Opportunities
China Cosco (1919.HK) expects first-half loss to narrow on asset sales.
Comments: I see this as an indicator that the shipping/ship-building industry bottoming for the longer run. China Cosco is the parent of Cosco (F83, $0.755) listed in Singapore. Looking at Yangzijiang (BS6,$0.930) on dips for a longer-term position.
Mapletree Greater China Commercial Trust (RW0U, $0.945) posted available distribution per unit of 1.73c beating its forecast of 1.6c by 8.3%.
Comments: This is for keeps if anyone is interested.
Yoma (Z59, $0.865) disappoints as Q1 profit tumbles 81%.
Comments: Chart shows a downtrend at the moment. $0.005 dividend that XD on 01 Aug may not be much of a support.
Commentary
As we have suspected yesterday, BNY’s report today states that US stocks are net bought by US investors and net sold by foreign investors. It mentions “home bias”. “Home bias” is strongest during periods of risk aversion and heightened uncertainty.
Reiterating here that, Japan and South Korea remain the stronger net bough stock markets in the region supported by currency flows. SGD reversal to being net sold present risk that Singapore stocks (especially blue-chips) are at risk of correcting in the coming weeks.
Wednesday, 31 July 2013
Tuesday, 30 July 2013
UtdEnvirotech proposes purchare of Memstar unit, Blumont write-downs, my hunch on the market
Opportunities
UtdEnvirotech (U19, $1.025) proposes $293.4m purchase of Memstar (5MS, $0.099) unit. It will pay 25% in cash, 75% through issue of some 200m new UtdEnvirotech shares.
Comments: Not positive for both companies in the short-term. Textbook corporate finance tells us that when a company pays 75% of a takeover in stock, it is not a confident move. UtdEnvirotech shareholders can expect to be diluted. Memstar shareholders may not gain much from this either. The little cash paid by UtdEnvirotech is not wonderful. Sentiment-wise, market may sell off after a churn in the past few days. It has already been a weak morning for these 2 counters.
Blumont (A33, $1.415) plunged into the red to the tune of $22.4m during its fiscal Q2 as the company wrote down financial assets. Net earnings for the April-June 2013 period were down from $11.9m during year-ago quarter.
Comments: Not positive on the share price for the moment despite the short jump in price at the opening.
Commentary
A statistic rocks yesterday’s hypothesis on USD weakness may result in weakness in US stocks. Last night, flow data from BNY showed that US stock inflow was at +2.80. 95% of the time, this statistic should be between -1.96 to +1.96 (those who remember your high school statistics will appreciate this much better). US Bond inflow was +2.07 while USD outflow was -2.96. A stark divergence. We can rationalise the bond inflow despite the USD outflow but the stock inflow just shows that support from US investors is exceptionally strong (US investors do not need to change for USD to buy US stocks so their action has no impact on USD flow).
This throws yesterday’s fear that negative sentiment in US may negatively affect Asian markets for now. Contrary to popular belief, I would like to comment that Asian markets appear well supported at the moment. My forecast is this support can sustain throughout this week but it is uncertain if it will carry throughout August. Call it a hunch. I may be wrong.
UtdEnvirotech (U19, $1.025) proposes $293.4m purchase of Memstar (5MS, $0.099) unit. It will pay 25% in cash, 75% through issue of some 200m new UtdEnvirotech shares.
Comments: Not positive for both companies in the short-term. Textbook corporate finance tells us that when a company pays 75% of a takeover in stock, it is not a confident move. UtdEnvirotech shareholders can expect to be diluted. Memstar shareholders may not gain much from this either. The little cash paid by UtdEnvirotech is not wonderful. Sentiment-wise, market may sell off after a churn in the past few days. It has already been a weak morning for these 2 counters.
Blumont (A33, $1.415) plunged into the red to the tune of $22.4m during its fiscal Q2 as the company wrote down financial assets. Net earnings for the April-June 2013 period were down from $11.9m during year-ago quarter.
Comments: Not positive on the share price for the moment despite the short jump in price at the opening.
Commentary
A statistic rocks yesterday’s hypothesis on USD weakness may result in weakness in US stocks. Last night, flow data from BNY showed that US stock inflow was at +2.80. 95% of the time, this statistic should be between -1.96 to +1.96 (those who remember your high school statistics will appreciate this much better). US Bond inflow was +2.07 while USD outflow was -2.96. A stark divergence. We can rationalise the bond inflow despite the USD outflow but the stock inflow just shows that support from US investors is exceptionally strong (US investors do not need to change for USD to buy US stocks so their action has no impact on USD flow).
