Strategic Investor

Olam - near term breakdown may pose as short term buying opp

2010-08-11T15:55:00.000+08:00

Juz a quick note on Olam.

technically this counter has fallen through its support trend line at 2.62 and likely to test support at 2.48 (which was tested twice). With RSI looking oversold, expect some support to be found in the region - may be good region to go for a rebound.

Nonetheless, if this support give way, counter will test the lower trend line at 2.38.

I have attached my chart for Olam here. So far the trendline look pretty decent with overall general trend still positive. Also note the double bottom form at 2.17 region, which will be the very key support to negate the uptrend.

My personal observation.

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 Broking firm. To contact him, please email: icewolfmike@gmail.com

Global Container volume return to pre-crisis level. Time to bargain Hunt? Keppel Corp looks good.

2010-06-30T14:39:00.000+08:00

ML's Take:

Shipping volume has indeed been climbing now returning to pre-lehman days.

This actually reinforce my view that any market weakness at this moment on fear of a double dip recession in the US and global economy may have been overdone.

I believe that any weakness at this juncture, as in the case today, may be a case of buying on weakness.

Actually going by the chart, some counters are already starting to look attractive noticeably Keppel Corp, which seems to be forming a base with support at S$8.40.

Also watching Capland, SembMarine, Noble for bargain hunting opportunity.

See article below:

Macquarie: “Record-breaking container volumes in May”

Tuesday, 29 June 2010

Excerpts from Macquarie report dated Mon, 28 June…

Macquarie Equities Research says: “Record-breaking container volumes in May”
Global Container Index reaches new high
Macquarie’s Global Container Index, constructed from the aggregation of volumes from almost 200 container ports in 58 countries, suggests that global container volumes reached a record high in May 2010, exceeding the previous peak seen in July 2008 by around 1%. In terms of the YoY growth rate, we estimate that global throughput increased by 19% in April and 18% in May, illustrating that the growth rates seen in 1Q10 have yet to slow.

2Q10 could prove a record quarter…
In the April edition of Counting Containers we challenged the perception that restocking benefits had driven container volumes to unsustainable levels during 1Q10, and estimated that global throughput during 2Q10 could increase by around 9% compared with the previous quarter. During April/May this estimate proved accurate, with the average monthly volume +9.4% vs. that seen during 1Q10. If this trend continues into June, we estimate Global throughput growth of +17% YoY for 2Q10, which would be a record high for an individual quarter.

…while 3Q10 is likely to scale even greater heights
Based on typical seasonal trends, in which 3Q volumes typically exceed those seen in the previous quarter by around 4%, it is likely that 3Q10 will prove to be a record quarter by some distance, with the possibility that our Global Container Index could hit 200 during this period, equal to a YoY increase of 14-15%.

Two key reasons suggest to us that volumes will remain strong during this period:

(i) our analysis of inventories in Europe and the US suggests the main benefit from re-stocking may be still to come; and

(ii) in importing regions such as the US, the ratio of containerised imports-to-end demand remains low for both consumer and industrial goods.

Is it time to buy BP PLC?

2010-06-30T09:54:00.001+08:00

Is it time to buy BP? Mike Lim

Since the sinking of the Deepwater Horizon rig, which resulted in the worst oil spill disaster in the US, BP PLC share price has crashed to US$27, almost half of its pre-crisis price and a level it has not seen since June 1996.

BP looks Cheap

Hedge fund T2 seems to think so, as it recently revealed that it has taken up new position in BP. T2managing partners, Tilson and Tongue justify their rationale for their buy in an article on the Barron’s other voices” column, arguing the extraordinary current value of BP based on the followings key fundamentals:
1. BP is an “extraordinarily” cheap bargain as it is currently only trading at a PE of 5x
2. BP is still a great company, with the fourth largest revenue and profit of any companies in the world
3. BP will be able to cover the liabilities derived from the disaster, citing example from similar disasters such as that of 1979 Gulf of Mexico spill which cost Pemex US$100M, and the 1989 case of Exxon Valdex, which eventually cost Exxon approximately US$4 billion to clean up and pay for damages.
In addition, they also noted that any damages and clean up bill that are likely to be footed by Exxon is likely to be spread-out over years, as in the case of Exxon Valdex of which the US supreme court did not make a final ruling on damages until 2008, about 19 years after the Alaskan incidence.
Tilson and Tongue further liken the current BP situation to that of the overall market in March 2009 where “the near term fundamentals are terrible, nobody knows when they will improve and fear-mongers dominate the headlines. But, for investors with courage, conviction and an outlook longer than a few months, we (Tilson and Tongue) think this market overreaction is a wonderful buying opportunity.”
Is BP really cheap?
While it cannot be argued that BP shares is “relatively” cheaper or indeed “very cheap” compared to pre-crisis level, it however, always make sense to look at any steep discount to stock prices relative to its downside risks, and at this moment, it is hard to be convinced that the storm is all over for BP.
a) Revaluation inevitable
Yes BP is unlikely to be going bankrupt, but taking cue from its bond prices of late, BP’s borrowing cost is expected to spiral upward, especially after it has its long-term credit rating cut by all big 3 rating agencies.
Fitch
AA+ to BBB (6 notches downgrade)

Moody’s
Aa2 to A2 (3 notches downgrade)

S&P‘s
AA- to A (1 notch downgrade)
While, traditionally BP is not heavily reliance on debt financing, this may be changing in view of its rising liability from this episode, which includes the US$20 billion that the US government required it to be placed into escrow account as collateral for the damages.
The recent downgrade is likely to double BP’s borrowing easily and this would definitely have an impact on its bottom line. Hence, realistically speaking, BP’s forward PE can be more than 5x at the current price level.
b) Weather
Weather is perhaps the least discussed and considered factors by the market at this moment.
Seasonally, June to November is hurricane season in the Gulf of Mexico and this can be expected to cause some havoc to BP’s crisis management plan, with rough sea and heavy winds likely to further widen the spills beyond its current eco-zone.
With the company already struggling to confine the spill during non-hurricane season, their option amid howling wind is even more limited. This is likely to result in further oil losses and possible further escalation of its clean-up bill.
c) Alternatives
While BP is still a good company for sure (at least for now), the question beget is whether the risk reward is there.
Comparing BP to its French counterpart, Total S.A., which is trading at around US$46.50 with a forward PE ratio of around 7x and a dividend yield of around 6%, BP’s valuation is actually not overwhelmingly convincing. This is especially considering that Total comes without the risk exposure which BP is currently facing.
BP – Downside remains ahead of any upside
While the courageous investors typically get rewarded in such uncertainty, the market has never fail to punish those that consider the upside ahead of the downside risk.
In this case, we feel that too many uncertainties remained for BP and the impetus to buy BP now is not overwhelming and is only worth revisiting if price dipped closer toward the US$20 region.
Technically Speaking – Looks Oversold

BP price pattern is definitely in a downtrend channel although in the near term, it seems oversold. Nonetheless, any attempt to rebound is likely to be muted, with price more likely to consolidate around the $26-28 region for now until fresh leads present.

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 Broking firm. To contact him, please email: icewolfmike@gmail.com

K-Green Trust starts trading Tuesday. DBS call for $1.20 TP

2010-06-25T16:50:00.000+08:00

DBS Research is initiating coverage on K-Green Trust, be listed on Tuesday, 29 Jun, with HOLD and TP of S$1.20.

Its sponsor is Keppel Integrated Engineering, the wholly owned environmental engineering arm of Keppel Corp. KGT’s assets generate stable, long-term cash flows. The initial portfolio consists of two Waste-to-Energy (incineration) plants as well as a water recycling (NEWater) plant in Singapore, with concession terms ranging from 15 - 25 years. Its zero debt balance sheet will enable growth.

However, growth pipeline is limited at this point. Given the historical trading ranges of peers, our analyst believes KGT could trade between 6-8% target yield, which would imply a share price range of S$0.98 – S$1.30.

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 Broking firm. To contact him, please email: icewolfmike@gmail.com

NOL - To continue on its uptrend

2010-06-24T09:53:00.000+08:00

NOL - No Carrier to be Under-Utilized

24 Jun 10

Macquarie Note

With the global economic recession starting to lift, major shipping companies operating the world's merchant marine fleet have started to show some signs of recovery and growth. NOL’s recent report on its operating performance certainly validates that. The TSA’s statement at the start of the week however, signals for even better times ahead…

“No carrier to be under-utilized and at non-compensatory rates”
A.P. Moeller-Maersk A/S and 14 other container-shipping lines including NOL, expect sustained demand on Asia-U.S. routes after rebounding consumer spending spurred a 24 percent traffic rise to U.S. west coast ports last month.
“Carriers are now seeing a strong peak-season surge that could last for some months,” Kim Young-Min, head of the Transpacific Stabilization Agreement (TSA) shipping group said in a statement on June 21. He added that “after last year, no carrier is going back to operating
vessels underutilized and at non-compensatory rates.”
First-quarter container volumes on Asia-U.S. routes jumped about 13 percent from a year earlier to 1.27 million 40-foot boxes, the TSA said. The tally however, is still below 2008 levels.

NOL’s sees strong operating performance
Meanwhile, NOL published their operating performing during the four weeks ending May 28 2010 on the same day the TSA released their statement above on June 21.

The report showed that average freight rates jumped 19 percent compared to the same period last year – its biggest increase in more than six years. The company also transported 34 percent more cargo.

Share price performance
On the day of the release of the above-mentioned operating performance (announced on the SGX after market), NOL’s share price had jumped 1.5% to $2.10 on June 21 – its highest since May 14. While the stock has since come off slightly to its last traded share price of $2.02, June remains a good month for NOL with the stock recovering 5% from its sell-off in May. It is still however, trading 12% below its recent high of $2.30 in April.

ML's take:

Believe this counter still have some upside to go, after the consolidation over the past 3 days. $2.0 looks like support with $2.12/13 the key resistance to break.

Fundamentally, I think the container shortage for the US route should be rectify within 2 to 3 months as more idle ships come on stream. Hence shippers are certainly playing up the hype in recent days, amid the renewal of US route contract, giving shipping counters the much needed lift.

Hence, very much a short term to mid term play. Not for long term holding.

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 Broking firm. To contact him, please email: icewolfmike@gmail.com

NOL - Benefit from strong economic number from US

2010-06-17T10:15:00.000+08:00

From Macquarie note:

The stream of positive economic data flowing from the U.S this week would have benefitted most stocks worldwide, but more noteworthy, was the boost it gave seafarers across Asia yesterday. Asia’s largest container shipper Neptune Orient Lines – which draws 57% of its sales from America – jumped 5% yesterday…

Asian seafarers boosted by improving U.S data
Yesterday, seafarers across Asia saw strong gains on speculation that faster than expected increases in trade volume will boost profit.

In Korea, Hanjin Shipping Co., the country’s largest shipping line led gains among Asian seafarers with its 11% spike. Here in Singapore, Neptune Orient Lines (NOL) advanced 5.1% to $2.05 – its highest in a month. The stock is above the $2 mark for the first time since May 18.

Earnings of carriers to rise on improving U.S demand?
The seafarer rally yesterday came on the back of an improving U.S economy where manufacturing was shown to be leading the U.S economic rebound on Tuesday night. Last night, U.S Industrial Production in May rose 1.2%, more than the expected 0.9%.

The recovering U.S economy as well as a rebound in trade has triggered a container squeeze as orders for new units plunged during last year’s global recession, causing the worldwide box fleet to shrink 4 percent last year, according to San Francisco-based Textainer Group Holdings Ltd., the world’s largest container-lessor.
Separately, Washington-based National Retail Federation has said that container imports at U.S. ports may rise as much as 15 percent each month through October because of higher consumer spending

A.P. Moeller-Maersk A/S and Mediterranean Shipping Co. are among carriers levying peak-season surcharges on trans-Pacific trade this year as increasing consumer spending fuels demand. (Bloomberg)

NOL received 57% of sales from the U.S, based on its latest earnings report.

ML's Take:
Technically the counter may have been overbought after the good run over the past few days and looks to take a breather for now.

Any weakness ahead looks like good buying opportunity with support seen at $1.94-5 region. If the breakout sustain, expect $2.12 to be regained.

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

Noble Group- Enter into Palm Oil with new acquisition

2010-06-15T10:01:00.000+08:00

This morning, Noble Group announced that it bought a stake in an Indonesian company that will provide the former its first foray into the palm oil sector. Noble’s announcement comes on the back of recovering NYMEX crude and palm oil prices…

Gaining access into crude palm oil sector through acquisition
The Hong Kong-based commodities supplier backed by China’s sovereign wealth fund CIC, said it bought a stake in PT Henrison Inti Persada to gain access to the palm oil market.

Noble acquired a 51 percent share in the company that “intends to develop” 32,500 hectares of land for palm oil production in Indonesia’s West Papua province, Noble said in a statement to the Singapore stock exchange this morning, without stating the value of the deal.

The transaction is Noble’s first project in the palm oil industry and allows the commodities supplier “to expand and increase its investments in this area in the future.”

According to Chairman Richard Elman, “this move into palm oil plantations will complement our global agriculture and energy businesses. Our operating experience in Indonesia should prove to be an asset in helping us manage this and future projects.” He added that “with increasing convergence between agriculture and energy, this investment is a clean fit for the Group’s diversified portfolio.”

Macquarie Research Equities has an Outperform rating on Noble Group with a 12-month target price of $2.50.

Crude palm oil sees best gain in three weeks

Noble’s announcement comes on the back of recovering crude oil as well as palm oil prices. August crude palm oil futures yesterday rose for the first time in six days amid concern the Argentine supply of soybeans and soybean oil may be affected by a port strike. It added 1% to 2,410 ringgit a ton on the Malaysia Derivatives Exchange, snapping a five-day drop of 3.6 percent and also rebounding from a 12-month low of 2,386 recorded on Friday. The gain was the most since May 20.

In the meanwhile, NYMEX crude oil prices also saw a bounce back above the US$75 mark. It rallied 1.8% overnight to close at US$75.12. It continued to advance 0.1% to US$75.18 as of 8.53 a.m Singapore time.

Crude palm oil prices tend to correlate with crude oil prices.

ML's Take:

Technically, counter seems to be attempting a breakout. However, resistance seen at 1.86 for now.

