Market views 09 January 2012

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Announcements

Happy New Year ☺

This year, I will be planning a slew of courses to help everyone better understand the market and also to introduce everyone to topics that no one else covers in courses outside, either that, or they charge lots of money for it

We will start with "Mindset Tuning – the Optimal Attitude to Stock Market Investments" coming in the first week of Feb
Look out for more details coming soon

Japan is closed for "Coming of Age Day"

Juice

Management Changes
Management changes announced last Fri may catch the eye; SMRT (S53) named Tan Ek Kia interim CEO after Saw Phaik Hwa resigned following public outcry over recent service disruptions, while Cosco (F83) named Ma Ze Hua as chairman to replace retiring Liu Guo Yuan.
Comment: My MRT train was delayed again this morning. Let's hope the on-coming fellow does a better job. However, I think it is unlikely much better unless they change the government-linked company's culture inside out, change the people and the profile of the people they hire. But that will be disastrous for those who work for SMRT. This is not a problem that can be solved in the short term or just by changing CEO. The engineers still need time to solve the disruptions, and the company will need time to change their train system maintenance policy and also audit methods
As for Cosco, granted that the out-going Chairman is old. This change should not be a red-flag to signal that something is very wrong

Noteworthy Analyst Calls
Biosensors (B20): Nomura reiterate Buy, increase TP to $1.90 from $1.70. House tweak forecasts to account for the conversion of the US$120m notes by Weigao and price pressure in Japan, and raise TP to incorporate the potential of the group entering the US market.
Comment: Biosensors is attending JPM conference this week. This may bring more attention to the stock

Genting SP (G13): UBS downgrades to Neutral from Buy, TP $1.65 from $2.08. House note that profit growth may remain subdued in 2012. Q410, RWS’ VIP vol have been on a declining trend
Comment: Despite being everyone's favourite stock, I urge everyone to take note of the reality of the situation with Genting

SG Developers: Residential project Archipelago’s preview just prior to the announcement of the ABSD has seen 12% of units sold with options lapsed. DMG maintains Neutral on developers and SELL on City Dev C09)
Comment: Take note of the trend of lapsing options and revoking of purchase agreements

Rig Builders: JP Morgan has sector Outlook. House stays O/W on robust rig demand. Slight preference for KepCorp (BN4) over SembMar (S51) on the back of: KepCorp being more resilient (defensive) in an uncertain macro environment
Comment: Rig-building will continue to be profitable if oil price stays above US$80/barrel. We take note of the preference here

CPO: Daiwa notes that weather trade could go on for a while. CPO prices have benefitted from dry weather conditions in South America.
Potential soybean crop losses in South America are reversible if rain comes soon, which then might curb CPO price gains near term.
Comment: Preference is still for Goldenagri (E5H) as it has the largest plantations in the world. It is also the largest plantation (pure play) stock, meaning the main business is growing palm and not doing other business like its other competitors listed here


Sources: Bloomberg, Reuters, WSJ, The Business Times, Analyst Reports, Company Announcements