This throws yesterday’s fear that negative sentiment in US may negatively affect Asian markets for now. Contrary to popular belief, I would like to comment that Asian markets appear well supported at the moment. My forecast is this support can sustain throughout this week but it is uncertain if it will carry throughout August. Call it a hunch. I may be wrong.
Monday, 29 July 2013
Positive expectations for SMM results by analysts, Swiber wins contracts, Innopac profits tumbles, paring of USD ahead of central bank meetings
Opportunities
From the Analysts’ Desk: Looking for SembMar (S51, $4.48) to follow Keppel’s (BN4, $10.55) lead with strong O&M margins, driving 12% YoY profit growth. MBKE will be looking for confirmation of pipeline analysis, which shows strong Semisub demand for 2H13.
Comments: Chart on SembMar looks good for now. SembMar results on 01 Aug (this Thursday).
Swiber (AK3, $ 0.725) won contracts worth about $330m and about $105m under its joint venture company. The contracts would start immediately and are expected to be completed by 2015.
Comments: Price gapped up this morning but it can present an attractive opportunity on pullback. Look at how its subsidiary Kreuz (5RK $0.775) has ran ahead in the past weeks.
Innopac (I26, $0.138) Q2 profit tumbles 95%.
Comments: Not positive despite last Friday’s churn-up.
Commentary
Negative sentiment from US may spread to Asia. Both technical charts and flow information point to an increasing likelihood of a general pullback.
Flow data shows position paring on USD ahead of central bank meetings. This may take its toll on US stock markets. Reason being that when outflow happens on USD this time, the only other asset to be affected will be stocks because inflow was recently just observed in US Treasuries and fixed-income. Bonds shall have a tendency to be held as the buying decision was made knowing there may be oncoming USD weakness. Stock price on the other hand, are still high. Given the lack on inflow into the markets in the past weeks, profit-taking may take place on older positions.
SPECIAL
Our analysts' Contribution on WE Holdings (5RJ, $0.096) XR Theoretical Price
WE Holdings: Using Friday's close of $0.096, we estimate the ex-rights price
= [ 0.096 + 0.015 + 0.03 ] / 3
= $0.047
This involves a renounceable 1-for-1 rights issue @ $0.015 plus one free warrant with exercise price @ $0.03.
The warrants may be exercised from the date of issue and have a life span of 2 yrs.
The corporate action is a complex one that involves derivatives, hence we can only give a broad estimate of the ex-rights price.
Since the rights and warrants are deep in the money, we assume full acceptance of the rights and expected full conversion of the warrants.
v----- Voice your views below -----v
From the Analysts’ Desk: Looking for SembMar (S51, $4.48) to follow Keppel’s (BN4, $10.55) lead with strong O&M margins, driving 12% YoY profit growth. MBKE will be looking for confirmation of pipeline analysis, which shows strong Semisub demand for 2H13.
Comments: Chart on SembMar looks good for now. SembMar results on 01 Aug (this Thursday).
Swiber (AK3, $ 0.725) won contracts worth about $330m and about $105m under its joint venture company. The contracts would start immediately and are expected to be completed by 2015.
Comments: Price gapped up this morning but it can present an attractive opportunity on pullback. Look at how its subsidiary Kreuz (5RK $0.775) has ran ahead in the past weeks.
Innopac (I26, $0.138) Q2 profit tumbles 95%.
Comments: Not positive despite last Friday’s churn-up.
Commentary
Negative sentiment from US may spread to Asia. Both technical charts and flow information point to an increasing likelihood of a general pullback.
Flow data shows position paring on USD ahead of central bank meetings. This may take its toll on US stock markets. Reason being that when outflow happens on USD this time, the only other asset to be affected will be stocks because inflow was recently just observed in US Treasuries and fixed-income. Bonds shall have a tendency to be held as the buying decision was made knowing there may be oncoming USD weakness. Stock price on the other hand, are still high. Given the lack on inflow into the markets in the past weeks, profit-taking may take place on older positions.
SPECIAL
Our analysts' Contribution on WE Holdings (5RJ, $0.096) XR Theoretical Price
WE Holdings: Using Friday's close of $0.096, we estimate the ex-rights price
= [ 0.096 + 0.015 + 0.03 ] / 3
= $0.047
This involves a renounceable 1-for-1 rights issue @ $0.015 plus one free warrant with exercise price @ $0.03.