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

Hyflux - upgrade to buy by DBS

2010-06-11T10:48:00.000+08:00

DBS has just upgraded this counter to a buy:

Shares of Hyflux have fallen 20% m-o-m and currently trade at –1SD of 17x FY10 earnings, which is seen as an attractive entry level. Near term catalysts for the stock are potential contract win from Singapore’s 2nd desalination plant, new wins from MENA and China as well as the conclusion of the SGD1-1.4 bil Libyan contracts in H2 that provides visibility up to 201.

Hyflux is unaffected by developments in Europe and US and has little exposure in China.

Our research analyst upgrades the stock to Buy from Hold TO: $3.50 DBS

ML's take:

technically looks like a breakout this morning to me. Target is $3.20 with a stop at $2.80.

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

Olam - New acquisition New growth

2010-06-09T09:48:00.002+08:00

Olam - MRE Targets 25% Upside

In a SGX announcement yesterday, commodity supplier Olam proposed an acquisition for US$250m. Prior to the announcement and broad market sell-down on Monday, Olam had been on a three-day winning streak, climbing 11%. Following the announcement, Olam rose 1.2% yesterday to emerge as the third leading index mover for the day. However, a further analysis by Macquarie Research Equities reveals further potential upside to the stock price…

Chunky acquisition from Conagra Foods
Yesterday, Olam proposed to acquire Conagra's Gilroy Foods & Flavors dehydrates and vegetable products business for US$250m. Olam will also enter into a long-term supply agreement to cater to Conagra Food's requirements.Analysing the impact of acquisition
Macquarie Research Equities (MRE) provided their view on the proposed acquisition in a note published yesterday:
Bulking up in dehydrates. Gilroy's product portfolio includes onions, garlic, capsicum and vegetables dehydrates as well as a proprietary onion seed program. Its plants are spread across six locations in the US. This transaction adds further bulk to Olam's dehydrates business and is amongst the largest that Olam has entered into in this space (the rest of its transactions in this space have been far less than US$100m).
Synergies with its existing units. Olam already operates SK Foods (US tomatoes processing), DeFrancesco (US onions) and Key Foods (Chinese garlic). Olam expects that its combination of dehydrates units will generate annual revenue of US$300-350m i.e. ~5% of its annual revenue base. The US dehydrates market at near US$750m annually offers further room for Olam to grow.
Margins to be enhanced. Olam's expects EBITDA margins for its dehydrates processing unit to be 14-15%, a few folds higher than the margins it sees for its supply chain business. This is in line with the expectation that investments into processing assets will have higher margins (and help compensate for the lower levels of leverage that can be deployed for these transactions).
Earnings accretion, financing structure. While there was no disclosure on the earnings (nor revenue) for Gilroy - Olam states that this transaction will be earnings accretive from the first year of consolidation. This deal will be financed via internal accruals and debt.
Contributions from acquisitions is the key catalyst. Olam has made significant acquisitions in the past three years, with nearly US$1b (incl Gilroy) invested in various ventures and acquisitions. MRE believes sustained growth in contributions from its various acquisitions will be the next key catalyst that will help rerate the stock.
MRE reiterates rating and target price on Olam
Contributions from acquisitions, together with an ability to access long-term capital and execute on attractive M&A deals, leads MRE to reiterate their Outperform rating on the stock. MRE’s 12-month target price of S$3.10 implies a 25x PER to reflect an expected growth rate of 20% per annum (ex one-time gains) over the next three years.

ML's take:
Olam continues on its acquisition trail..rain or shine and I think that is generally a good sign of a company that is clear on its direction and strategy of being the world leading integrated soft commodity player.
while there will always be integration and execution risks on all M&A, I believe Olam's track record speaks for itself.

Although this current acquisition may not have a significant impact in the short run, if you look at all its acquisitions in the past 3 years, Olam has made significant investment that is likely to bear fruits in the future.
I never have doubt that Olam is another bluechip in the making....and I think Temasek also agrees on this.

Is it time to pick up Keppel Corp, Sembcorp, Ezra? Keppel Land in MSCI today

2010-05-26T09:54:00.002+08:00

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

Euro crisis - An Opportunity for picking up stock?

2010-05-21T10:53:00.000+08:00

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?

2010-05-21T10:36:00.001+08:00

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

I don’t follow Wilmar shares - at one point in time it had a market cap that was almost the same size as Singapore Telecom. Wilmar shares declined sharply today by 6% today (at time of writing on 31bn shares and itself contributed to an 11-point decline of the STI Index's fall.

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

keppel Land to be included in MSCI SIngapore Index

2010-05-12T14:09:00.000+08:00

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

Insider buying amid last week weakness - Raffles Education, China Animal, Osim

2010-05-10T10:33:00.002+08:00

Written by The NextInsight Team

Monday, 10 May 2010

	Buyer	No. of shares bought	Dates	Stock price (start Monday May 3)	Stock price (Friday end)
CHINA ANIMAL HEALTHCARE	FMR LLC	2.203 m	May 4	31 c	28 c
RAFFLES EDUCATION	Company share buyback	24 m	May 5- 7	37 c	36.5 c
RAFFLES EDUCATION	John Teo (director)	300,000	May 6
OSIM INT’L	Company share buyback	3.5 m	May 3, 5, 6	85 c	80.5 c
LEEDEN	Steven Tham (CEO)	612,000	May 6	34.5c	35 c
HOTUNG INVESTMENT	Company share buyback	1.55 m	May 4, 7	13 US c	12 US c

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.

	Buyer	No. of shares bought	Dates	Stock price (Monday start)	Stock price (Friday end)
MEIBAN GROUP	Company share buyback	1.116 m	May 5,6	30 c	29 c
DEL MONTE	Company sharebuyback	3 m	May 6	37.5 c	37 c
DEL MONTE	Lee Pineapple Company (substantial shareholder)	21.026 m	May 3, 4
CITY DEVELOPMENTS	Aberdeen Asset Management	1.119 m	May 4	$10.68	$10.46
CHANGTIAN PLASTIC	Andrew Barron Worden (substantial shareholder)	378,000 (direct interest); 7.033 m (deemed)	May 5	25 c	22.5 c

* 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

Olam, Noble Group, SMRT, Capitaland, Citibank

2010-05-04T14:59:00.000+08:00

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

Bank of China and peers share price fell on China tightening

2010-05-04T09:02:00.000+08:00

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

Yangzijiang Shipbuilding, Baker Tech, Sembmarine - Fight over PPL

2010-04-26T10:33:00.000+08:00

Baker Tech has accepted the offer to sell its stake in PPL Holdings (PPLH) to a consortium led by Yangzijiang Shipbuilding (YZJ), which is not surprising given the attractive offer price. The sale is subject to shareholders’ approval in an EGM (to be convened) and we note that Saberon Investments Pte Ltd, Baker’s controlling shareholder with about 69.63% stake, has agreed to vote in favour of the sale. However, not
everyone is happy with the deal, Sembcorp Marine (who has a 85% interest in PPL Shipyard) has alleged that the sale would be a circumvention of its pre-emptive rights by not giving it a first right-of-refusal over the sale. On this note, Baker Tech’s lawyers have said that Sembcorp Marine “has no basis for its claims”. A drawn-out tussle for PPLH may affect YZJ’s offshore initiatives. We maintain our HOLD rating on YZJ with S$1.60 fair value estimate.

(Low Pei Han)OCBC.

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

Noble Group - Macarthur's major shareholder warm toward Peabody latest bid

2010-04-16T10:12:00.000+08:00

Macarthur has received responses from POSCO and ArcelorMittal as follows:

POSCO
“Subject to the Macarthur Board recommending Peabody’s proposal to its shareholders (in the absence of a superior proposal), and to POSCO considering and agreeing the key terms of its ongoing investment in Macarthur (a process which we could complete in a timely manner), POSCO confirms its in-principle support for a Peabody-led privatisation of Macarthur in the absence of a superior proposal. POSCO presently intends to retain its existing economic interest in the resultant private company structure.

For the avoidance of doubt, POSCO does not have, and it does not propose to enter into, any agreement arrangement or understanding (binding or otherwise) with Peabody relating to Macarthur, any power to exercise (or control the exercise of) a right to vote Macarthur shares, or any power to dispose of (or control the exercise of a power to dispose of) Macarthur shares.

POSCO will continue to carefully monitor and analyse all developments ahead of the EGM and reserves the right to vote its shareholding at the EGM in any manner that it determines in its absolute discretion.”

ArcelorMittal
“Although not providing [a] specific decision as to how ArcelorMittal will vote at any shareholders' meeting, ArcelorMittal does recognise that the Peabody offer is one that warrants MCC giving it due consideration and providing them the necessary time for the 5 days due diligence that [Peabody] have sought from MCC Board. ArcelorMittal will continue to carefully monitor developments in relation to MCC.”

A response from CITIC has not yet been received.

The Directors of Macarthur are meeting today, Friday 16 April 2010 to consider Peabody’s Further Proposal.

The Macarthur Board is committed to being in regular contact with shareholders and will keep you informed of future developments. The Macarthur Board reminds shareholders to not have any regard to public statements issued by any third party. Should you have any queries, please contact Macarthur’s shareholder enquiry line on 1300 160 409 (or +61 3 9415 4147).

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

Chart for ST Engineering, Sembmarine and Keppel Corp

2010-04-12T17:48:00.000+08:00

I have attached here the chart (6 April 2010) for ST eng, Sembmarine and Kepcorp for your information. Sorry for this late posting...

ST Eng
I like the look of it. The recent upmove is supported by good volume. Also, chart wise it seems like the move is still not exhausted and should have more room for further upside.
3.28 turn from resistance to support with 3.37 as the next resistance level. If 3.37 breach, I expect the counter to attempt 3.55 next.

Keppel Corp
After the strong recent upsurge (which took me by surprise in term of its strength), I believe it may have reached or will be reaching an exhaustion point even thou the RSI is only slightly overbought. However, the surge over the past few days is not really accompanied by good volume. In fact, volume seems to be tailing off which mean that buying may be drying up.

9.60 immediate resistance with next support at 9.50. Expect this to give way for counter to retreat to 9.25 - 9. 12 region. Here it may present good buying opportunity again.

Sembmarine
Showing similar pattern to Kepcorp. May have reached its exhaustion point. Looking toppish at 4.44 and may retreat to 4.25 region. Falling volume as in the case of Keppel Corp.

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

Yangzijiang - Dual listing plan. Another one sailing away from SGX.

2010-04-12T17:36:00.001+08:00

Yangzijiang Shipbuilding Holdings Ltd (YZJ SP; S$1.29)

Yangzijiang requested for a trading halt this morning.

Over the lunch break, Yangzijiang clarified that it has received proposals for dual listing on the Stock Exchange of Hong Kong and TDR listings. However, all talks are only exploratory at this juncture. If Yangzijiang does proceed with alternative listing options, our recent meeting with management suggests that a TDR listing in Taiwan is more likely as the listing process may be faster. However, as TDRs are non-fungible, there is a low likelihood for a sustained surge in trading multiples for the SGX-listed shares from higher TDR valuations. Moreover, the closest peer in Taiwan is trading at a lower valuation.

Still, we remain bullish on the Company, due to management’s excellent execution record as the company had coped well with industry negatives with zero order cancellation to date, on-schedule deliveries, and ability to secure new contracts of about US$460m in 2009 despite the industry-wide drought and relatively superior margins.

Catalysts for the stock include stronger-than-expected order wins and share of profits from its new ship-breaking JVs, and confirmation of TDR listing.

YZJ remains one of our two top-picks among S-Chips with potential for dual listings. At the current price, the stock offers 16.3% upside to our target price.

Maintain Outperform, target price of S$1.50. CIMB

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

Ausgroup - benefit from new Iron ore pricing regime?

2010-04-12T17:35:00.000+08:00

CIMB-GK MAINTAINED its “Buy” call with a target price of 96 cents on Ausgroup last week, citing its relatively cheap valuation in the offshore & marine universe.
The report was triggered by a structural shift in iron-ore markets in the past couple of weeks as the world’s largest 3 mining companies, Vale, BHP Billiton and Rio Tinto, announced a switch to setting the price of iron ore contracts every 3 months, ending a 40-year system of annual pricing.

The new price system will lift the cost of iron ore to Asian steelmakers to about US$110-$120 a ton for April-June contracts, up 80% to 100% from the US$60 level at which the 2009-10 annual contracts were settled.

CIMB-GK analyst Yeo Zhibin believes that higher iron-ore prices could accelerate capex spending in the mineral resource sector in Western Australia, benefiting specialist construction service companies like Ausgroup.

However for the high profile Gorgon oil & gas project, Australian fabricators such as Ausgroup have been priced out by Asian competitors due to a rising A$.

30% hike in iron ore prices in Western Australia in just 3 months.

CIMB-GK expects Ausgroup’s earnings for the financial year ending Jun 2010 to grow 90% year-on-year, given its strong order book of A$470 million.

It has a target price of 96 cents based on 13x CY11 P/E, Ausgroup’s trading average since listing.

”We see stock catalysts from an acceleration in orders wins from LNG and mineral projects, improved margins and further sets of strong results.

”Key risks to our call are execution slippages and lower than-expected order wins,” according to the CIMB-GK report.

CIMB-GK’s bullish report contrasted with OCBC Investment Research's (OIR) update on the Aussie mining resources infrastructure specialist issued 2 weeks ago.

While OIR analyst Meenal Kumar believes that Ausgroup’s 4Q10 (Apr-Jun 2010) revenue will grow sequentially because of completion of works at several LNG projects, she is bearish because of Western Australia’s subdued project tendering activity.

”There is a large potential pool of projects but many players are still taking their time to resume or launch projects due to continuing economic uncertainty.

”Rising costs (especially labour) may be another concern,” according to the her report.

LNG projects that contribute to 2H10 revenues (Jan-Jun 2010) include Woodside's Pluto and BHP Billiton's Rapid Growth Project 5.

OIR has a ‘Hold’ rating and a relatively conservative target price of 60 cents.
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

Let the earning season begin....

