DBSV maintain our technical views for O&M stocks Keppel Corp, SembCorp Marine and Ezra to find interest. The price of Brent
Crude remained supported around USD69-70pbl. We had highlighted in our Weekly Comments that the preferred entry
levels for the 3 stocks are:
1) Keppel Corp – Buy at $8.30, sell at $9.45
2) SembCorp Marine – Buy at $3.60, sell at $4.15
and 3) Ezra – Buy at $1.63, sell at $2.
We maintain our view for these stocks.
Keppel Corp has fallen to within 10cts, SembCorp Marine within 5cts and Ezra has reached our preferred entry levels.
We believe that they are poised for a rebound. Even Ezion, which we highlighted as having downside risk to $0.55 also reached that level yesterday. Possible catalysts for Keppel Corp and SembCorp Marine ahead are the potential awards of the first 2 deep-water rigs contracts by Petrobas as the award of the 28 rigs building programme has started. This is Phase 1and the tender for these contracts should close by today. Phase 2 in the future could award up to 21 rigs and phase 3, 5 rigs.
Ezra is simply oversold based on 14-day and 8-wk RSI as well as weekly stochastics reading. The stock has also fallen 38% below only fundamental fair value of $2.62 and there is scope for a technical rebound from here.
The MSCI semi annual rebalancing will occur today on the close. For the Singapore market, Keppel Land will be included in the MSCI Singapore index. Stock is likely to rise in the current session.
DBS Research currently has a Buy recommendation for Keppel Land with TP of $4.13.
This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework. ML is a licensed stockbroker with one of Asia Leading Stock Broker firm. To contact him, please email: icewolfmike@gmail.com
Wednesday, May 26, 2010
Friday, May 21, 2010
Euro crisis - An Opportunity for picking up stock?
| KEVIN'S TAKE on... the impact of the Greek and euro crisis |
| Written by Kevin Scully |
| Wednesday, 19 May 2010 |
The following is a posting by Kevin Scully, executive chairman of NRA Capital, on his blog yesterday, and it is reproduced here with permission. Investors are over-reacting negatively to the EU's US$1 trillion rescue package announced last week !!?? I was asked yesterday during a TV interview about why the market was reacting so negatively to the EU's US$1 trillion rescue package. The VIX initially fell to below 30 after it rocketed to above 40 and is now just trading above the 30 level. A fall below 30 would signal to me that sentiment is improving. Key concerns that caused the collapse of the Euro and heightened market volatility were comments from DB that Greece would not be able to repay its debt and could even head for bankruptcy. I think investors have very short memories about the crisis facing global stock markets in late 2008 into 2009. The chart below of the Dow shows what happened to the index during the financial crisis in mid 2008. I have included it here to refresh memories. When the crisis first surfaced - then US Treasury Secretary Paulson announced a rescue plan but as he became a lame duck - new Treasury Secretary Geithner announced his own plan after he took office in early 2009 - but investors were skeptical about the lack of detail. There were then a number of supplementary packages which were the catalyst for that big rally in March 2009. To me this is what is happening in the EU now - first stop the panic and bring some stability to the market - I think the US$ 1 trillion package does that because it gives money to the countries to finance their debts. This has to be phase 1 - once the markets have been calmed - then we should see supplementary packages meant to address the more important long term structural issues. From the US experience, it would appear that it would take about six months before the EU and the Euro stabilise. I will now be watching out for supplemental measures to bolster the US$1 trillion package Will Greece go bankrupt?Will this be aggravated by the collapse of the Euro? The chart below shows the collapse of the Euro compared to the US$. It looks like $1.20 is where some support will be found. Ironically a weak Euro is good for Greece because the largest sector in the economy is tourism. Its major trading partners are also EU members. In fact a weak Euro is good for the EU because it would make their exports more competitive. So this could be an unexpected upside surprise for the economy. Notwithstanding that however, the national debt is large so it may take several years for the debt position to improve. The only saving grace now is that its economy is about 0.3% of the world economy. I would be worried if Germany or France has national debt issues because they are significant contributors of Global GDP. On balance, I think the Greek and EU crisis will be resolved and we should see some stability back in the markets by Q3-2010. The good news is that stock markets such as the Dow or even Singapore are not expensive in PER terms at about 13 to 14 times 2010 earnings. The market weakness has also been aggravated by the significant decline in stock market volumes as many investors remain sidelined awaiting more information about Greece and the EU rescue packages. This has increased the volatility in the indices. Medium to long term investors can bargain hunt - after all the Singapore Q1-2010 results season showed that many companies reported stronger and better earnings. Traders will however find it harder because of the low liquidity. ML's take: This crisis will take some time to resolve as kevin has correctly pointed out. Even with the S$1 trillion package, the details are yet to be iron out. This together with the confluence of factors in the US - banking reform and China - interest rate hike will keep sentiment soft at this juncture. Nonetheless, always view any panic selling as buying opportunity. The world has underwent so many crisis before and the lesson is that the brave amid panic shall emerge victorious. |
This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework. ML is a licensed stockbroker with one of Asia Leading Stock Broker firm. To contact him, please email: icewolfmike@gmail.com
Wilmar - selling due to tax allegation a over reaction?