The warrants may be exercised from the date of issue and have a life span of 2 yrs.
The corporate action is a complex one that involves derivatives, hence we can only give a broad estimate of the ex-rights price.
Since the rights and warrants are deep in the money, we assume full acceptance of the rights and expected full conversion of the warrants.
v----- Voice your views below -----v
Friday, 26 July 2013
Special: A View on Singapore Residential Property Market
A View on Singapore Residential Property Market
Attended a talk by Jones Lang Lasalle last night. One of their Singapore Sales Directors gave an interesting view of the Singapore property market even though he was there to talk about Iskandar.
In short, he is not bullish on the residential property prices over the next 6 months. I have previously mentioned to, many of you that I am not bullish on property prices too.
The speaker mentioned that after every of the previous 6 rounds of cooling, agents can "spin it" by telling buyers that they have to “buy now else the next round of cooling might prevent people from buying”. This has brought buying decisions forward and caused the data pattern that we have observed. Unfortunately, after the latest round of cooling measures, such a story cannot be spun for property investors and speculators. Forward buying decisions means that future demand may now be uncertain.
Interesting…
On the other hand, my view comes from a heuristic (rule of thumb) that the physical property market price pattern lags property develop stock price pattern by 6 – 9 months. We have seen how property developer stocks have performed year-to-date (see Capitaland C31, Kepland K17 and CityDev C09).
Also, bank and developer tie-ups have facilitated affordability by the mass market and recent active prohibition of such tie-ups may reduce affordability and may therefore cause sales volumes and prices to decline.
CityDev and KepLand have a higher exposure to residential property than their peers.
v----- Voice your views in the comments! -----v
Attended a talk by Jones Lang Lasalle last night. One of their Singapore Sales Directors gave an interesting view of the Singapore property market even though he was there to talk about Iskandar.
In short, he is not bullish on the residential property prices over the next 6 months. I have previously mentioned to, many of you that I am not bullish on property prices too.
The speaker mentioned that after every of the previous 6 rounds of cooling, agents can "spin it" by telling buyers that they have to “buy now else the next round of cooling might prevent people from buying”. This has brought buying decisions forward and caused the data pattern that we have observed. Unfortunately, after the latest round of cooling measures, such a story cannot be spun for property investors and speculators. Forward buying decisions means that future demand may now be uncertain.
Interesting…
On the other hand, my view comes from a heuristic (rule of thumb) that the physical property market price pattern lags property develop stock price pattern by 6 – 9 months. We have seen how property developer stocks have performed year-to-date (see Capitaland C31, Kepland K17 and CityDev C09).
Also, bank and developer tie-ups have facilitated affordability by the mass market and recent active prohibition of such tie-ups may reduce affordability and may therefore cause sales volumes and prices to decline.
CityDev and KepLand have a higher exposure to residential property than their peers.
v----- Voice your views in the comments! -----v
SIA results, China orders industries to cut capacity, MoneyMax IPO
Opportunities
SIA (C6L, $10.25) results below estimates as cited by Deutsche Bank, sets target at $9.40. Nomura states it is in-line with their estimates, sets target at $11.10.
Comments: Chart suggests that we can try to go long on the dips. Keep in mind the 17c dividend that XD on 30 Jul.
China ordered more than 1,400 companies in 19 industries to cut excess production capacity this year, part of efforts to shift toward slower, more-sustainable economic growth.
Steelmaking, ferroalloys, electrolytic aluminum, copper smelting, cement production and papermaking are among areas affected, the Ministry of Industry and Information Technology said in a statement posted on its website yesterday. Excess capacity must be idled by September and eliminated by year-end, it said.
Comments: Possible positive effect on stock prices for companies like MIDAS (5EN, $0.485) again. However, consider better entry prices.
MoneyMax Financial Services launched yesterday its initial public offering (IPO) of 53.8m new shares at 30c/share for a Catalist listing. United Overseas Bank is the sponsor and underwriter of the IPO. The offer closes at noon next Wednesday and trading is expected to begin on Aug 2.
Comments: Suggest everyone go for this one. I have covered Pawn-Broking industry before if you remember my write-up on Maxi-Cash (5UF, $0.455). Pawn shop licences are not being issued anymore therefore there is almost unlimited barrier to entry. Pawn shops can be profitable in the longer run.