2010-04-12T17:30:00.000+08:00

Earnings Season Is a No-Trading Zone
Published: Friday, 9 Apr 2010 | 10:14 PM ET

By: Tom Brennan
Web Editor, Mad MoneyOn Monday, Alcoa takes the earnings stage, marking the ceremonial start of the season. Cramer’s expecting a “parade of positive reports” this time around, and he’s warning investors not to get lured in.

Cramer's Top 12 Retail Stocks

Of course, strong earnings are a good thing. But when beat after beat is announced they can be too tempting not to trade. One thing Cramer’s learned over his 30 years of trading, though, is that you just can’t make money on these reports. Too many companies are reporting and there’s too little time to do the necessary homework. The Game Plan going forward then is to just sit tight and listen. Cramer on Friday discussed the most important earnings releases of the coming week and what investors should look for. Here they are:

Again, Alcoa [AA 14.39 -0.48 (-3.23%) ], the largest aluminum producer in the US, goes first on Monday. The two markets – aerospace and industrial gas – that failed to hit their targets last quarter are at the beginning of “long, positive cycles,” Cramer said. And Alcoa has the cash flows and cost controls necessary to capitalize on them. He recommend maybe buying some AA after the Street dumps it, because he’s expecting the two markets to have a strong second half in 2010.

Among the banks, JPMorgan Chase [JPM 45.98 0.22 (+0.48%) ]and Bank of America [BAC 18.59 -0.06 (-0.32%) ]report in the coming week. Cramer expects vast improvements over last year, enough to possibly push JPM past the $45 level its been stuck at for a while. And while BAC’s report won’t be as clean, with asset write-downs and provision expenses still a problem, Cramer thinks we’ll see a second straight quarter of better credit costs. That could take Bank of America to $20, he said.

Also, one of Cramer’s favorite regional banks, First Horizon National [FHN 15.02 0.15 (+1.01%) ], releases its numbers. He’ll be looking to see if we can finally confirm that worst is over, he said, “and FHN is now on its way to becoming one of the best banks.”

In tech, Intel [INTC 22.55 0.24 (+1.08%) ]and Advanced Micro Devices [AMD 9.30 -0.12 (-1.27%) ]will gives us a read on the semiconductor cycle. Cramer’s a fan of INTC – his charitable trust owns it – for its new products, the balance sheet and the 3% dividend yield. He thinks the stock right now is cheap too. Also tech in the coming week is Google [GOOG 566.22 -1.27 (-0.22%) ]. Cramer wants to hear more about China and what the company thinks about Apple’s move into what was once largely GOOG’s turf: advertising.

Yum! Brands [YUM 40.70 0.63 (+1.57%) ]will report more than earnings on Wednesday. It will tell us about the strength of the consumer, too. Are they eating out again? Cramer’s only concern is whether or not people are choose Yum’s Pizza Hut if they do. He thinks KFC will save the quarter, thanks to a new spurt in growth in China.

The rails are always some of the best barometers of economic health – because of the products they carry – which is why Cramer’s watching CSX [CSX 52.96 -0.02 (-0.04%) ]on Tuesday. And the company’s coal loadings, in particular. If those are up, then it might be a chance to buy more Walter Energy [WLT 96.75 1.24 (+1.3%) ], Mad Money’s favorite play on metallurgical coal. Cramer likes it up to $100.

PPG Industries [PPG 68.68 0.75 (+1.1%) ]is the way to play the continued chemical side of the rebound. The “polys” and “ethyls” of this industry are the building blocks of the economy, and they’ve been performing well. Cramer said we’ll probably get more good news about them from PPG on Thursday. If Asia’s has become more than 20% of the company’s business, Cramer thinks the stock could run past $70.

Lastly, there’s General Electric [GE 18.52 -0.04 (-0.22%) ]– parent company of CNBC. This conglomerate touches on a number of industries, and good earnings from GE often translate into great investments in related companies. Also, GE will give us an idea of worldwide credit conditions, which Cramer said should be “the best they’ve been in three years.”

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

Retail investors not in the recent stock market gain...

2010-04-12T17:28:00.000+08:00

ML's take:

This is an interesting observation which is largely emulated in many other markets except perhaps Hong Kong, China and Taiwan.

Singapore market itself has been largely quiet since Chinese New Year and this is despite thr un up in Blue Chip stocks. Retailers are largely defensive preferring to keep their cash than to speculate in a highly volatile market. There is also no denying that the bouyant property market may have kept some of these players away from the stock market.

Anecdotal evidence continues to point that economies are indeed recovering worldwide with talk of a double dip abating. With retailers largely out, it means that funds have been buying up.

What this mean to you is it may be worthwhile entering the market NOW rather than waiting for a clear signal of a mkt recovery...as by then it may have been all too late. I continue to prescribed a buy on weakness strategy, picking up good blue chip name during technical corrections as a mean to stay ahead of the pack, while protecting your downside risk.

Average Investors Are Finally Returning to Stocks—Slowly
Published: Friday, 9 Apr 2010 | 2:06 PM ET

By: Jeff Cox
CNBC.com Appearances to the contrary, the 13-month runup in stock prices has been absent one critical element—participation from mom-and-pop investors.

Trillions in cash are sitting on the sidelines because investors are still afraid of the market after seeing half the value sucked out of stocks during the financial crisis.

And while pros think retail investors are starting to come back, they see the process as a slow one that will only accelerate when people feel safe again.

"If you go back to 2000, think about how much money was lost, then think about how long it took for retail investors to come back into the market," says Quincy Krosby, general strategist at Prudential Financial.
"The gains in the equity market will compel the retail investors to move from the diminishing returns from bond funds and reallocate" to equities, she adds. "Ultimately the retail investor realizes that the equity market is doing well. They want part of those gains, so they start allocating money."

Jeff Cox
Staff Writer
CNBC.com

Indeed, market yardsticks are showing a grudging move off the sidelines as Wall Street strives to surpass the psychological milestone of Dow 11,000.

Money market assets hit $2.964 trillion for the week ended April 7, the Investment Company Institute reported this week. That marks the first time money market accounts have held less than $3 trillion since October 2007, when the financial markets began to implode and set the stage for a calamitous bear market that crested in March 2009. Money market inflows were $14.3 billion for the week, according to Lipper data.

The good news is that the lack of participation from average investors sets up for another leg higher in the market, likely in the staircase fashion that has marked much of the move higher in 2010.

The bad news is that as retail investors finally realize they have missed a large portion of a 75 percent rally in stock prices and start to pile back in, that likely will signal the top of the market.

"We know in the last 10 years or so that when the retail investor moves into an asset class and moves in with force that is very often the beginning of the end of that asset class's gain for that cycle," Krosby says.
Brian Belski, chief investment strategist at Oppenheimer, said in an interview with CNBC this week that the strong flow of Main Street investors into the market will be his signal to get out.

But he doesn't see that point happening anytime soon.

"We as investors are still kind of sitting in the bunker because we're scared of what happened in 2007 and 2008...so we're acting and investing very defensively and not seeing the forest through the trees," Belski said (see video below). "What that's telling us is we're seeing a classic recovery. It has its issues, but we still think we head higher through the year."

Still, advisors remain baffled over the lack of participation and worry whether that in itself could be setting up a correction—usually defined as a 10 percent drop in stocks—that has yet to materialize.

"This could be the most significant, least-satisfying bull market to Wall Street itself in the stock market's history," Rick Bensignor chief market strategist at Execution Noble in New York, said in a note to clients. "[I]t's the biggest party ever that no one showed up to."

Market bears are growing increasingly reluctant about stepping in front of the Wall Street bull.
Short interest on the New York Stock Exchange—often considered a contrarian sign for market direction—is at 14.1 billion shares, ahead of the December 2009 total by 1.1 billion shares but well short of the 2007 mark.

"At this point any of us who have been bearish are just too tired of being wrong that it's hard to stick your neck out," said Kathy Boyle, president of Chapin Hill Advisors in New York.
Boyle sees clients who are still leery of the stock market, and are thus likely only to get back until well after the major gains have been realized.

"How will we know we're at the top? I don't think we're going to until after the fact," she said. "The average person is still disenfranchised. Individual people just got out of the market and they don't have the risk tolerance. They see their future looming. They don't trust the market, they feel it's being manipulated. Bond funds look safe."

Bond investing continues to far outpace stocks.

Equity fund inflows excluding exchange-traded funds were at $1.2 billion, compared to $3.5 billion for bond funds in the week ended April 7, according to Lipper. Both figures represent gains approaching 50 percent from the previous week.

While retail investor participation is only one factor in what determines the broader movement of the market, the trends suggest that hesitance is likely to remain and the market could be looking at more of the same for months to come.

"In terms of the entry of retail investors, it's clear we're early in that cycle," says Lawrence Creatura, equity market strategist and portfolio manager at Federated Clover Capital Advisors in Rochester, N.Y. "Those investors flooded the zone in terms of investing in the bond market."

"The shift from bonds to equities is at its very early stages, because investors are tentative about the economy, the jobs market," he continues. "Out there in the real world, the all-clear sign has not been given."
© 2010 CNBC.com

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

Earning Season begin...time to buy or sell stock?

2010-04-12T17:23:00.000+08:00

ML's take:

Earning season usually provide the volatility catalyst to market, and it is a period whereby as a trader..i love. Short term trading strategy, with a sell on news bias is my preferred execution method, with a technical stop in place.

However, this time round, I am a tad cautious, with the recent run up in stock prices. Somehow it means that the market (funds) have already started factoring in the earning upside, and the risk presented are more on the downside going forward. Banks stock for example has seen a good run of late, and this may present some vulnerability if results came in below expectation. Watch: Citibank and BoFA.

Most analysts are expecting a good set of numbers for 1Q, with some even think that the economy may have out-performed what the market is expecting. I agreed. However, note that if most upside has already been factor in, even a slightly better number is unlikely to push the market much further during this earning season. In contrast, if the number came in below expectation or on expectation, you can expect some selling to take place.

Hence for those of you, who have missed the boat of late....perhaps it is time that you take advantage of any weakness in price this earning seasons to pick up your lot.With retail participation largely missing and the economy firmly on track, this may be a good chance to jump on board before the rest of the skeptic.

So my take: Buy on weakness and sell on news this earning season.

Week Ahead: Earnings and Economic Reports Tell Tale of Recovery

Published: Friday, 9 Apr 2010 | 8:34 PM ET

Text Size

By: Patti Domm
CNBC Executive Editor

Corporate America should begin to see its first quarter of double-digit revenue growth in nearly two years, as earnings season gets underway in the week ahead.
Alcoa [AA 14.39 -0.48 (-3.23%) ], Intel [INTC 22.55 0.24 (+1.08%) ], JPMorgan Chase [JPM 45.98 0.22 (+0.48%) ], Google [GOOG 566.22 -1.27 (-0.22%) ], AMD [AMD 9.30 -0.12 (-1.27%) ], and General Electric [GE 18.52 -0.04 (-0.22%) ] are among the companies reporting first-quarter earnings this week.
"Last quarter we saw a lot of beats. I think we'll be in the same ball park. We're looking at growing evidence the economy is on better footing," said Ed Keon, portfolio manager at Quantitative Management Associates. Last quarter, 72 percent of the companies in the S&P 500 beat analysts' earnings estimates, according to Thomson Reuters.

Oliver P. Quilla for CNBC.com

"It's hard for analysts to build the macro picture into their earnings numbers. At the beginning of a recovery, they tend to be too conservative. At the beginning of a recession, they tend to be too optimistic," Keon said. He said the consensus view is for earnings growth of around 30 percent. "My guess is it'll be something better than that."
Citigroup chief U.S. equities strategist Tobias Levkovich also expects some knock out earnings reports. "I think earnings are going to look very strong...It's going to be a combination of cost cutting and top line revenue growth," he said. "The operating leverage in businesses is usually quite dramatic at turning points."
The coming week has a heavy calendar of economic data -- from international trade, to retail sales and industrial production . All of that should provide a better look at how the economy performed in the first quarter. Another highlight will be Fed Chairman Ben Bernanke's Congressional testimony on the economy Wednesday.
The Greek debt crisis will stay in focus, as speculation swirled in markets Friday that there could be a weekend bailout. China and its move to let its currency float is also dominating market chatter, as President Hu is expected to join other world leaders at a nuclear summit hosted by President Obama in Washington. China also releases GDP and other indicators on Thursday.

"I think the theme next week is further signs of recovery and a broadening out of those signs," said Deutsche Bank Joseph LaVorgna.
In the past week, there were a number of positives that suggest the economy may be a bit stronger than some economists expected. One of those was strength in the ISM nonmanufacturing survey, as well as wholesale inventories. Chain stores also reported better than forecast sales for March.
"I actually think the scope for the biggest surprise will be in international trade and inventories," said LaVorgna of the coming week's data. His current GDP forecast is 4.5 percent for the first quarter. "It just seems to me that the inventory numbers with the trade will be more important than some of these other figures in terms of how GDP plays out in Q1."
J.P. Morgan economist Bruce Kasman, in a note Friday, said for the first time since last summer, J.P. Morgan is raising its outlook for global growth. He noted that his first quarter U.S. GDP forecast of 4 percent is at risk of being too low. He expects March retail sales, reported Wednesday, to show that consumption is gaining momentum.
One report in the past week that was not encouraging was the weekly jobless claims data, which showed an unexpected increase of 18,000 to 460,000. Economists say there needs to be a real turn in the employment situation in order for the economy to heal, and the question is when will the stronger corporate profits result in hiring.

Major U.S. Indexes

	Last	Change	Today's % Change	1 Week % Change	YTD % Change
Dow	10997.35	70.28	0.64%	0.64%	5.46%
NASDAQ	2454.05	17.24	0.71%	2.14%	8.15%
S&P 500	1194.37	7.93	0.67%	1.38%	7.11%
Russell 2000	702.95	3.31	0.47%	2.77%	12.40%
CBOE VIX	16.18	-0.30	-1.82%	-7.38%	-25.37%
FTSE CNBC Global 300	4700.50	55.22	1.19%	1.05%	3.54%

Dow 11,000
The Dow in the past week crossed 11,000 for the first time since Sept. 29, 2008. It finished the week at 10,997, with a 70 point, or 0.6 percent gain. The S&P 500 was up 16, or 1.4 percent at 1194, and the Nasdaq gained more than 2.1 percent to 2454. The S&P energy sector was the best performer, gaining 1.1 percent, followed by the telecom and consumer discretionary sectors, both up 0.8.
Nymex crude for May delivery gained $0.05 per barrel this week, or 0.06 percent to $84.92.
Treasury prices rose on the week, pushing yields lower after the 10-year yield topped 4 percent on Monday. The 10-year finished the week with a yield of 3.890 percent, and the 2-year was unchanged, at 1.072 percent. The dollar lost 0.03 percent against the euro this past week, despite volatility around Greek debt worries.
Marc Chandler, chief foreign exchange strategist at Brown Brothers Harriman, said he thinks the speculation about a Greek bail out over the weekend will prove false, as Greece has enough financing in place for April. "I don't think we've reached the point where their feet are on the fire, and they've got to do something now," he said.