| KEVIN'S TAKE on...Wilmar's share dive, buying opportunity |
| Written by Kevin Scully |
| Thursday, 20 May 2010 |
The following posting by Kevin Scully, executive chairman of NRA Capital, appeared on his blog yesterday and is reproduced here with permission. Visit www.nracapital.com At the centre of the weakness is was alleged tax evasion - the following article in the Jakarta Post gives more details on the case. Technically we could see the shares fall further to S$4.96 where I see some support - this may provide a buying/trading opportunity as the lost in market cap now is about 5 times the value of the alleged tax evasion. Wilmar has come out to deny any wrong doing in a statement filed on SGX. The statement is set-out below: RESPONSE TO RECENT MEDIA REPORTS ON INDONESIAN VALUE ADDED TAX The Company refers to certain media reports today that certain Indonesian subsidiaries of the Company are under investigation over certain allegations relating to value added tax restitution claimed by those subsidiaries in Indonesia. Those reports had stated that the value added tax restitution claims are questionable and fictitious. Value added tax is typically payable for domestic purchases and restitution of value added tax payments arises out of refunds for exports of palm oil out of Indonesia. Wilmar’s Indonesian subsidiaries are collectively the biggest exporters of Indonesian palm oil. These subsidiaries collectively exported more than US$3 billion worth of palm oil in each of the last 3 financial years, thereby entitling these subsidiaries to claim the 10% value added tax paid on the cost of these sales for each of those years. These subsidiaries have received restitution of varying amounts over the years, which correspond directly with the actual quantum of cost of export sales, consistent with the permissible amounts claimable under Indonesian value added tax laws. The Company’s subsidiaries have fully complied with such value added tax laws and are in full compliance with the procedures relating thereto. The Company is fully confident that its subsidiaries are and have at all times been in full compliance with all relevant Indonesian value added tax laws. The Company categorically denies the allegations that the value added tax restitution claims are questionable and fictitious, and further categorically denies any allegation of collusion with tax officials referred to in those reports which the Company hereby states are completely untrue and unsubstantiated. From the charts - there seems to be some support technically at the S$4.96 level. Fundamentally, let me put the numbers in some context. First the amount of the alleged tax evasion is US$385mn or about S$535mn. This looks like a drop in the ocean compared to Wilmar's market capitalisation of S$37.2bn at S$5.82 or 1.4% of its current market cap. The decline in market cap from yesterday to today, ie a S$0.37 drop has seen Wilmar's market cap fall by S$2.36bn. In terms of NTA - at S$1.71 per share - the S$535mn of alleged tax evasion would only reduce its NTA by 8.4 cents to S$1.63.... Barring any new information and taking no view on the merits of the alleged tax evasion, the potential decline in the share price to S$4.96 would seem to provide a great buying/trading opportunity. But a decline in Wilmar shares to S$4.96 from S$5.82 now would shave another 26 points off our STI index. |
ML's Take:
Agreed with Kevin that the tax allegation would be a drop in the ocean toward wilmar mkt cap and NTA.
If this is the reason for the drop, it is overdone.
This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework. ML is a licensed stockbroker with one of Asia Leading Stock Broker firm. To contact him, please email: icewolfmike@gmail.com
Wednesday, May 12, 2010
keppel Land to be included in MSCI SIngapore Index
Keppel Land has been added to MSCI Singapore index. Change will take place on May 27.
This counter has recovered from its recent low of $3.46, but seems to fail to breakout from the upper downtrend line.
$3.58 will be a better entry point in my opinion, with a stop at 3.47 or breakdown from lower uptrend line (which is currently around 3.47 anyway).
This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework. ML is a licensed stockbroker with one of Asia Leading Stock Broker firm. To contact him, please email: icewolfmike@gmail.com
This counter has recovered from its recent low of $3.46, but seems to fail to breakout from the upper downtrend line.