Commentary
Flow data shows that inflow into stocks across markets is relatively well supported. With the exceptions of South Korea, Taiwan and Japan, flows into Asian markets are not extra-ordinary. However, the moderate inflow just means that risk of a crash or short fast pullback is relatively low.
We can look forward to trade the upswings for possibly another week before further macro-assessment is needed.
v--- Voice your very own opinions in the comments below ---v
SIA (C6L, $10.25) results below estimates as cited by Deutsche Bank, sets target at $9.40. Nomura states it is in-line with their estimates, sets target at $11.10.
Comments: Chart suggests that we can try to go long on the dips. Keep in mind the 17c dividend that XD on 30 Jul.
China ordered more than 1,400 companies in 19 industries to cut excess production capacity this year, part of efforts to shift toward slower, more-sustainable economic growth.
Steelmaking, ferroalloys, electrolytic aluminum, copper smelting, cement production and papermaking are among areas affected, the Ministry of Industry and Information Technology said in a statement posted on its website yesterday. Excess capacity must be idled by September and eliminated by year-end, it said.
Comments: Possible positive effect on stock prices for companies like MIDAS (5EN, $0.485) again. However, consider better entry prices.
MoneyMax Financial Services launched yesterday its initial public offering (IPO) of 53.8m new shares at 30c/share for a Catalist listing. United Overseas Bank is the sponsor and underwriter of the IPO. The offer closes at noon next Wednesday and trading is expected to begin on Aug 2.
Comments: Suggest everyone go for this one. I have covered Pawn-Broking industry before if you remember my write-up on Maxi-Cash (5UF, $0.455). Pawn shop licences are not being issued anymore therefore there is almost unlimited barrier to entry. Pawn shops can be profitable in the longer run.
Commentary
Flow data shows that inflow into stocks across markets is relatively well supported. With the exceptions of South Korea, Taiwan and Japan, flows into Asian markets are not extra-ordinary. However, the moderate inflow just means that risk of a crash or short fast pullback is relatively low.
We can look forward to trade the upswings for possibly another week before further macro-assessment is needed.
v--- Voice your very own opinions in the comments below ---v
Wednesday, 24 July 2013
SPH starts trading at 2pm today, Nam Cheong orderbook expands about 14%, Value-investing into Chinese Yards
Opportunities
SPH Reit (SK6U) about 37x subscribed. Trust is expected to start trading on SGX from 2pm today.
Comments: Response was excellent. Those who have successfully gotten the IPO shares, please inform me so I can update you on the latest happenings before 2pm later.
Nam Cheong (N4E, $0.275) has sold 3 vessels worth a total of US$70.5m. It said it is on track to surpass its record of 21 vessel sales achieved in 2012. The group's order book stands at RM1.5b (S$586m).
Comments: Good news. Newest order is about 14% of orderbook. Technical breakout at 0.280, next resistance at 0.300.
Kepcorp (BN4, $10.78, P/B 2.1x, P/E 12.9x) will focus on building more offshore production and support vessels in Brazil as competition from China cuts prices for its main product.
Comments: Value investing on China yards is what I read from this. Not so much on Kepcorp per se. Consider looking at Cosco (F83, $0.755, P/B 1.3x P/E 22.2x) and Yangzijiang (BS6, $0.915, P/B 1.0x, P/E 6.2X). Do note that as P/E is based on forward earnings, Cosco’s P/E may look high as consensus has not estimated an earnings recovery yet.
Commentary
S&P and Dow Jones Industrials have begun to show divergence. S&P is known to be the better benchmark as it is market-weighted on 500 counters versus a price-weighted Dow on 30 counters. Profit-taking on US stocks is in-line with flows.
This morning, market is looking at China PMI flash estimates. This will probably guide sentiment in Asian markets for today.
v----- Voice your own opinions by leaving a comment below -----v
SPH Reit (SK6U) about 37x subscribed. Trust is expected to start trading on SGX from 2pm today.
Comments: Response was excellent. Those who have successfully gotten the IPO shares, please inform me so I can update you on the latest happenings before 2pm later.
Nam Cheong (N4E, $0.275) has sold 3 vessels worth a total of US$70.5m. It said it is on track to surpass its record of 21 vessel sales achieved in 2012. The group's order book stands at RM1.5b (S$586m).
Comments: Good news. Newest order is about 14% of orderbook. Technical breakout at 0.280, next resistance at 0.300.