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

Noble Group offer all cash for Gloucester; Peabody up the ante to A$14 for Macarthur

2010-04-06T16:18:00.000+08:00

Noble has once again taken the initiative in the Gloucester-Macarthur deal, by offering a all cash deal to Gloucester shareholder in the event that the deal fell through.
This is even after Macarthur has rejected a Peabody last minute attempt to scuttle the deal. However, Peabody has now up the ante with a A$14 bid for Macarthur, showing its determination to scuttle the Noble deal or at least to further postpone the April 12 EGM by Macarthur.
By offering an all cash deal to Gloucester, I believe Noble is making it very clear to Macarthur that it is in no mood to renegotiate the deal, and is prepare to go in alone and go head on with Macarthur if the deal did not go through, and a warning shot to Macarthur and anyone else that it will be even more expensive in the future, should they attempt to buy out Gloucester next time.

I putting my bet that the deal will still go ahead (to create one of the largest coal company in the world) that will benefit Noble. Noting that for Peabody to succeed, it will have to get the nod of Citic, Posco and Mittal - the major shareholders of Macarthur. Citic by the way also own 15% of Noble.

Will still look to buy on any weakness related to this deal.

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

Where is DJIA and STI heading next??

2010-04-06T16:11:00.001+08:00

JIA and STI reach new high of late, while HS lagged this upward move.

While I maintained my bullishness on the market overall, I am also growing cautious over the recent uptrend which comes with falling trading volume. If trading activities do not pick up soon, my view is that some technical correction may once again be in the horizon, albeit unlikely to be a very fierce one.

Did up a quick chart overview of the latest trend for HSI, DJIA and STI, to provide a general perspective of the latest trend.

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

Cache Reits IPO

2010-04-06T16:09:00.000+08:00

Not many IPO to look out for these days after CMA IPO.

However, Cache Reits IPO which is closing its public offering on the 8th April, may be worth looking at.

Priced at 88 cents, its expected DPU is set at 8.70%.

With the economy picking up, I expect warehousing play (especially good quality one) to be an interesting theme.

In any case, heard that the placement tranche of this IPO is well received by institution investors and this should bear well for this counter when it start trading on the 12 april (monday).

I can't get placement tranche (most local brokerage was not even allocated any!!) so you may hv to try your luck at the ATM machine.
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

Shipping industry turns...or is it?

2010-04-01T09:09:00.003+08:00

Shipping industry  starts to turn- The Edge
                         

The US economy is on the mend. So says Emil  Wolter, head of regional strategy, Asian markets at RBS, who prefers to  play developed market growth over emerging market growth. He is  forecasting that US unemployment is going to fall to 8% from 10%. That  would support a continued recovery in US consumption. As a consequence,  global trade is poised to rebound by 6-8% in the next 12 month, Wolter  says. While the shipping sector has supply issues, Wolter says “You can  buy a lot of these companies at their NAVs and although some companies  have problems with their balance sheets, there are also a lot of  companies with strong balance sheets.” Moreover, pricing power is  returning, and the shipping companies are operating more efficiently  too. 

That’s a view that Survo Sarkar, an analyst at  DBS Group Research, agrees with. In a 32-page report on Neptune  Orient Lines, DBS has re-initiated coverage with a price target of  $2.40. According to Sarkar, the figure represents seven times FY11  EV/EBITDA, (enterprise value to earnings before interest, tax,  depreciation and amortisation) and a price to book of 1.6 times. These  valuations are conservative compared to peers’ average of about 10 times  FY11 EV/EBITDA, the report says. 

According to the report fundamentals for the  shipping sector are indeed turning increasingly positive. “Year to date,  container rates and volumes have both made a strong comeback — with  rates on Asia-Europe routes now about 70% higher than last October  levels,” Sarkar writes. NOL’s operating statistics for the first 10  weeks of FY10 reflect the improved fundamentals, the report says.  Volumes have risen 52% y-o-y, and freight rates are up 7% and 10% on a  sequential basis in the first two reporting periods, it adds. “According  to our estimates, NOL’s container shipping business should return to  profitability by 4Q10, on the back of 9% growth in trade volumes, a 10%  growth in average freight rates/FEU and a 3% drop in average operating  expenses/FEU for FY10,” Sarkar states in the report. NOL last traded at  $2.01.

Elsewhere, Kim Eng Research is bullish on Singapore   Airlines and is raising its target price to $18.90 from $16.20  earlier because of improved assumptions for passenger loads from FY11.  Analyst Rohan Suppiah believes that higher visitor arrivals into  Singapore, a recovery in the global aviation sector and a rebound in  premium travel should underpin better yields. SIA last traded at $15.20.

ML's Take:

Send  out an email on shipping about 2 weeks back saying the same thing.  However, after talking to insiders from the market, any freight rate is  unlikely to be sustainable unless economic activities jump up strongly.  This is because there is still alot of idle capacity which ship owners  can activate.

Hence, for counter like NOL, its a buy on  weakness in the short term, but also a sell on strength whenever the  price rally. Not a buy and hold strategy yet for now.

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 Brokering firm.

Sembcorp Marine announced contract. Offshore Marine industry looks bright.

2010-03-19T17:51:00.000+08:00

Sembcorp Marine has announced a substantial contract worth S$550m. SMOE, SMM’s subsidiary that specialises in topside modules, has secured an estimated S$550m contract from ConocoPhillips to build the Ekofisk accommodation topside to be installed in the North Sea. This sizeable contract reinforces our positive view on SMM and we maintain our price target of S$4.95. Our forecasts still remain conservative as we have not yet factored in a significant amount of rig building and offshore jobs, which we believe will begin to flow in by 2H10. This contract reinforces our optimism for a recovery in the offshore marine sector. Our target price of S$4.95 is pegged to a FY10 PER of 14x. Kim Eng

Singapore Offshore & Marine Sector

Maintain Overweight on O&M sector. We believe both Keppel and Sembmarine share prices could continue to do well in the near term as we expect about S$11bn worth of order wins. Key catalysts for the sector include recovering order momentum and earnings visibility beyond 2011.

Even if we exclude the seven drillships, we believe that Sembmarine and Keppel O&M could still snatch about US$4bn worth of contracts in total from Petrobras.

We believe that it is only a matter of time before oil majors start to spend again. Both Sembmarineand Keppel are seeing heightened genuine enquiries. We upgrade our 2010-11 order wins for Sembmarine from S$3.5bn to S$6.5bn, S$4bn respectively and S$4.5bn, S$4bn for Keppel O&M. We believe that 2009’s order drought will eventually prove to be just a temporary halt in the ongoing O&M cycle.

Sembmarine and the implied Keppel O&M valuations are trading close to their five-year average of 15-16x. We believe that with the accelerated orders, the share prices could potentially trade near to its previous peak of 20-22x (10% upside to our target prices).

Maintain Outperformon SembMarine, target price raised from S$4.54 to S$5.44. CIMB

ML Note:

I continue to like the offshore marine sector in view of firmer oil price on the back of economic recovery globally. While rig contract may not be as robust as before, the above contract demonstrated that the offshore marine business is more than rigs and there are much peripheral support infrastructure that can benefit this sector.

Kepcorp, SembMarine, Ezra are some of the better names that can consider picking up. However, I do note that they have run up recently, so would prefer to wait for a minor correction, to pick them up again.

I also notice that business activities has picked up over the past one month, and was told that container volume has seen a pick-up and this has caused some kind of squeeze of the supply of late. This is likely to result in freight rate increase which will have a positive effect on shipping counter like NOL and the newly listed Golden Ocean (but this one is bulk freight).

God bless!

ML is a licensed stockbroker with one of Asia Leading Stock Broker firm. To contact him, please email: icewolfmike@gmail.com

CitiGroup says container shipping is “On the Brink of Profitability; Sustainability in Doubt”

2010-03-19T17:46:00.002+08:00

CitiGroup says container shipping is “On the Brink of Profitability; Sustainability in Doubt”

Analysts: Rigan Wong, and Ally Ma

Positive guidance and outlook – Recent commentary from major liners suggest a positive 2010 outlook and return to profitability for some, dispelling investor concerns of multi-year, industry-wide losses.

Demand and rate hikes were phenomenal, but increasingly difficult to push up –Recent demand was driven by a strong inventory re-stocking cycle and caught many liners by surprise. Rates climbed by 15-30% in the first 2 months of 2010, but recent March hikes failed to pass on smoothly. Continued volume strength and further hikes in freight rates will hinge on the extent of G3 consumption, the stage of inventory build-out, and liners’ holding power of large idle fleet.

What should investors do? – Within the shipping sector, selected container shipping stocks have outperformed YTD (NOL +19% vs. industry +11%) on expectation of Transpacific rate hikes and undemanding valuations. While 1Q10 results may beat expectations and bring shares higher from current levels, investors may turn cautious thereafter on the sustainability of volume strength and rate hikes, as well as perennial industry oversupply.

ML Note:
Just happen to see this.

Meanwhile, I spoke to a friend from the industry. His take is this: "Yes Vol has increased and carrier also restoring rate esp Euro/us cargo. But fact remain that no. of idle ships still large which will threaten freight level if carrier start pulling back idle ship."

Hence I see freight rate increasing in the near term, but agreed with Citi take that sustainability will be an issue especially if economy does not pick up fast enough. On the other hand, I see short term supply pressure to remain, that will boost freight rate in the near term.
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 Broking firm. To contact him, please email: icewolfmike@gmail.com

Invest in China Energy Sector

2010-03-15T16:06:00.000+08:00

Below is a research on China Energy Sector by Yuanta. Good note.

Note that China energy companies are fast growing (if not the fastest growing) and quickly catching up with their western counterpart. If you wish you are a shareholder of Shell or Exxon Mobil in its early day...then perhaps China energy stock is something which you would like to take a look at before it become too expensive.
ML

Industry Initiation: China Gas Industry - The oil contender
Top recommendations·         BUY CNPC HK (135 HK), PetroChina’s (857 HK; not rated) subsidiary, in a position to benefit from explosive growth in gas.
·         BUY China Oil & Gas (603 HK) to gain exposure to coal-bed methane (CBM) in China.

What’s new?
·       We initiate coverage of the China gas sector.
·       We expect unconventional gas sources such as coal-bed methane and shale gas to significantly boost gas reserves in China.

Industry outlook
·         We expect China’s natural gas consumption in 2020 to be six times that of 2008.
·         We believe the soon-to-be-announced China gas reform will boost sector growth.

Initiating coverage: We initiate coverage of the China gas sector with BUY recommendations on CNPC (HK) and China Oil & Gas, and a HOLD call on China Resources Gas (1193 HK).

Gas to help ease China’s reliance on oil: Given that China is short of oil, we believe the country will increase natural gas production aggressively to reduce its reliance on oil. On top of its known natural gas reserves, China has made significant progress in unconventional gas development, in particular coal-bed methane (CBM). The National Development and Reform Commission (NDRC) estimates that economically recoverable CBM reserves in China totals 10 tcm (trillion cubic meters, or 353 trillion cubic feet), which is more than four times the proven natural gas reserves in China as of 2008. As China is the world’s largest coal producer, we believe it will naturally be a leading, if not the largest, CBM producer.

Natural gas is a cheaper and cleaner alternative: CNPC, CNOOC (883 HK; not rated), Sinopec (386 HK; not rated) and city gas distribution companies have been investing heavily in gas pipeline infrastructure. Natural gas is replacing liquefied petroleum gas (LPG) and coal gas in homes and buildings for heating and cooking, it is used in industries as a fuel gas and may also increasingly replace gasoline in cars. It is a perfect substitute for LPG or gasoline as it is cheaper and cleaner.

Stock recommendations: Our top pick in the sector is CNPC (HK). We believe PetroChina will continue to inject assets into its subsidiary and support it with natural gas supplies to grow the company into the number one gas distribution company in China. We like China Oil & Gas too as a mid-cap pure CBM play with significant growth potential. However, we are neutral on China Resources Gas as we are concerned about its potential near-term equity dilution risks

A research note by Yuanta

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

Keppel Corp - Establishing new high. Chart and short term views

2010-03-15T10:10:00.002+08:00

Keppel corp established new 20 days high this morning. The counter has been bolstered by recent strong result as well as firmer oil price.

For those who had follow my call earlier in February (when it is trading around 8.30 region), it may be a good time to take some profit. Based on chart (attached below), I believe it will try for 8.90-9.00 region before coming back down.

This counter remains on an uptrend, and interestingly, seems to be displaying a flag and pennant pattern. So I will wait for a correction, to buy back the share, while taking profit when it rally.

My last note on kepcorp is on 1 Feb at this link: mlstrategicinvestment.blogspot.com/2010/02/keppel-corp-won-1-billion-contract-from.html

For your reading pleasure.

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

The Bull market is coming??

2010-03-11T15:32:00.003+08:00

"The bull is coming." 2 fellow brokers said this to me this morning, for no apparent reason. Perhaps they can feel something (they been in the market much more than me) or perhaps they are juz bored (the phone is hardly ringing these days).

