank card business, and intermediary business.
  • The financial market business consists primarily of capital operation, investment banking, and asset custody.

Dividend Discount Model

The Dividend Discount Model is one of several methods for determining stock value. The procedure is similar to the Discounted Cash Flow model, except that dividends are substituted for free cash flow as the cash flowing to the investor. One advantage of this method is that dividend information is easily accessible from the company’s financial reports. It is also my preferred method for valuing dividend-paying stocks. Dividends are tangible income for the investor and represent the return of investment and return on investment. Dividend cash allows the investor to reinvest the proceeds in the same stock or in other more appealing stocks, achieving the all-important compounding effect.

This article describes the use of the Dividend Discount Model to determine the Intrinsic Value, Expected Return on Investment, and Margin of Safety of Chongqing Rural Commercial Bank (03618.HK) shares listed on the Stock Exchange of Hong Kong.

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What is the expected rate of return of Hang Seng Index? (as of 3rd October 2022)

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What is the expected rate of return of Hang Seng Index?

The Hang Seng Index (HSI) closed at 17079.51 points on October 3rd, down 34.9% from its 52-week high of 26,234.94 points. The index has clearly undergone a significant correction and is now in bear market territory. This short post attempts to estimate the expected rate of return of the Hang Seng Index with help from … Read more

Bank of Japan’s yield curve control policy drives the depreciation of the yen

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Bank of Japan's yield curve control policy drives the depreciation of the yen

The Bank of Japan’s yield curve control policy has had a devastating effect on the value of the Japanese yen, driving the currency to a 20-year low against the US dollar.

In its ongoing battle against free-market forces, the Bank of Japan has vowed to keep the money printing press running in order to support Japanese Government Bond (JGB) prices and maintain the 10-year JGB yield at a level not exceeding 0.25%. The relentless buying of JGB with freshly minted yen is one of the main causes of the precipitous fall of the currency.

The Japanese Yen has fallen by more than 15% against a basket of major currencies as shown in this JXY chart.
The Japanese Yen has fallen by more than 15% against a basket of major currencies as shown in this JXY chart.

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Broker Recommendations and Target Prices for China Construction Bank (0939.HK) – November 2021

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Broker Recommendations and Target Prices for China Construction Bank (0939.HK) - November 2021

Introduction China Construction Bank (CCB) is one of the big four State-owned Banks and its H-shares, trading on the Hong Kong Stock Exchange, currently offer some of the best values in the market. An earlier article on CCB provided an estimate of the Intrinsic Value, Margin of Safety and Return on Investment for the H-shares … Read more

Broker Recommendations and Target Prices for the Industrial and Commercial Bank of China (1398.HK) – November 2021

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Broker Recommendations and Target Prices for the Industrial and Commercial Bank of China (1398.HK) - November 2021

Introduction The Industrial and Commercial Bank of China (ICBC) is one of the mainland China Bank stocks which I keep in my Dividend Income Portfolio. An earlier article on ICBC provided an estimate of the Intrinsic Value, Margin of Safety and Return on Investment for the H-shares based on the Dividend Discount Model. This article … Read more

Broker Recommendations and Target Prices for Alibaba (9988.HK) – November 2021

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Broker Recommendations and Target Prices for Alibaba (9988.HK) - November 2021

Introduction Alibaba is one of the few growth stocks in my portfolio, and I have previously written an article on the stock which provided an estimate of the Intrinsic Value, Margin of Safety and Return on Investment based on the Discounted Earning Model. The table below summarizes the latest Broker Recommendations and Target Prices for … Read more