Kepcorp (BN4, $10.78, P/B 2.1x, P/E 12.9x) will focus on building more offshore production and support vessels in Brazil as competition from China cuts prices for its main product.
Comments: Value investing on China yards is what I read from this. Not so much on Kepcorp per se. Consider looking at Cosco (F83, $0.755, P/B 1.3x P/E 22.2x) and Yangzijiang (BS6, $0.915, P/B 1.0x, P/E 6.2X). Do note that as P/E is based on forward earnings, Cosco’s P/E may look high as consensus has not estimated an earnings recovery yet.
Commentary
S&P and Dow Jones Industrials have begun to show divergence. S&P is known to be the better benchmark as it is market-weighted on 500 counters versus a price-weighted Dow on 30 counters. Profit-taking on US stocks is in-line with flows.
This morning, market is looking at China PMI flash estimates. This will probably guide sentiment in Asian markets for today.
v----- Voice your own opinions by leaving a comment below -----v
Tuesday, 23 July 2013
Book Review: The Upside of Turbulence by Donald Sull
The Upside of Turbulence: Seizing Opportunity in an Uncertain World
-Donald Sull
Hard Cover, 276pages
Summary
As the title suggests, this book touches on seizing opportunities in turbulence. Think it extends more to business opportunities than anything else. How to seize opportunities for exponential returns. Author gives numerous examples, some positive, some negative. For example, how Samsung has seized opportunities to stay relevant though the years while Kodak has become obselete.
What investors/traders can learn from this
We can profit from this if we notice companies that are managed in a way that they can survive turbulence. Some companies may be at depressed prices in troubled times. Value-investing that you do not learn from a "value investing" book! (This is why I do not read those books. Books like this one are better.)
Best place to get this book
At the National Library.
-Donald Sull
Hard Cover, 276pages
Summary
As the title suggests, this book touches on seizing opportunities in turbulence. Think it extends more to business opportunities than anything else. How to seize opportunities for exponential returns. Author gives numerous examples, some positive, some negative. For example, how Samsung has seized opportunities to stay relevant though the years while Kodak has become obselete.
What investors/traders can learn from this
We can profit from this if we notice companies that are managed in a way that they can survive turbulence. Some companies may be at depressed prices in troubled times. Value-investing that you do not learn from a "value investing" book! (This is why I do not read those books. Books like this one are better.)
Best place to get this book
At the National Library.
Mirach/CNA restrictions, Cosco chart
Announcements
Feel free to comment here!! :)
Opportunities
Mirach Energy (C68) and CNA (5GC) are on UOBKH small cap stocks watch list. The rules are as follows:
(a) Single Exposure per Counter
- Not more than $50K (if clients' approved trading limits are less than $150K)
- Not more than $100K (if clients' approved trading limits are more than $150K)
(b) Cumulative Exposure per Client
- Not more than $300K
Comments: Not positive. This usually reduces the demand for the stock and so may have negative effect on stock price. Short-sellers may wish to beware of risks of a short squeeze (too many shorts in the market that a little buying causes frantic covering of shorts, resulting in upswing in price).
On the other hand, due to settlement mechanics, the overhang and restrictions may be lifted in a week or so. Therefore, watch out for any possible return of interest next week.
Chart of the Day
Cosco (F83)
Comments: Chart looks to be on a longer term rebound.
Commentary
Flows on continue to show strength in stocks in countries like Korea and Indonesia. HK and Singapore continue to show slight inflow in stocks coupled with interest in the respective currencies. On the US front, more interest is in US Treasures. US stocks show signs of profit-taking.
Feel free to comment here!! :)
Opportunities
Mirach Energy (C68) and CNA (5GC) are on UOBKH small cap stocks watch list. The rules are as follows:
(a) Single Exposure per Counter
- Not more than $50K (if clients' approved trading limits are less than $150K)
- Not more than $100K (if clients' approved trading limits are more than $150K)
(b) Cumulative Exposure per Client
- Not more than $300K
Comments: Not positive. This usually reduces the demand for the stock and so may have negative effect on stock price. Short-sellers may wish to beware of risks of a short squeeze (too many shorts in the market that a little buying causes frantic covering of shorts, resulting in upswing in price).
On the other hand, due to settlement mechanics, the overhang and restrictions may be lifted in a week or so. Therefore, watch out for any possible return of interest next week.
Chart of the Day
Cosco (F83)
Comments: Chart looks to be on a longer term rebound.