Anyway, my quick take on the market:

a) The market is moving away from the recent bouts of bad news (since CNY) on Greece, US job and China inflation. These are becoming old news as market start to move away from them. This is the transition period from negative sentiment to not so negative sentiment, and this is seen keeping stock price well supported for now. The lack of bad news, is seen as good news.

b) However, valuation is no longer as cheap as before. I am not expecting the March bull run that we see last year, although I remain overall bullish that the market is on a recovery path.

c) Nonetheless, this remain a volatile market. There will be upswing and downswing as the market seek out clear direction amidst the lack of a market leader (china or US).

d) I do not see a burst in volume just yet, and only when that happen, then we can see the momentum maintain. Despite the recent rise in the US market, the rise is still not broad base enough.

e) Blue Chip will continue to steer the market. Penny stock...forget it for now.

f) This market is for the brave and nimble - meaning: please take your profit (and dun be greedy) and wait for correction and weakness to pick up share. I am not asking you to churn the market, but what i am saying is rally or down trend unlikely to be sustainable. So take your profit!

g) The strategy: Buy when everyone wants to sell, sell when everyone want to buy. Go for the easy money (but u must be brave). Be patience.

My preference:

a) Commodity related play
- Olam and Noble are my preference. Look to buy on weakness.
- Golden Agri, Wilmar are trading play..as they trace the CPO and crude oil price. If crude oil price is going up, these guys will follow suit most likely.
- Straits Asia - another trading play. Hit by bout of weakness lately due to lack of earning visibility and succession issue.

b) Offshore Oil and Gas play
- Sembmarine
- Kepcorp
- Ezra

These have run up quite a fair bit lately. Look out for oil price. If oil price up, this will rekindle interest in E&P activities and thus raise the possibility of new contract.

c) Property Play
- Recent government measures took some wind out of the properties sector.
- However, feedback from the ground is that the demand is still real.
- As long as interest rate remain low, pple will invest in property.
- More government measures ahead...thus will create buying opportunities.

d) Finance
- Banks result is looking up. Re-valuation, lower NPL, higher interest rate income are all positive factors to come.

e) Reits
- Long term dividend play amid some stability. Most reits has successfully raise fund after last year debacle. So they should remain stable and yet give good DPU.
- Suntec Reits
- Capitaland related Reits
- Starhill global Reits

If singapore IR strategy play off, rents will be on the up again. This will benefits reits.

f) Transport
- SMRT
Talk of revision in earning for SMRT. It is a stable play even in downtrend with good stable earning.
Beside rising ridership, SMRT is likely to see better rental yield from its property arm. That should be another injection in the arm.
For those looking for long term investment, this can be one counter for you.

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

CapitaLand says boom in China property not a bubble...by bloomberg

2010-03-11T12:18:00.001+08:00

CapitaLand, which has Chinese properties valued at more than US$14 billion ($19.6 billion), said demand in China is “strong” and the real-estate boom can’t be called a bubble.

Still, the Singapore-based developer said it was “comforting” that the Chinese government is taking steps to rein in the market, according to a CapitaLand presentation filed to the Singapore Exchange today. CapitaLand, Southeast Asia’s biggest developer, has said it plans to expand its China business to 45% of its operations within five years.

China’s property prices rose at the fastest pace in almost two years in February, adding urgency to the government’s efforts to damp speculation and increase the amount of affordable housing. Residential and commercial real-estate prices in 70 cities climbed 10.7% from a year earlier, the statistics bureau said on its website yesterday, topping a gain of 9.5% in January.

To cool speculation, China is requiring a down payment for land purchases equal to 50% of a plot’s price, the Ministry of Land and Resources said on its website late yesterday. The government in January also re-imposed a tax on homes sold within five years of their purchase, after having cut the taxable period to two years in January 2009 to bolster a then-flagging market.

Bank of China, the nation’s third-largest lender by market value, said Feb. 3 that it had reduced discounts for some mortgages, citing concern about rising property-market risks.

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

China NPC - Looking for direction in a listless market

2010-03-03T15:28:00.000+08:00

While many await job data from the US this week, I am instead watching the Chinese NPC that is happening over the next 3 days.

With the rest of the world economies in doldrum, how China steers its economy over the next few months will be crucial and will likely have the most direct impact on the market.

Things to look out for:
a) China Monetary stance - we know that china is tightening and the NPC will tell us that. Hopefully the NPC will set the tone of how much tightening will take place.

b) China economy recovery - China economy has remained robust although the recent manufacturing number has slowed down. The NPC will state the government view on the risk and direction of the economy going forward.

c) Yuan - China is being pressured to re-value the RMB. The question is when and how much. NPC is likely to reiterate the Chinese hesitation to re-value the RMB due to the risk on its export sector. If the revaluation of the yuan is limited, then the chinese is back to using monetary policies to address any inflation issue - this will have an impact on chinese banks and property stocks.

Most importantly, China is an important engine for the world economy with US and Europe still struggling to get their footing. Hence I suspect, if there is any good news, the market is going to look out for what is happening in China again.

How and what will China do? -- focus of world's media
by Xinhua writers Dai A''di, Ma Mengli

"How and what will China do?" at its upcoming parliamentary plenary sessions has recently become a focus of world media.

As the annual plenary sessions of China''s National People''s Congress (NPC) and the National Committee of the Chinese People''s Political Consultative Conference (CPPCC) are set to start on March 5 and March 3 respectively, the international community has started to turn its attention to China.

The two meetings will discuss and analyze such topics and issues as China''s role in the global financial crisis, government measures to benefit the people and redivide social wealth, a drafted voting law that allows both urban and rural residents to enjoy equal rights to vote, and the building of China''s democratic politics, among others.

All of the topics and issues, which are of rich, in-depth and far-reaching significance, show that China''s development and progress have caused wide discussion in the world media.

TRANSFORMATION OF CHINA''S ECONOMIC DEVELOPMENT

Last year was the most difficult for China''s economic development since the new century started. But the Chinese people of all nationalities, under the leadership of the Central Committee of the Communist Party of China (CPC), worked hard to manage the country''s economy. That effort led to the achievement of an overall recovering trend while China was still facing the impact of the world financial crisis.

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

Genting Singapore shares down as Casino stocks get a drubbing on LV Sands results

2010-02-18T10:34:00.002+08:00

ML's Take:

Sands China share is suspended this morning. In pre-suspension, it is down HK28cents. Sands says it call for this halt, to allow investor to ponder over the results release overnight. However, its share continue to tumble after the halt is lifted.

Asia Casino stocks fell this morning across the board, taking the lead from LV Sands overnight weakness. This is despite LV Sands reporting narrowing losses. Seems like market has over-factor in their expectation for Sands Macau operation.

In the same vein, this may be the case for Genting Singapore as well, with the counter falling below S$1 this morning. Adding to this pressure is the fact that Genting has a mandatory conversion for its convertible bond today with a conversion price of 95cents. This will add to the selling pressure on this counter.Support at S$0.95.

Article from Reuters below:

Deena Beasley

LOS ANGELES

Wed Feb 17, 2010 6:58pm EST

Stocks

LOS ANGELES (Reuters) - Las Vegas Sands Corp (LVS.N), the casino operator run by billionaire Sheldon Adelson, narrowed quarterly losses, but disappointed investors hoping for even better results from its Macau operations.
Hot Stocks
Its shares slid nearly 6 percent as the results met Wall Street expectations, but fell short of the most bullish forecasts, with weakness in Las Vegas offsetting strong gambling demand in the former Portuguese enclave in China.
"I think people were expecting a beat," said Keybanc Capital analyst Dennis Forst.
Some analysts said the market had hoped for better from Macau, viewed by investors as the crown jewel in the company's portfolio.
Soleil Securities said in a research note the company's profit margins, particularly in Macau, were less than expected.
Gambling revenue in Macau, the only place in China were gambling is legal and the source of the majority of Sands' operating income, has soared in recent months -- jumping nearly 65 percent in January.
Sands, which sold a stake in its Macau operations in a public offering in November, posted a net loss of $113.9 million, or 17 cents a share, in the fourth quarter compared with a year-earlier loss of $136.5 million, or 27 cents a share.
Excluding items such as expenses to open a new resort in Singapore, Sands earned 3 cents a share, matching the average analyst forecast, as compiled by Thomson Reuters I/B/E/S.
Operating income at the company's Venetian Macao resort nearly doubled to $119.7 million during the quarter, while operating income at the Sands Macao rose 13 percent to $43.9 million.
In Las Vegas, where citywide gambling revenue has begun to stabilize, but room rates are still heavily discounted, Sands had an operating loss of $15.7 million.
"In my view, Vegas underperformed and Macau outperformed," Forst said.
Chairman and Chief Executive Adelson said Sands has done well in Macau -- where earnings before interest, taxes, depreciation, amortization and rent (EBITDAR) rose a "whopping" 48 percent in the fourth quarter -- by focusing on mass gaming, hotel and retail businesses, while controlling costs.
Sands said $50 million of its Macau EBITDAR came from gambling "hold," or luck on the part of its casinos.
The company acknowledged that results in Las Vegas have been hurt by lower room rates and less revenue from food and beverages. Competition continues to cap room rates, but Adelson said business is returning to Las Vegas, with group business up 20 percent in the first 40 days of 2010.
Overall net revenue for the quarter rose 17 percent to $1.28 billion, beating the $1.23 billion expected by analysts.
Sands owns the Palazzo and Venetian resorts on the Las Vegas Strip, two casinos in Macau and a casino in Pennsylvania. The Las Vegas-based company said its next gambling resort -- located in the city-state of Singapore -- will begin opening in late April.
Sands, which has come close to violating loan agreements and suspended construction on several projects, resumed work on additional Macau projects late last year.
The company said the first phase of these projects, located in an area of Macau known as the Cotai Strip, will open in June 2011, with the next phase following about six months later.
Sands officials discounted any impact on its Macau operations from monetary tightening by the Chinese government, saying that most of the company's business in Macau is from mass market customers who do not rely on credit.
The company said it will report results for Hong Kong-listed Sands China Ltd (1928.HK) on March 1.
Sands shares, which hit an all-time low of $1.38 last March, fell to $16.44 after hours after closing down 0.6 percent at $17.46.
(Reporting by Deena Beasley; Editing by Andre Grenon, Bernard Orr)

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

China raise bank reserve requirement to 16.5% - my perspective of the move

2010-02-13T10:27:00.001+08:00

China Raises Bank Reserve Requirement to Cool Economy

ML's quick take:

a) A surprise hike by PBOC in term of timing, more specifically the speed of it. However, announcing this after the close and on "eve" of CNY will allow the market to absorp the news and avoid another rout in the stock market.

b) The hike in capital requirement, is a move to draw out liquidity from the system and to rein in runaway bank lending. This move is expected to draw out around 300b of liquidity from the banking system versus 4trillion that has been pumped into the system and the 1.39t of loan that has been given out. Hence, it is important to look at this from a relative perspective.

c) It is actually a good thing that china is tightening at the early part of the year. This will avoid the double whammy of China, US and EU all tightening at the same time, which is largely expected in the 2H of the year - a sure ingredient for a double dip recession! And I believe the Chinese authorities wants to avoid this.

d) This move will not be the last. In fact, it show that the Chinese government willingness to act quickly if needed and show that the growing savviness in managing inflation in the country. Beside capital requirement, expect more move to raise the benchmark interest rate. Market will eventually get use to it.

e) Note how the market react to the news from china. This show China growing force in the world economy.

f) Note how the Dow rally off the low at the close to stay above 10,000. Technically, that is a positive sign as it demonstrate the emergence of new bull and the remnant bear in the market.

I expect some initial softness in STI on its opening next week, but I will look for weakness to go long. I am still targeting bluechip stock, specifically, those with FY09 result on the horizon. Majority are short term trade, with tight stop (using recent low).

With this I sign off from the year of the OX, as we step into the year of the TIger.

Wishing all of you Hu Hu Sheng wei, Hu nian sing da yun!

Below is an article on the move by Bloomberg.

Feb. 12 (Bloomberg) -- China ordered banks to set aside more deposits as reserves for the second time in a month to cool the fastest-growing economy after loan growth accelerated and property prices surged.
The reserve requirement will increase 50 basis points, or 0.5 percentage point, effective Feb. 25, the People’s Bank of China said on its Web site today. The current level is 16 percent for big banks and 14 percent for smaller ones.

Stocks reversed gains in Europe after the announcement on concern that tighter lending in China will damp the global economic recovery. Policy makers aim to avert asset bubbles and restrain inflation after banks extended 19 percent of this year’s 7.5 trillion yuan ($1.1 trillion) lending target in January and property prices climbed the most in 21 months.

“This is all about controlling the boom, so that we don’t have a bust in the second half,” said Stephen Green, head of China research at Standard Chartered Bank Plc in Shanghai.
The central bank moved after Chinese markets closed and on the eve of a weeklong Lunar New Year holiday when the nation moves into the Year of the Tiger from the Year of the Ox.
Europe’s Dow Jones Stoxx 600 Index temporarily regained ground on better-than-estimated corporate earnings and a stronger-than-forecast increase in U.S. retail sales before declining again. The Shanghai Composite Index rose 1.1 percent before the announcement.

Avoiding ‘Overheating’
Record lending and a 4 trillion yuan stimulus package have helped the nation to lead the recovery from the first global recession since World War II.

“With China’s increasing economic significance in the world economy, major policy moves will always touch a nerve with global markets,” said Qu Hongbin, chief China economist at HSBC Holdings Plc in Hong Kong. “Still, timely tightening in China will help sustain growth and avoid overheating, benefiting the world in the long term.”

Investors’ concern about investment bubbles in China, and what action the government may take to prevent or deflate them, has mounted this year.

“There’s a monumental property bubble and fixed-asset investment bubble that China has underway right now,” hedge fund manager James Chanos, founder of New York-based Kynikos Associates Ltd., said in a Jan. 25 Bloomberg Television interview. “Deflating that gently will be difficult at best.”

‘Crisis Mode’
The decision to raise the reserve requirement ratio doesn’t signal a change in monetary policy, the official Xinhua news agency said, citing an unnamed official from the central bank. Officials will maintain their moderately loose monetary policy, the report said.
The central bank said yesterday that it wanted to gradually normalize monetary conditions from a “crisis mode” after gross domestic product grew 10.7 percent in the fourth quarter, the fastest pace in two years. It also said that not all countries will exit stimulus policies at the same time.
Policy makers are yet to drop the yuan’s effective peg to the U.S. dollar, which was adopted in July 2008 to aid the nation’s exporters, stoking friction with the U.S. and Europe.

Recovery Bets
Credit Suisse Group AG. estimated that today’s move will remove about 300 billion yuan from a financial system also facing inflows of cash from investors betting on the nation’s recovery and likely gains by the yuan. The nation’s foreign- exchange reserves swelled to a record $2.4 trillion in December, partly on inflows of “hot money,” or speculative capital.

