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.
 
 
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