Commentary
Flows on continue to show strength in stocks in countries like Korea and Indonesia. HK and Singapore continue to show slight inflow in stocks coupled with interest in the respective currencies. On the US front, more interest is in US Treasures. US stocks show signs of profit-taking.
Monday, 22 July 2013
PBOC removes floor on lending rates while keeping a cap on interest on deposits, Market flows and technicals
Commentary
2 topics today.
PBOC removes floor on lending rates while keeping a cap on interest on deposits for banks in China.
This is good. Simply explained, the cost to the money banks lend out is capped. Removal of the floor to lending rates is to encourage banks to lend at lower rates to encourage borrowing buy businesses. However, by doing this, banks will end up squeezing their own margins. This is just a sentiment move that banks now have the option to improve liquidity at their own expense.
Implications of this is, if the banks really reduce lending rates, capital intensive industries like property and ship-building will benefit.
Market Flow and Technicals
It seems that the great rotation to stocks may not happen so soon as sideline money shifts back into bonds. Cross asset class, we see money shifting back into US Treasuries consistent with inflow on USD. This rides on the back of sentiment where bond buying by the Fed will extent to mid-2014 at the least and up to 2016 as speculated by PIMCO.
Flow-wise, asset allocation is selective. Japan and Korea are the obvious leaders on inflow, together with Mexico. South-east Asia sees most outflow from Malaysia. Singapore market is relatively muted, with flattish inflow.
Weekly charts on indices have been relatively confusing. The candles have swung wildly from bearish to bullish in the last 3 weeks. Daily charts show short-term uptrend to continue in various markets.
2 topics today.
PBOC removes floor on lending rates while keeping a cap on interest on deposits for banks in China.
This is good. Simply explained, the cost to the money banks lend out is capped. Removal of the floor to lending rates is to encourage banks to lend at lower rates to encourage borrowing buy businesses. However, by doing this, banks will end up squeezing their own margins. This is just a sentiment move that banks now have the option to improve liquidity at their own expense.
Implications of this is, if the banks really reduce lending rates, capital intensive industries like property and ship-building will benefit.
Market Flow and Technicals
It seems that the great rotation to stocks may not happen so soon as sideline money shifts back into bonds. Cross asset class, we see money shifting back into US Treasuries consistent with inflow on USD. This rides on the back of sentiment where bond buying by the Fed will extent to mid-2014 at the least and up to 2016 as speculated by PIMCO.
Flow-wise, asset allocation is selective. Japan and Korea are the obvious leaders on inflow, together with Mexico. South-east Asia sees most outflow from Malaysia. Singapore market is relatively muted, with flattish inflow.
Weekly charts on indices have been relatively confusing. The candles have swung wildly from bearish to bullish in the last 3 weeks. Daily charts show short-term uptrend to continue in various markets.
Friday, 19 July 2013
Kepcorp results in-line, Ezion wins contract, CNA does placement
Opportunities
KepCorp's (BN4, $10.90) Q2 profit shrinks 33.4% to $346.8m. Interim dividend of 20.8c/share comprising 10c cash plus 10.8c K-Reit units.
Comments: Results In-line. CEO announced challenges ahead, his own retirement and succession by current CFO. Various analysts maintain their BUY rating with target price around $13.00. Penetration into drillship market seen positive.
Ezion Holdings (5ME, $2.30) announced yesterday that it has received a letter of intent (LOI), with a value of up to US$82.1m over 5 years, to provide a service rig to a national oil firm in South-east Asia.
Comments: Positive. However take note that stock surged ahead before the announcement was made late in the trading session yesterday.
CNA (5GC, $0.137) proposed placement of 60,000,000 new shares at $0.1208/share. These were placed to 7 private investors.
Comments: Stock price has surged almost 50% this morning.
Commentary
Again, there is nothing much to say on the front of smart money.
Smart money is seen buying into US bond market again but at a relatively slow pace. Demand in USD may suggest non-US buyers. Flows show inflow into Japan and Korea, markets which I have been suggesting we look into as well. The inflows into these markets look sustainable in the next half of the year.
HK and Singapore markets remain not so interesting.
Singapore market continues to be dominated by small caps. Short-term punting and trading by “interested parties” makes it difficult to participate without substantial risk.
KepCorp's (BN4, $10.90) Q2 profit shrinks 33.4% to $346.8m. Interim dividend of 20.8c/share comprising 10c cash plus 10.8c K-Reit units.