“The central bank will keep raising the ratio frequently until the middle of the year,” said Lu Zhengwei, a Shanghai- based economist at Industrial Bank Co., who predicted today’s increase. “The central bank wants to stay ahead of the curve by tightening before inflation starts to gain pace.”
He forecast an increase in the benchmark lending rate from 5.31 percent as early as April.
In contrast, Citigroup Inc. said the central bank may not raise rates until the third quarter as inflation stays “mild.”

Consumer prices rose 1.5 percent in January from a year earlier, down from 1.9 percent in December, on smaller gains in food prices. Inflation will accelerate to 3.6 percent by the end of June, according to a

Bloomberg News survey of economists.
“Raising the reserve ratio on the eve of the Chinese New Year holiday really makes a lot of sense as it will give markets time to react,” said Mark Williams, an economist at Capital Economics Ltd. in London.

Property Prices
Economic data this week showed property prices across 70 cities surged 9.5 percent in January from a year earlier, exports climbed and producer-price inflation accelerated. Bank lending of 1.39 trillion yuan topped the total for the previous three months combined.
The central bank on Jan. 12 increased banks’ reserve requirements for the first time since June 2008. The latest move will soak up liquidity from maturing central-bank bills and also money injected into the financial system for the coming holiday, China International Capital Corp. said.
At Morgan Stanley, Hong Kong-based economist Wang Qing said that today’s increase would counter foreign-exchange inflows which “must have been persistently strong since January” and also withdraw money added for the holiday.
Reserve-requirement increases will continue through 2010, Wang said. “The market should get used to it.”

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

When will Asia stock market rebound? Maybe only in March

2010-02-10T14:23:00.000+08:00

This is an interesting article from MarketWatch
Chinese stocks have put in an anemic performance so far this year, despite the nation's strong economic recovery, and one group of analysts say investors may have to wait until March for a significant upturn.
Part of the problem are upcoming data releases, which will likely continue to feed worries about further policy tighteningto prevent the economy from overheating, according to Macquarie Group Asia strategist Michael Kurtz and analyst Shirley Zhao.
Kurtz and Zhao said that, timing-wise, it may not be until the Chinese Communist Party's annual National People's Congress in March that investors may again begin to grow comfortable with Beijing's policy outlook.
By then, most Chinese companies will have released their 2009 corporate earnings, which the analysts said will likely be strong and could provide an additional trigger for market gains.
"China's next couple of months of data may continue playing directly into the 'sell inflation/buy exports' trade ... as base-effect distortions from a bombed-out first quarter of 2009 substantially elevate the 2010 [year-on-year comparison] readings on both China's headline inflation and exports," they said.
China released January trade data Wednesday showing a narrowing of the trade surplus, though analysts said the monthly figures for January and February are hard to read due to distortions from the Chinese New Year holiday.
Meanwhile, the Macquarie analysts also cited data on money flows from China-dedicated long-only fundsas showing that they have pulled out some 20% of their total net subscriptions last year, in "a liquidation so large as to seem itself unsustainable."
The Shanghai Composite now is among the worst performing benchmark indexes in Asia so far this year, having lost about 9.5%. In Wednesday's morning trading, the index was at 2,967.03, up 0.6% from the previous close.
The Hang Seng China Enterprises Index, a benchmark tracking performance of large-capital Chinese shares listed in Hong Kong, has even sharper losses under its belt, having dropped 12.5%, while Hong Kong's benchmark Hang Seng Index has given up around 9% so far in 2010.
The Hang Seng was flat at 19,782.88 in Wednesday's morning session, while the HSCEI rose 0.5%.
Even shares of commodity producers in Australia and exporters in Japan, Taiwan and South Korea have all performed weakly in recent weeks due mainly to worries about Chinese policy tightening, given that China is a major importer of raw materials and is increasingly a major buyer of consumer goods.
Hope Of Greece Rescue Boosts Asia
Asian shares are lifted by hopes that the EU will craft a rescue plan for Greece and other troubled euro-zone economies. Dow Jones Newswires' Mark Cranfield reports.
The Macquarie analysts listed Hong Kong-traded Chinese shares, better known as H-shares, as attractive bets.
"In addition to value, dividend yield has become increasingly attractive, as markets remain choppy and indecisive," they said.
Among H-shares, they said Bank of China Ltd., China Shenhua Energy Co., Aluminum Corp. of China, China Petroleum & Chemical Corp., Nine Dragons Paper Holdings and Weichai Power Co. were stocks trading at a sharp discount to their historic valuations after the recent correction.
Macquarie also named China Southern Airlines Co. as a stock likely to benefit from a potential yuan appreciation, and rated China Telecom Corp. as a "value play."
Industrialized nations have been mounting pressure on China to let the yuan appreciate against major currencies. Chinese authorities have kept the local currency in a very tight range around 6.82 yuan to a U.S. dollar for more than a year.

My take:
Chinese policy makers intention is pretty clear but market will only settle down after the central sit down for their annual meeting march to put everything down in black and white. In any case, I believe that March is a reasonable time frame, as by then most of the news out there should have been absorbed by the market.
Also by then, we should have a clearer picture of at least 1H10 for the US market, and hopefully a good strong resolution for the European sovereign debt issue.
Until then, market will remain volatile with volume staying thin. Genuine buying interest are still thin, and this will keep the market choppy.
However, if you do see March as a good time for stock, then perhaps February after CNY, is a good time for some bargain hunting.

Europe in crisis and what does Piigs got to do with Asia (or US) Stock Market?

2010-02-06T17:11:00.001+08:00

Portugal, Ireland, Italy, Greece, Spain (or PiIGS) are representing European pride in the upcoming 2010 World Cup.

Unfortunately, they are now also blamed by the market for testing the Eurozone unity.

Growing concerns about their deficit and concerns (i stress the word "concerns") about their inability to service their debt is rattling capital market worldwide. Technically, none of these countries has actually defaulted on their debt or raise issue repaying their debt.

The heart of the problem here is not so much as of their debt, but the question is on the overall unity of the Eurozone members and the political willingness of the bigger players (Germany and France) to bail out their poorer neighbours in time of need.

With the world just on its recovery path, and European economies still struggling to find it footing, the financial market pirate (if you believe in the financial world conspiracy theory) saw a candidate ripe for some plummeting. This is especially so with the Eurozone just undergoing a recent transition of new leaders and, not to mention, an European Central Bank president, Jean-Claude Trichet, which many views as inept..(looking at his recent statement that EU will never bail out Greece...I tends to agree with this view)...the market is testing the theory that EU will have issue coordinating a rescue of their own version of a major financial crisis.

So what does this got to do with Asia...or even the US? Well, there is always the contagion effect theory. However, from lessons from the Asia Financial Crisis, and the recent US Sub-prime meltdown...I believe the key impact will still be on ground zero.

Yes any crisis in Europe will definitely further slowdown the recovery process, but PiIGS ultimately is not US, nor France, nor Germany and hence I do not see this having a key economic impact on Asia recovery.

OK...the Euro may be vulnerable you may argue. But it is almost unimaginable that Germany and France will actually allow the pride of Euro to go into tatters...even thou politically they will not say so.

The pirate will keep looking for bad news to short the market after the run up in stock prices since march 2009, but I am betting on this as a correction rather than a return of the real bear market for now.

I have attached here a revised chart of DJIA, HS and STI showing their respective support levels. Looks like there will still be some downside ahead, but I still see the market to be supported until the major trendline is broken.

2010 will prove to be a volatile year...and only the brave and nimble will prevail.

God bless!

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 as usual.

Keppel Corp won 1 Billion contract from Brazil - on an uptrend!

2010-02-01T23:07:00.002+08:00

SINGAPORE, Feb 1 (Reuters) - Keppel Corp ( KPLM.SI ), the world's largest oil rig builder, on Monday said it has won a $1 billion contract with a joint venture partner to build and operate a rig platform in Brazillian waters.
The contract, Keppel's largest rig deal in over two years, was clinched by a joint venture between Keppel and J. Ray McDermott, a unit of U.S.-listed McDermott International ( MDR.N ). The deal will bolster Keppel's order book, which has been falling over the past year and stood at $5.6 billion at end-December.
The contract was awarded by a Petrobras ( PETR4.SA )-Chevron ( CVX.N ) joint venture.
Keppel said the P-61 tension leg wellhead platform will be deployed in Brazil's Papa-Terra field in the Campos Basin and will operate alongside a floating production storage offloading vessel to handle up to 180,000 barrels of oil per day.
"Brazil's offshore sector is embarking on a very exciting phase with many of Petrobras' new projects put on fast-track," Chow Yew Yuen, president of Keppel Offshore & Marine USA, said in a statement.

My take (this is written before i saw the contract but should be relevant except that Target price may be higher now):
Good buying interest over past 3 days (3 white candle) but note that this comes from a very low base. The RSI index still within range and have not actually reach overbought region,

Personally I believe can still hold on to this counter, but it may hit resistance at 8.66 to 8.70 region in the near term, but with this contract I expect it to try for a new high (prelim target 8.80). If you can hold longer and do not want to trade, this counter is still on an uptrend (as suggested by higher high and higher low it has been achieving over the past months).

Fundamental looks promising with a strong order book. Recent win of oil rig project is also a good sign that the oil exploration project may be on a rise.

For your consideration. This is my personal opinion.

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 as usual.

Obama says not keen in punishing banks...is Washington vs Wall street battle over?

2010-01-30T16:40:00.001+08:00

Market rebounded today during Obama's state of union speech this morning. While Obama pledge to stabilize and grow the US economy is positive (I mean what else can he say), I think the crux of the whole speech is that he is NOT declaring war on the banks, and he just want to ensure that the US economy is sheltered from huge systematic risk.

After the strong populist rhetoric on whacking the US banks last week, today statement definitely sounds much milder and take some load off the negativity surrounding the uncertainty of what exactly his government intend to do to clamp down risk taking among banks.

Note that Davao economic forum is also on-going with most banking honcho denouncing any restriction on such clamping move and noted the limited effectiveness if it is not coordinated internationally (which is difficult if not impossible).

The market has an almost instantaneous effect when O Ma Ma took on a milder stance, as the market stage on a good TECHNICAL REBOUND.

Is the selling over? I think most of the selling is done (in fact over done). Margin call n force selling should end by today if any left...hence the market should stabilise from here.

Will the price go up? There will be technical rebound. Many Blue chip counters still have got some gaps to fill, but this could take time.

Will it go down again? I believe prices hereon will be volatile as the market seek out news for direction amid lack of fresh news.

Should I cut loss? If you din cut over the past few days, you are already a brave soul. As I said most force selling should be over. Price should stabilize from here, at least for the short while.

Should i buy to cover my loss? You buy to make money, not cover your loss! If you want to bargain hunt, you better be able to hold. At the same time, practise tight stop if the market move down again. In the mean time, look for good stock with fundamental. For the long run, I believe the forward PE ratio still looks good for Asia.

Can I buy US stock? Note that US market will stay in the doldrum and US banks will stay under pressure for awhile. Be prepare to sit out.

Commodity story is over? Personally I do not think so. Some correction is inevitable thou, but to start off with prices are not overly high to start off with (minus gold and silver lar!).

Is the coast clear? I dun know, but most negative news are already out. So at least for now...I think the heavy sea should be calmer....for now, I hope.

This commentary was send out to my client on Thursday morning during the state of union speech. Apologize for being late here.

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 as usual.

When will the bloodletting stop? Stock markets took another round of whacking

2010-01-27T16:57:00.000+08:00

Equity market worldwide took a beating again today, as selling continue in the afternoon. News of Chinese banks being asked to pull back loan (yest the news is that they were asked to stop giving loan) give the shortists new ammunition to pound the market.

The recent selling is extraordinary and is almost brutal as prices plunge in quick succession. The price action seems to be indicating that big funds are pulling in a big way, and the shortist are definitely having a field day over the past 1 week.

Fundamentally, the selling is overdone. Everyone knew it, but at the same time, as long as the funds refuse to come in to buy up the market, the overall weakness will prevail. The freefall is exacerbated by margin call and contra players taking a hit in recent days. This will restrict further buying power for the days to come.

At this juncture, capital protection is a priority and all trade should come with a tight stop. If you are in the money do ensure you take them before they evaporate.

How far more will the market go? I frankly can't tell. Technically, the chart is oversold and a rebound should be in place. However, I am urging all my kaki to play on the cautious side and wait for Friday before considering going in.

Tonite is FOMC...which I do not expect anything new. Tomorrow Obama (should rename O Ma Ma) will be giving his state of union speech. I wonder what he will be saying this time round.

I am still putting my bet that this selling will not abate until O Ma Ma end his populist war of the banks stance...yes, personally I do think there is a conspiracy going on (yes you can laugh at me).

Coming back to my serious self, the charts attached are definitely looking ugly. Trend line and supports are pierced and the momentum definitely turning down. Is it the Bear market, i can hear you ask? I personally is still not putting my bet on it. Fundamentally, I do not see the world economy sinking into a new round of recession. Perhaps it got something to do with the White Tiger coming...this is a new theory, and I bet the remisers will be harping on this soon once they run out of reason to give their clients after days of selling.

Anyway, if you do hear that from your broker (or from me!), do know that all bad news has been absorbed and guess what....its shopping time again. As for now, stay out!

Keppel Corp - New green trust listing. Solid dividend.

2010-01-27T11:48:00.003+08:00

Keppel Corp's profit up 15% on-year, plans to list "green" trust (Source Channel news asia)

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Conglomerate Keppel Corp on Tuesday posted record profits for 2009, but warned that surpassing the performance will be a challenge this year.

Keppel is also planning to list a business trust in the second quarter, focusing on eco-friendly infrastructure.

The oil rig business was good for Keppel Corp in 2009 as improved margins from rig orders boosted its offshore and marine division, which contributes about two-thirds of the group's profits. Strong earnings from its property unit also helped.

Keppel's net profit for 2009 jumped 15 per cent on-year to a new record of S$1.26 billion. But revenue rose a modest four per cent to S$12.2 billion.