This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework. ML is a licensed stockbroker with one of Asia Leading Stock Broker firm. To contact him, please email: icewolfmike@gmail.com
Monday, May 10, 2010
Insider buying amid last week weakness - Raffles Education, China Animal, Osim
| Written by The NextInsight Team | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Monday, 10 May 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AS THE MARKET turned down last week because of the Greek crisis, a number of companies bought back shares. So did management or substantial shareholder in some cases. They are reflected in the two tables we have compiled on this page, although the compilation is not exhaustive. Perhaps because of the buying, which probably reflected the goodunderlying business fundamentals, these companies’ stock prices were well supported in the past week. More companies and company directors can be expected to buy shares if the market weakness persists. They could do so when they come out of a blackout period once their Q1 results are announced. The SGX Listing Rules state that a listed issuer and its officers "should not deal in the listed issuer’s securities during the period commencing two weeks before the announcement of the company financial statements for each of the first three quarters of its financial year and one month before the announcement of the company's full year financial statements (if required to announce quarterly financial statements), or one month before the announcement of the company's half year and full year financial statements (if not required to announce quarterly financial statements)". For Q1, a number of companies have reported a strong recovery in their profits, and last week was as good an opportunity as any for the company or directors or substantial shareholders to buy shares in a weak market. For example: * China Animal Healthcare: After buying 2.2 m shares last week, fund manager FMR LLC now owns 6% of this company, or 93,571,000 shares. The company has just reported net earnings rising 46.3% in Q1 to RMB36.6 million. Adding to the good news, after not declaring a dividend for FY09, it surprised with a RMB0.02 dividend for Q1. * Hotung Investment: The 1.55 m shares bought back last week amounted to about S$270,000, which is not terribly significant. But it is noteworthy that the company has been an aggressive buyer prior to that - ie, after announcing sterling Q1 results. Q1 net profit was NTD78.5 m compared to a mere NTD 8.9 m in Q1 of 2009, or a 779% jump. Since announcing the result, it has bought back 13.5 m shares. In 2009, it was truly aggressive: It purchased 19.9 m shares in the open market and 97.5 m off-market. And it cancelled all the shares purchased, in total representing 9.59% of the company’s issued share capital. Shareholders can only welcome such a move.
* Changtian Plastic: Its 4Q09 revenue was up 144.2% to RMB253.2 million while its net profit jumped 191.5% to RMB66.1 million. As at end-2009, it had cash and bank balances of RMB461.7 million (S$96 million) versus a market capitalization of about S$150 m based on the recent stock price of 22.5 cents. Seeing value in the stock, Andrew Barron Worden has been accumulating, and now owns 56.5 million shares (in direct and deemed interests). That's a hefty 8.56% of the share capital of Changtian. (It's an S-chip, in case you didn't know) Update: Changtian has just announced that its Q1 net profit jumped 385.8% to RMB55.4 million. Likely due to seasonal fluctuation, this is lower than the RMB66.1m achieved in Q4 of last year. Group revenue in Q1 tripled to RMB229.2 million. |
This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework. ML is a licensed stockbroker with one of Asia Leading Stock Broker firm. To contact him, please email: icewolfmike@gmail.com
Tuesday, May 4, 2010
Olam, Noble Group, SMRT, Capitaland, Citibank
I have attached here the chart of some of your favorite counters. Hopefully will give you some indication on their support and resistance price amid all the volatility.
As mentioned in my note this morning, I expect short term weakness amid rising interest rate environment. However, see such weakness as good time to pick up some solid counter.
A quick run through:
Olam
Weakness amid uptrend line.
See support at 2.43, with upside cap at 2.69.
Immediate resistance likely at 2.54 region.
Noble
Seems to have broken the uptrend line and poise for further weakness ahead.
With 2.98 support broken, this counter may slip further to 2.79 support. 2.98 region form immediate resistance.
Capitaland
Freefall since going XD.
However, RSI seems to indicate overselling. Hence should expect some short term rebound ahead.
Immediate support at 3.62 region.
SMRT
Worse than expected result see the counter being sold off over past 2 days.
2.04 immediate support. Expect further weakness to persist, until recent buyers exit.
Citibank
weakness amid profit taking from recent run up.
However, seem support at 4.29 region. (good area to queue to buy)
Counter has returned to profitability. See this supporting price ahead.
Goldman lawsuit may keep pressure on financial sector, but see any weakness as buying opportunity still
Above are my personal take only.
This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework. ML is a licensed stockbroker with one of Asia Leading Stock Broker firm. To contact him, please email: icewolfmike@gmail.com
As mentioned in my note this morning, I expect short term weakness amid rising interest rate environment. However, see such weakness as good time to pick up some solid counter.
A quick run through:
Olam
Weakness amid uptrend line.
See support at 2.43, with upside cap at 2.69.
Immediate resistance likely at 2.54 region.
Noble
Seems to have broken the uptrend line and poise for further weakness ahead.
With 2.98 support broken, this counter may slip further to 2.79 support. 2.98 region form immediate resistance.
Capitaland
Freefall since going XD.
However, RSI seems to indicate overselling. Hence should expect some short term rebound ahead.
Immediate support at 3.62 region.
SMRT
Worse than expected result see the counter being sold off over past 2 days.
2.04 immediate support. Expect further weakness to persist, until recent buyers exit.
Citibank
weakness amid profit taking from recent run up.