Comments: Results In-line. CEO announced challenges ahead, his own retirement and succession by current CFO. Various analysts maintain their BUY rating with target price around $13.00. Penetration into drillship market seen positive.
Ezion Holdings (5ME, $2.30) announced yesterday that it has received a letter of intent (LOI), with a value of up to US$82.1m over 5 years, to provide a service rig to a national oil firm in South-east Asia.
Comments: Positive. However take note that stock surged ahead before the announcement was made late in the trading session yesterday.
CNA (5GC, $0.137) proposed placement of 60,000,000 new shares at $0.1208/share. These were placed to 7 private investors.
Comments: Stock price has surged almost 50% this morning.
Commentary
Again, there is nothing much to say on the front of smart money.
Smart money is seen buying into US bond market again but at a relatively slow pace. Demand in USD may suggest non-US buyers. Flows show inflow into Japan and Korea, markets which I have been suggesting we look into as well. The inflows into these markets look sustainable in the next half of the year.
HK and Singapore markets remain not so interesting.
Singapore market continues to be dominated by small caps. Short-term punting and trading by “interested parties” makes it difficult to participate without substantial risk.
Thursday, 18 July 2013
Opportunities
After its partner Golden Myanmar Sea Company became Nokia's distributor in Myanmar, mDR's (A27, $0.014) unit MDR Myanmar has been appointed the after-market service provider for Nokia in the country.
Comments: Good news. Stock may see positive price action and interest in the short-term.
Cosco (Nantong) Shipyard, a subsidiary of Cosco Corp's (F83, $0.725) 51%-owned Cosco Shipyard, secured a US$200m contract to build a harsh-environment semi-submersible accommodation vessel from Mexico-incorporated Cotemar SA de CV.
Comments: Positive, Cosco is clearly getting a foothold into the rig market. Profitability may not be high now but this may improve as time goes along. Longer term call.
Thai Bev (Y92, $0.590) - UBS initiates coverage with Sell Rating and S$0.51 TP
Comments: Not good for the short-term. Long term prospects are in listing of some of Fraser’s properties as a REIT early next year.
Commentary
Clearly, the markets are not quite confident about Bernanke’s vague remarks recently, regardless of what the media reports. This can be seen from weird swings in the market and an unusual lack of depth in the market. By “depth”, I mean presence of buyers and sellers. US markets did not perform strongly positive despite seemingly positive comments from the Fed.
In Singapore, the market has been dominated by penny stocks over the past few days. This situation seems likely to continue over the next few weeks as uncertainty on the general market continues.
After its partner Golden Myanmar Sea Company became Nokia's distributor in Myanmar, mDR's (A27, $0.014) unit MDR Myanmar has been appointed the after-market service provider for Nokia in the country.
Comments: Good news. Stock may see positive price action and interest in the short-term.
Cosco (Nantong) Shipyard, a subsidiary of Cosco Corp's (F83, $0.725) 51%-owned Cosco Shipyard, secured a US$200m contract to build a harsh-environment semi-submersible accommodation vessel from Mexico-incorporated Cotemar SA de CV.
Comments: Positive, Cosco is clearly getting a foothold into the rig market. Profitability may not be high now but this may improve as time goes along. Longer term call.
Thai Bev (Y92, $0.590) - UBS initiates coverage with Sell Rating and S$0.51 TP
Comments: Not good for the short-term. Long term prospects are in listing of some of Fraser’s properties as a REIT early next year.
Commentary
Clearly, the markets are not quite confident about Bernanke’s vague remarks recently, regardless of what the media reports. This can be seen from weird swings in the market and an unusual lack of depth in the market. By “depth”, I mean presence of buyers and sellers. US markets did not perform strongly positive despite seemingly positive comments from the Fed.
In Singapore, the market has been dominated by penny stocks over the past few days. This situation seems likely to continue over the next few weeks as uncertainty on the general market continues.
Tuesday, 16 July 2013
Opportunities
Moody's turns bearish on S'pore bank sector. It downgrades outlook to negative on concerns over rapid loan growth and possibility of fall in asset values.
Comments: Non-event. This news came out during lunchtime yesterday. Also, considering all the downgrades since the beginning of the year, Singapore banks’ stock prices have been doing well because they are ranked relatively safer banks compared to their counterparts in the rest of the world.
Keppel O&M (BN4, $10.84) will build a 5th jack-up rig to its proprietary KFELS B Class design for Mexican drilling company Grupo R worth US$206m.
