Investment tips from Overture Point， a Singapore-based investment firm

Image from Overture Point

Overture Point is an investment company based in Singapore made earlier this year. Instead of investing in a company for short-term profits, they take the "time-consuming path," which is where they look at a company's long run. I've had a conversation with their Chief Investor Officer, Dee Senaratnes, on how they look at companies from an investment point of view, so here I am sharing tips from what I learned!

1) As investors, we have to look at who the company's supplier is and the bargaining power of the supplier. Whether it is in contracts, cost, or royalties. In most cases, the company would pay their suppliers in royalties. Royalties is an investment or business term where the investor or owner of an asset in a company receives a certain percentage of revenue made. People use royalties whenever the investor or supplier owns a patent, trademark, or licensing agreement (usually widespread in companies like Spotify).

2) Investment Consensus is an investment term where a collective group of analysts create a collective prediction for the company's future earnings, revenue, or other financial aspects. So another investment term that is commonly used together with investment consensus is called "beat," "met," or "missed" after seeing the actual results of how the company did. The term "beat" is when their expected results are exceeded primarily in net income. The term "missed" is used when investors see that expected results are unmet and the company's performance decreases. The only term left is "met," which anybody with common sense could understand when expected results are met.

Revaluation:

3) Now, with how well the company performed for the whole year, we look at the P/E ratio, which is Market Capitalization (price of company)/net income. So, the more net income increases, the more the integer value of the P/E ratio will decrease, and this is good for investors (assuming that the stock price/market capitalization doesn't change in number)! Vice versa, the situation wouldn't be suitable for investors. If you remember from the last tip, this situation is a miss. With that in mind, whether the performance was beat or met, this adjusts the company's expectations and sets them even higher. More investors are looking to invest because they like or dislike these numbers. So, their adjusted P/E ratio would decrease or increase. Of course, if P/E was "met," nothing would be adjusted, and nothing would change.

More tips incoming from Overture Point in the future ! Otherwise stay tuned for more information about the Asian economy and business world.