In the quarter ended December, Keppel earned S$343 million on revenues of S$3.03 billion. The fourth-quarter numbers exclude an exceptional gain of S$322 million from selling its stake in Singapore Petroleum Corp.

"This is the best year ever," said Choo Chiau Beng, chief executive officer at Keppel Corp. "While we are working very hard to make sure that we (grow the) ... business and so on, I think it will be tough to beat this result."

To spur growth ahead, Keppel plans to list a business trust in Singapore, which will focus on green infrastructure.

Choo said: "We think there's a lot of need for new green projects, and we will actively participate in that and we see that the trust will give us an avenue to do that in a more efficient way.

"We are optimistic about the environmental business. Because sustainable environment is something that human beings and governments have to invest and have to spend money on, so we are on this trend."

Keppel Corp said that for now, the aim of the green trust is not to raise money, but to reward its investors.

It will distribute 50.5 per cent of K-Green Trust to shareholders by giving them one unit for every five shares held. Keppel Integrated Engineering will keep the rest. This means a distribution value of 23 cents per share.

This will be part of a proposed dividend of 61 cent, which the company is proposing to offer shareholders. There will be a final cash dividend of 23 cents per share, on top of the interim cash dividend of 15 cents per share, paid earlier this year.

The green trust's initial assets will comprise two Singapore waste-to-energy incineration plants and a distilled water complex.

My Take:

Keppel Corp was being pushed down with the rest of the crowd yest to hit a 20 days low of 8.08. This morning it gap up to open at 8.20 on the back of the solid 2009 result and news of its listing of a green trust.

The final dividend in my view is very attractive: 23 cents cash and another 20 cents in form of share = 43 cents, this is taking out the interim cash dividend of 15cents which has been paid.

Technically, yesterday Kepcorp is oversold, and today it may attempt to fill the gap between 8.28 and 8.35 that was caused by the drop on Friday. 8.31 seems to be the immediate resistance, with immediate support at yest low of 8.08.

Obama declared war on Wall Street? Or is it just the same old story?

2010-01-24T09:56:00.002+08:00

By now most of you should have read somewhere about President Obama's proposal to rein in risk taking by banks. If you have not, you should at least know that there was a bloodbath on stock market (and yes commodity also) around the world over the past few days. If you still have not, well count yourself blessed.

In any case, I am writing this just to give some basic understanding on what President Obama is actually proposing that had rattle Wall Street and the rest of the financial world of late.

While he has been vague on details, I believe that what ultimately Obama is proposing is similar, if not the same, with what the US has implemented in 1933 called the Glass Steagall Act (GSA).

So what is the Glass Steagall Act?

In a nutshell:

Historical Background:
The Act came about in 1933, after the collapse of the US stock market which caused the great Depression in 1929, and is largely designed to prevent commercial banks from taking on risky asset largely via investment banking activities.

Basically, the act separate the commercial banking entity from its investment banking entity.

Rationale:
Through separation of the entities, the act technically prevented commercial deposit which is being collected on a low risk basis from being channeled into high risk investment area thus stemming the likelihood of the government coming in to bailout and prevent the collapse of commercial deposit in the event of a huge investment failure by the banks (To some extent this define what it mean by too big to fail).

Why was it repeal in 1999?
The GSA is repealed in 1999, as it was deemed as too harsh and have a mixed bag of effects on the US financial sectors.

"The limitations of the GSA on the banking sector sparked a debate over how much restriction is healthy for the industry. Many argued that allowing banks to diversify in moderation offers the banking industry the potential to reduce risk, so the restrictions of the GSA could have actually had an adverse effect, making the banking industry riskier rather than safer. Furthermore, big banks of the post-Enron market are likely to be more transparent, lessening the possibility of assuming too much risk or masking unsound investment decisions. As such, reputation has come to mean everything in today's market, and that could be enough to motivate banks to regulate themselves." Investopedia

What is the impact on the financial market going forward?
While the reform is seen as highly restrictive and will most likely affect the trading volume in most financial market and the profitability of US banks, its direct impact will not be known until we can get a clearer picture on the details.

What is most worrying is the timing of the proposal which will shroud the market under a cloud of uncertainty all the way through to the US mid-term elections, which is scheduled only in November 2010.

In my personal perspective, this proposal is seen as a declaration of war on Wall Street and is likely to create much volatility and likely persistent weakness in the stock market for the near term. This is clearly evidence at the bloodbath seen over the past few days, which saw funds pulling out the market in a big way.

Frankly, I am not sure which one is better: A weak stock market with a stronger banking sector or a strong stock market with a weaker banking sector. With already a healthcare reform on his shoulder, I am not sure how much President Obama can stomach seeing a recovering market back on its knee....

I have attached here the charts for DJIA, HS and STI.

DJIA has pierced through my expected support around the 10,200 region. I fear more downside here.

HS is near the support line around 20,200 region. I am looking for some momentum rebound (hopefully). Otherwise HS may go further down to 19,500 region.

STI seems to imitate HS by sitting near its support line. I am also looking for some momentum rebound. 2,700 region is still the key support region if this pierce down.

In any case, in such volatile market, always play safe and stay nimble.

God Bless!

Is the market losing steam?

2010-01-15T15:23:00.002+08:00

After a good new year run, I am asking myself whether the market is losing steam after seeing the lackluster trade this morning. Trading volume has certainly creeped down and market movement has been relatively tame despite DJ performing respectably over the past few days.

China tightening move may have dampened the spirit and capped further upside, but as I have argued earlier, I do not see this as a fundamentally flaw policy and in fact think its for the better going forward.

The question however at this juncture is where is the market heading next - and from the way it look....maybe nowhere.

Is the market going to rally further? I doubt so. The expectation of a better 4Q has more or less been factored in. If any upside, it should be limited.

Is the market going to tank? I doubt so too. No reason for it to tank. If any, it will be some profit taking action.

Turning to the chart for some clue...I notice something.....Did u see what I see?

It seems to me that the indexes may have flattened lately from its uptrend (yes it is still technically on uptrend) and is entering into a sideway trading phase, or technically a time correction phase. This I believe is reasonably sound considering the arguement above that any pricing correction should be limited.

Keeping this in mind, I believe we have entered into a sideway trading phase until the market find new momentum and reason to see the breakout it required. Hence for now...may be buy near the support and sell near the resistance is the only option.

DJIA 10900 - 10200
HS 20285 - 23115
STI 2700 - 2960

Maybe its just my sentiment today...hopefully.

God Bless!

PBOC Tightening - Fundamentally Positive

2010-01-14T10:52:00.002+08:00

Stocks hit a Chinese wall Last evening, the People’s Bank of China (PBOC) announced it will raise the reserve ratio requirement (RRR) by 50 bps to 16% from 15.5% for big banks and to 14% from 13.5% for smaller institutions from Jan 18 with rural credit cooperatives excluded. That took the wind out of the sails of Asian markets. This is the first time since Dec 08 (after the Lehman collapse) that the PBOC is raising the ratio. Analysts and economists were expecting the RRR to be raised sometime in February. According to Bloomberg News, a median of 11 forecasts were expecting the move to be made only in April. As a result, the Hang Seng Index lost 578 points or 2.6% to close at 21,748 on Wednesday while the Shanghai Composite Index dived 3.1% or 101 points to close at 3,172. In a research note, DBS Research says that the China’s decision to hike its RRR “sends the clearest signal yet that it is beginning to tighten monetary policy”. That in turn could dampen sentiment for stocks with pure exposure to Chinese properties, it adds. Chinese property companies listed on the Singapore Exchange include Chongqing-based Ying Li International Real Estate, Yanlord Land Group, Centraland, Pan Hong Property Group, Guangdong-based China Yuanbang Property Holdingsand Sunshine Holdings. Analysts also predicted that any tightening of monetary policy by PBOC will affect commodities. Already, copper and oil eased on Wednesday, while the Baltic Dry Index ended at 3,160, down roughly a third from its Nov 09 high of 4,661. STX Pan Ocean lost 56 cents to $15.50 on Wednesday. Other SGX bulk carrier operators include Mercator Lines and Courage Marine. DBS Research believes there could be “a knee-jerk reaction from commodity plays such as CPO (crude palm oil) and coal”. Wilmar Internationalhas been very much a China play and its stratospheric ascent came to an abrupt halt on Wednesday when prices fell 13 cents to $7.04. “We note that CPO stocks Indofood-Agri Resources (target price: $2.30) and First Resources (target price: $1.16) have both exceed our fundamental target prices,” DBS says. On the other hand, Citigroup Research reckons any tightening by PBOC would have a positive impact on Chinese banks. “We see the sector range-bound in the near term due to capital raising uncertainties, but view monetary tightening as fundamentally positive leading to higher net interest margins (NIM),” Citigroup says in a report released on Wednesday. “We would much prefer slower loan growth and higher NIMs than the opposite combination.” Its top picks are China Construction Bank, China Merchants Bankand China Citic Bank. While the 0.5 percentage point increase in bank reserve requirement only drains about RMB200-300 billion ($40.7–$61.1 billion) from the market, it could be the start of further tightening which could drain another RMB500 billion from the market, China watchers estimate. Moreover, this first step comes in the wake of the Chinese government’s concerns over inflation. Bank lending is estimated to have risen to RMB600 billion in the first week of January versus RMB295 billion in Nov ’09. Asian markets could be vulnerable should PBOC tighten further, analysts warn. Chart Watch: Short-term decline The STI’s decline was more measured than its North Asian peers with the index falling 27.7 points to 2,888. Support for the decline is at 2,800, and the still rising 50-day moving average is at 2,795. Last Friday, short-term indicators had turned down. Monday’s move to a new high of 2,933 created a minor negative divergence. This is not a major divergence, and a failure swing hasn’t materialised. Against this background, the down move should be temporary as the main uptrend remains intact. — Goola Warden, The Edge
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My Take:

Fundamentally, PBOC tighthening is an important move to restraint the run away loan growth as well as asset price. This is in fact an important step by the chinese government to rein in, or to at least signal to the market that they are not keen to see unfettered growth in asset price and hot money flow.

While this may be negative for Property and Chinese bank stocks in the near term, in the long run, this move should be viewed as healthy.

As for commodity, it is time for some healthy revaluing anyway. Physically, I do not think demand for commodity will come down. I will let the hype die down a tad, and look for good re-entry opportunity. Wilmar, Noble, Olam - blue chip commodity play in SGX. Can also look at H-share for more upside.
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 as usual.

Goldman Sachs report show Asia equity may not be overbought

2010-01-11T17:51:00.002+08:00

GOLDMAN SACHS: China 'overweight', investors 'quite positive'

Written by Andrew Vanburen (China Correspondent) Nextinsight
Sunday, 10 January 2010
2009 was the second best year ever for Asian markets .... after the worst year 2008. Above: MSCI all country Asia Pacific ex Japan (USD) index. CHINA GETS another “overweight” call from Goldman Sachs for 2010 after the brokerage held over 150 investor meetings in Hong Kong, Europe and the US, and found investors to be “generally positive” on stock market return prospects for the year in Asian region. The brokerage said it expects 34% usd total returns for Asia this year, propelled primarily by above-consensus earnings growth on improving margins. “We are overweight China, Taiwan and Korea, and favor tech and consumption/infrastructure sectors. The unifying theme for our market and sector views is under-recognized (and under-priced) growth: China and Taiwan are changing their growth drivers, and tech earnings could be well ahead of consensus,” Goldman said. It said it expects markets in the region to get off to a good start this year as investors “re-risk." “In terms of sectors, we think tech has the most upside, and continue to broadly favor domestic demand/infrastructure themes like Chinese steel.” Goldman Sachs said that its over 150 investor meetings allows it to be “surprisingly positive on Asian markets for 2010, notwithstanding an initial skeptical bias.” The brokerage cited several reasons why it believes margins in the region will outperform consensus estimates. “The reasons for this are that a) capacity utilization in Asia is higher than many think which implies more positive operating leverage than consensus expects, and b) there is a rapid adaptive shift in Asian earnings towards EM, which means Asian companies benefit from the 8+% GDP growth in the emerging world and are less hampered by the 2% growth in the developed world.” It pointed to South Korea as a major beneficiary of the rise of the BRICs (Brazil, Russia, India and China) and the enhanced external demand from these four countries. “For example, Korea now exports more tech products to the BRICs than it does to the G3, whereas six years ago Korea was selling 5X more to the G3 than the BRICs. This is a staggering adjustment in such a short period.” Steel demand from shipbuilders like Singapore-listed Yangzijiang is helping Goldman Sachs favor Chinese steel firms. Photo: Romil Singh Investors ‘quite positive’ Goldman Sachs said that reception among investors to its strong 2010 equity return expectations has been “quite positive.” “Not everyone agrees with everything we are saying – and we would not expect or want this to be the case – but we encountered little vigorous pushback or criticism of our logic.” Goldman said that in several instances it found that investors were “conservatively positioned” relative to their views and that investors are seeing or expecting cash inflows. “Mutual fund subscriptions are generally positive, especially for Greater China-focused funds.” It said many big investment houses expected “fresh institutional mandates” for equities in Asia. “European pension fund and insurance companies are under-allocated to equities and many plan to raise allotments to Asia early in 2010; the same appears true for several Japanese pension funds. Hedge funds are generally optimistic with respect to inflows and many de-risked into end-December. “Overall, this feedback suggests that Asia is not as “over-owned” as consensus seems to think and that 2010 may get off to a good start.” Goldman Sachs obtained feedback from over 150 investor meetings in Asia, Europe and US. The grass is always greener… Goldman Sachs said that it found the least bullish sentiment among various investors regarding the markets in which they operate. “Interestingly, we encountered the greatest resistance to our Korea upgrade from domestic investors in Seoul. We also found more skepticism of our positive China equity views with domestic China accounts than we did with regional investors in Hong Kong, Europe or the US.” The brokerage also noted a “conservative” sentiment driving most investors, suggesting that the demons of 2008 and much of last year’s economic performance were not fully exorcised, and investors’ most-mentioned downside risks for equity return performance in Asian markets gravitated around these threats. “The risks that investors most frequently mentioned were a) China inflation and the threat of a sharp policy response (lots of concerns about a mid-year spike); and b) a stronger US dollar and the concern that this could impair Asian equity performance.” Goldman said that regarding investors anxieties over the possibility of a stronger greenback, it had the following point. “The inverse correlation over the past two years between the broad dollar index and the Asian equity index does not prove that a rising or falling dollar caused Asian stocks to move in an opposing direction. “In our view, both assets were responding to the same underlying fundamental drivers, notably the credit crisis and severe economic downturn that sparked a bear market in equities and a flight to liquidity and safety.” Goldman said that expectations that Asia growth model would fully “de-couple” from external demand (primarily the US) are premature, and there was always an upside to be factored in when the US dollar appreciated, as it spurred Asian exports to its traditional “best customer.” “Looking forward, if the dollar strengthens because the US economy is stabilizing, this would be positive for global growth and for Asian markets. The relative performance of Asia vs. US equities might be affected by a stronger dollar, but we would still expect very good absolute returns for regional stocks.” My Take: The Goldman report did not surprise me as I have also been arguing for the surprise on the upside for the equity market. Anecdotal evidence from my talking to clients and investors also indicate that many are still cautious on the equities market, citing the huge 60-70% jump from last march...which mean that quite a fair bit are still not full vested in the stock market. 4Q09 and 1Q10 results may surprise on the upside as I had argued earlier as inventory replenishment and demand from outside US seems to be stabilizing if not improving. This may fuel the stock market higher in the next couple of months. Keeping the above in mind, and the fact that funds are also not fully vested in equities, this will mean that the stock market may not be over bought after all, and the risk of a 10% to 20% technical correction (which some are waiting for), may not happen anytime soon! If that is the case, this may means that buying interest especially from the funds that has been waiting on the sideline, may decide to come in sooner rather than later, afraid that they may missed out the rally bandwagon. Regarding the risk in China, I seriously doubt the Chinese government will be stupid enough to kill off their growth. With recent export number being positive, this may give the chinese government some leeway in revaluing the RMB and thus reining in inflation. As in all healthy market, correction after extended rally is always expected, but I believe such correction will be of limited scale in the near term.