Comments: Good news. In 2013 ytd, Keppel has secured new orders worth S$3.6b vs Nomura’s full-year estimate of S$6.5b. Analysts’ target prices are above $12.00.
SPH (T39, $4.33) Q3 profit up 81% at $187.5m on fair value gain. Results include $111.4m fair value gain and $26.2m impairment loss; group operating revenue dips 2.1%.
Comments: Slightly below analysts’ expectations. Target price has been reduced slightly by analysts, range from $4.09 to $4.50. Do remember it has a special distribution of 18c coming after the SPH REIT IPO.
Commentary
Flows continue to show the indecisiveness of the money managers despite the Fed holding back tapering measures until mid-2014.
Daily flows show slight profit-taking in US and HK with moderate support for Singapore market.
Volatility in currency markets have been subdued as well, showing that money remains on the side and possibly residing in their respective countries. Not much movement across bonds to stocks as well.
We can see that there is money waiting to be invested however, given the state of the markets at the moment, valuations may not seem as cheap as it has been written. General sentiment has not encouraged much risk taking among money managers.
Moody's turns bearish on S'pore bank sector. It downgrades outlook to negative on concerns over rapid loan growth and possibility of fall in asset values.
Comments: Non-event. This news came out during lunchtime yesterday. Also, considering all the downgrades since the beginning of the year, Singapore banks’ stock prices have been doing well because they are ranked relatively safer banks compared to their counterparts in the rest of the world.
Keppel O&M (BN4, $10.84) will build a 5th jack-up rig to its proprietary KFELS B Class design for Mexican drilling company Grupo R worth US$206m.
Comments: Good news. In 2013 ytd, Keppel has secured new orders worth S$3.6b vs Nomura’s full-year estimate of S$6.5b. Analysts’ target prices are above $12.00.
SPH (T39, $4.33) Q3 profit up 81% at $187.5m on fair value gain. Results include $111.4m fair value gain and $26.2m impairment loss; group operating revenue dips 2.1%.
Comments: Slightly below analysts’ expectations. Target price has been reduced slightly by analysts, range from $4.09 to $4.50. Do remember it has a special distribution of 18c coming after the SPH REIT IPO.
Commentary
Flows continue to show the indecisiveness of the money managers despite the Fed holding back tapering measures until mid-2014.
Daily flows show slight profit-taking in US and HK with moderate support for Singapore market.
Volatility in currency markets have been subdued as well, showing that money remains on the side and possibly residing in their respective countries. Not much movement across bonds to stocks as well.
We can see that there is money waiting to be invested however, given the state of the markets at the moment, valuations may not seem as cheap as it has been written. General sentiment has not encouraged much risk taking among money managers.
Monday, 15 July 2013
Commentary
2 Topics today.
China GDP
A quick comment before China GDP comes out.
Consensus by Bloomberg is that China GDP will grow by 7.5% qoq.
Considering the current situation where the market is relatively low on expectations of this number, meeting or beating the expectations may see positive market sentiment.
So, that leaves 1/3 chance that market sentiment will move further negative on the Chinese market.
Looking at bigger S-chips here like Yanlord (Z25, $1.245) and Ying Li (5DM, $0.44).
New MAS rule prohibits preferential rates for property loans to clients buying designated properties
Comment: One would consider this another round of “cooling”. Such tie-ups have facilitated affordability by the mass market and active prohibition may reduce affordability and may therefore cause sales volumes and prices to decline. Watch CityDev (C09, $10.98) and KepLand (K17, $3.57). These 2 have a higher exposure to residential property than their peers.
2 Topics today.
China GDP
A quick comment before China GDP comes out.
Consensus by Bloomberg is that China GDP will grow by 7.5% qoq.
Considering the current situation where the market is relatively low on expectations of this number, meeting or beating the expectations may see positive market sentiment.
So, that leaves 1/3 chance that market sentiment will move further negative on the Chinese market.
Looking at bigger S-chips here like Yanlord (Z25, $1.245) and Ying Li (5DM, $0.44).
New MAS rule prohibits preferential rates for property loans to clients buying designated properties
Comment: One would consider this another round of “cooling”. Such tie-ups have facilitated affordability by the mass market and active prohibition may reduce affordability and may therefore cause sales volumes and prices to decline. Watch CityDev (C09, $10.98) and KepLand (K17, $3.57). These 2 have a higher exposure to residential property than their peers.
Friday, 12 July 2013
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