However, seem support at 4.29 region. (good area to queue to buy)
Counter has returned to profitability. See this supporting price ahead.
Goldman lawsuit may keep pressure on financial sector, but see any weakness as buying opportunity still
Above are my personal take only.
This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework. ML is a licensed stockbroker with one of Asia Leading Stock Broker firm. To contact him, please email: icewolfmike@gmail.com
Bank of China and peers share price fell on China tightening
Chinese Bank Shares Drop After Reserve Ratio Hike
Shares in major Chinese banks fell in Hong Kong on Monday after China raised the proportion of deposits that lenders must keep in reserve at the central bank, in a move to rein in inflation and mop up excess liquidity.
By 0251 GMT, the Hong Kong-listed shares of Industrial and Commercial Bank of China, the world's most valuable lender, were down 1.2 percent, similar to China Construction Bank's decline.
The benchmark Hang Seng was down 1.33 percent.
"There's going to be a lot of volatility, and investors must be prepared for that," said Sarah Wu, an analyst at Macquarie who is still overweight on Chinese banks.
"The issue right now is still on the government policy clarity front, and that remains the biggest overhang for the sector."
Smaller rivals Bank of China and Bank of Communications were down 1.5 percent and 2.3 percent, respectively.
On Sunday, China's central bank said it was lifting lenders' reserve requirement ratioby 50 basis points effective May 10, its third increase of that magnitude this year.
Chinese stock markets are closed for a holiday on Monday.
Fears that Beijing may further tighten monetary policy by raising the cost of lending have weighed on Chinese stocks this year, with China's stock markets the worst performing in Asia so far since January.
China has already said it aims to reduce new lending nationwide by 22 percent this year to 7.5 trillion yuan ($1.1 trillion), and banking regulators have repeatedly urged banks to be cautious when extending new loans.
ICBC is down over 11 percent so far this year, while CCB has shed 4 percent and BoCom is down about 2 percent.
ML's Take:
Chinese Tightening is not surprising. Have seen this coming since early part of the year. The most important questions is what next and how much more to go.
Recent data seems to suggest that the chinese economy is still powering ahead and housing prices are still on a high. Do expect more tightening ahead and this will keep a cap on chinese banks stock growth.
However, do note that stock tends to fall on initial tightening, but will rise going forward as tightening is a often a sign of strength in the economy. I still am a bull in stock, and see the improving economy as the foundation for stronger stock price.
Nonetheless, do not that interest rate environment is still generally low throughout, so the initial tightening will be the immediate effect that you will see.
This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework. ML is a licensed stockbroker with one of Asia Leading Stock Broker firm. To contact him, please email: icewolfmike@gmail.com
Shares in major Chinese banks fell in Hong Kong on Monday after China raised the proportion of deposits that lenders must keep in reserve at the central bank, in a move to rein in inflation and mop up excess liquidity.
By 0251 GMT, the Hong Kong-listed shares of Industrial and Commercial Bank of China, the world's most valuable lender, were down 1.2 percent, similar to China Construction Bank's decline.
The benchmark Hang Seng was down 1.33 percent.
"There's going to be a lot of volatility, and investors must be prepared for that," said Sarah Wu, an analyst at Macquarie who is still overweight on Chinese banks.
"The issue right now is still on the government policy clarity front, and that remains the biggest overhang for the sector."
Smaller rivals Bank of China and Bank of Communications were down 1.5 percent and 2.3 percent, respectively.
On Sunday, China's central bank said it was lifting lenders' reserve requirement ratioby 50 basis points effective May 10, its third increase of that magnitude this year.
Chinese stock markets are closed for a holiday on Monday.
Fears that Beijing may further tighten monetary policy by raising the cost of lending have weighed on Chinese stocks this year, with China's stock markets the worst performing in Asia so far since January.
China has already said it aims to reduce new lending nationwide by 22 percent this year to 7.5 trillion yuan ($1.1 trillion), and banking regulators have repeatedly urged banks to be cautious when extending new loans.
ICBC is down over 11 percent so far this year, while CCB has shed 4 percent and BoCom is down about 2 percent.
ML's Take:
Chinese Tightening is not surprising. Have seen this coming since early part of the year. The most important questions is what next and how much more to go.
Recent data seems to suggest that the chinese economy is still powering ahead and housing prices are still on a high. Do expect more tightening ahead and this will keep a cap on chinese banks stock growth.
However, do note that stock tends to fall on initial tightening, but will rise going forward as tightening is a often a sign of strength in the economy. I still am a bull in stock, and see the improving economy as the foundation for stronger stock price.
Nonetheless, do not that interest rate environment is still generally low throughout, so the initial tightening will be the immediate effect that you will see.
This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework. ML is a licensed stockbroker with one of Asia Leading Stock Broker firm. To contact him, please email: icewolfmike@gmail.com
Subscribe to:
Posts (Atom)