US payrolls could confirm recovery. Growth in Asia and Europe to support recent rally.

2010-01-08T16:00:00.000+08:00

Tonight key number from US. I have attached the article here for your reading pleasure.

Economic Outlook
Payrolls could see first gain since 2007

Last Update: 4:42 PM ET Jan 7, 2010

Has the long drought finally ended? It’s possible that, in December, the U.S. economy created more jobs than it lost for the first time in nearly two years, according to the Labor Deparment report due out Friday morning. ...Read the rest of the story

Market expectation is for a better job number to confirm the recovery in the US but number is not expected to be huge enough for FED to raise rate in the near term...which is positive for the global stock market.

In any case, while attention is still focus on the US market, the truth is that economy in Asia and now Europe could be on a speedier rebound than expected. While some are still skeptical on the economic rebound based on the fact that the US is still the largest consumption market in the world, I believe that 4Q09 and 1Q10 results should be positive and would continue to provide the underlying support for the recent market rally.

There will definitely be some market correction after the recent gain, but any such correction is likely to be limited and should be seen as opportunity for market entry.

So yes, I am still bullish on the market...for those who has been asking me.

This are my personal opinion.
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 as usual.

Epure - another dual listing news. S-chip worth revisiting.

2010-01-07T11:15:00.000+08:00

Epure share price shot up to 90cents this morning (now trading at 88cents, up 5.5cents from yest close) on news of its dual listing in Hong Kong.

This is the 3rd counters that move on dual listing news (previously XLX and Oceanus), and this is likely to be the trend in the near term. Other counters that have similar intentions are Midas, Map Technology, Chiangtian, which have all moved up in recent days as players hype on the "revaluation" story of such corporate actions.

Talk in the market has been that more counters are likely to seek out for such corporate actions as it seek out better valuation in market outside Singapore. In general, I continue to hold the views that such expectation is likely to force a revaluation of S-chip especially those with strong fundamental, since they are likely to be approach for such dual listing action.

Personally, among the S-chips, I favor counters such as Sinomem and Sinotel (which is already on US mkt via ADR). Both are solidly run company with strong management and business. If they can't get the right value here, I am sure they will seek it elsewhere and I am probably not the only one thinking about this.

Sinomem has been testing the 60.5 resistance in recents days, a breakout of this R will likely see it spike up to 64 and above. Immediate support at 58.
Sinotel seems to have broke recent upper trendline, but have to cross 67 for a convincing move upward. Immediate support at 63.

Such counters provide both short term (dual listing play) and long term potential (Business fundamental), hence is worth considering.

Congratulation to those who have believe in my new year rally prediction...and has piled on during the X'mas season. Must buy me lunch ok?

Market Poised for a New Year Rally - The Verdict

2010-01-05T15:18:00.000+08:00

Dow gave an encouraging performance on the 1st trading day of 2010, by climbing up 155.8pts or 1.49% to close at 10,584.

Investors were encouraged after the Institute for Supply Management showed a bigger-than-expected uptick in manufacturing activity during December, helped by improving production and ordering activity. Factory employment also showed gradual improvement. Also comforting some were Federal Reserve officials' comments from the weekend that played down the idea of lifting its easy-money policy in early 2010. Nevertheless, Chairman Ben Bernanke said the Fed needs to "remain open" to raising rates to avert or pop future asset bubbles.
Also, the Commerce Department reported U.S. construction spending tumbled in November more than expected, pulled lower by the housing and commercial sectors.

While a 100pts may not really qualify for a rally yet, but what I wish to highlight is the underlying theme that the market will be trading on in the next 2 to 3 months is precisely what we are seeing above - a mixed bag of economic signals that will keep the Fed on the defensive for the short-term.

Yes, an increase in rate in 2010 is a given and the market will on and off factor that in, the real question is now when. Some are saying 2H10 with some even saying 2Q10. My guess is incline toward the 2H, giving the US economy more time to stabilize and show real sign of an upturn.

With that in mind, note too that Crude oil cross $80 yesterday. Winter months in the northern hemisphere is perhaps 1 reason, with the USD weakening as the other. But my guess is that crude oil will only climb higher in 2010, with $100 within sight.

Well, I wish my prayer for a New Year Rally comes true.....and that all of us can make some money from the market this year!

--> Send out before mkt open this morning.
at 1517hr STI is up 20+ pt or 0.75%.

I really hope my clients have entered some trade and make some good money this start of the new year!

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 as usual.

Stockwatch: Midas

2010-01-04T20:23:00.000+08:00

DESCRIPTION OF MIDAS
Midas was listed on SGX on 23 Feb 2004 at an IPO offer price of S$0.115¹ . Midas has three main business divisions, viz. Aluminum Alloy, Polyethylene Pipe (PE) and Agency and Procurement. They are described in detail below:
A) Aluminium alloy
Aluminium has several favourable characteristics such as being highly versatile, light and a good conductor of heat and electricity. Thus, it is used in a myriad of industries. Midas’s aluminium alloy is used in the transportation industry for manufacturing products such as body frames of MRT, LRT trains etc. Aluminium alloy can also be utilised in the power industry to manufacture transmission cables and mechanical parts for industrial equipment. This manufacturing is done by its wholly owned subsidiary Jilin Midas Aluminium Industries Co., Ltd. which is located in north eastern China, close proximity to major customers such as Changchun Railway Vehicles. This division contributed about 95% to 3QFY09 revenue.
B) PE
Midas manufactures two basic types of PE Pipes – Water PE Pipes and Gas PE Pipes. For gas pipes, they are typically used by gas companies which supply flammable gas to consumers. Midas targets China’s municipal cities, for their gas transmission and water distribution infrastructure projects.
C) Agency and procurement
The agency and procurement division serves as a central procurement center for its Aluminium Alloy and PE divisions. It does the import, export and wholesale of aluminium alloy, polyethylene pipes, metal materials and other related products.
Both PE and Agency and procurement divisions currently have insignificant revenue contribution.
INVESTMENT MERITS
A) Bright industry outlook
With reference to Chart 1 , rail penetration remains low in China at 59 rail km per million of population vis-à-vis 184 rail km per million of population in Japan. Thus, it is apparent that China would continue to increase their railway lines and the number of trains servicing the lines. According to the official Xinhua agency, Yan Hexiang, a senior Ministry of Railways official reiterated on 23 Nov 09 that China will continue to have over 120,000 km of track by 2020, up from 78,000 km at the end of 2007. China has also stated in previous interviews that they would invest more than CNY700b a year in rail construction on average over the next three years after a rise to CNY600b this year. Thus, the outlook is bright for companies like Midas.

Chart 1: Various countries’ rail penetration per million of population
Source: US Central Intelligence Agency World Factbook 2008
B) One of the four licensed metro rolling stock manufacturers
Midas is one of the four licensed metro rolling stock manufacturers through its 32.5%-owned associate company Nanjing SR Puzhen Rail Transport (NRPT). Midas has an estimated 80% market share of the large section aluminium extrusion market as it supplies to all rolling stock manufacturers. Going forward, NPRT is expected to have a more significant contribution to Midas as revenue recognition accelerates with its RMB5.5b order books to be delivered from 2H09 onwards.
C) Excellent reputation for quality and management
Midas was the only company in China to be awarded the prestigious International Railway Industry Standard (IRIS) certification in Jul 2009. This is a testament of Midas’ commitment to quality products.
Midas has also been named by Forbes Asia as Forbes Asia’s Best Under A Billion Company consecutively for four years from 2006 to 2009. This reflects the excellent stewardship of Midas under its management.
D) Abundant stock catalysts
There will be abundant stock catalysts in the near and medium term. They come from the following five aspects, namely announcement of contracts awarded by China North Locomotive and Rolling Stock (CNR) and China South Locomotive and Rolling Stock (CSR); significant contribution from NPRT; more than doubling of its aluminium alloy extrusion production lines; dual listing and increasing traction from its fabrication lines.
Firstly, China’s Ministry of Railways has closed its 2nd tender for the production of 4,160 high speed train cars (double of previous tender) and contracts have been awarded to CNR and CSR in late September. Contract announcement awarded by them to Midas should be imminent within the next two months.
NPRT is expected to have a significant contribution as more train cars would be delivered in 4QFY09. According to a Kim Eng report, Midas’s profit share is estimated to be approximately $6.4m in FY09 as compared to S$1.0m contributed for 9MFY09. In my opinion, I have a more conservative estimate of around S$3.5m contribution in FY09.
Midas would be expanding its aluminium alloy extrusion production lines from the current 20,000 tonnes to 50,000 tonnes by end 2010. This would have a huge positive impact to its financial results as Midas is currently capped by its capacity.
Midas has appointed Credit Suisse in evaluating and preparing for the dual listing. Dual listing is expected to increase Midas profile and shareholder base and allows it to secure additional equity financing if necessary. Dual listing may also create a short term quick upside as speculators and punters pile into Midas (remember that China XLX soared 77% on its HK dual listing day, despite stratospheric valuations).
Midas reached another milestone in its long term strategy to be an integrated manufacturer and one-stop service supplier to the rail transportation industry by winning three fabrication contracts worth of RMB121.8m. This is likely to gain traction in 2H2010 and 2011 onwards as companies would like to see Midas track record in this segment before awarding more contracts to Midas.
INVESTMENT RISKS
A) Margins dependent on fluctuations in raw material cost to a certain extent
Midas is exposed to mainly two kinds of raw materials, viz. plastic resin for PE and aluminium alloys for its aluminium alloy division. As PE is an insignificant revenue contributor, I will focus more on aluminium alloy. According to prospectus, aluminium alloy accounted for 64% of its cost of sales in FY2002 (except for the prospectus, there is no explicit mention of aluminium alloy as a percentage of cost of sales in its other financial statements). I expect aluminium alloy to account for at least 50% of its cost of sales in FY2009 which makes it an important raw material. However, according to most metal analysts, aluminum prices are unlikely to surge due to excess inventories. Besides, Midas mitigated this problem by structuring 70% of its contracts on a back to back basis while the remaining 30% are on a cost plus basis.
B) Lumpy nature on revenue
Midas recognizes its revenue on a completed contract basis thus it will be expected that certain quarters may be better than other quarters, depending on the size of the contracts completed.
C) Excessive reliance on one aluminium alloy supplier
Yingyuan Special Aluminium Industry Co supplies more than 90% of Midas’ aluminium requirement. Midas is cognizant of this supplier risk and has expressed intention to expand into upstream aluminium billet production if its aluminium alloy requirement hits 40,000 tonnes, so as to gain economies of scale.
D) Capital intensive industry
According to OCBC research, one aluminium alloy extrusion production line costs about S$32m or RMB160m. This excludes land cost. Thus, Midas has to manage its cash flow properly between investing in value added capital expenditure and distributing as dividends to shareholders.
CONCLUSION
With reference to Table 1 below, Midas is trading in line with its peers based on FY09F PE. However, Midas is likely to have high growth in FY10 and “explosive” growth in FY11, thus I believe it would be sound to base on FY11F results. Based on 18.4x FY11F earnings, Midas’ share price works out to be about S$1.18. This represents an approximate 31% upside since its close of S$0.90 on last Fri.
Table 1: Comparison of Midas and its competitors
Source: Bloomberg
1 The IPO price was adjusted for a stock split of two for one in July 2004.
Article by: Ernest Lim is an assistant treasury and investment manager at Infocomm Development Authority of Singapore (IDA). Prior to joining IDA in 2009, he was with Legacy Capital Group Pte Ltd, a boutique asset management and private equity firm, as an investment manager since 2006. He received a Bachelor of Accountancy (Honours) from Nanyang Technological University in 2005. He is a Chartered Financial Analyst, as well as, a Certified Public Accountant Singapore.

My Take:

This counter has been on the buy list of several brokerage houses, largely on a buy call.

As mentioned by Ernest above, this counter has got fundamental and is not just another S-Chip. In fact, this counter is not really be a S-chip even thou its key business is in China as the guy who run it is actually a Singaporean...brother of Mr Chew Hua Seng (of Raffles Education).

It is worthwhile to put Midas on your radar screen, for the very fact, that it is a dual-listing play (it is going for HK Dual Listing) and that it has secured several contracts of late.

Chart wise, it is worthwhile to consider accumulating this counter around 90cents to 91 cents level with stop below 89cents. 95 is key resistance level to breach.

--> This stock watch is issued around 8.45am this morning to my client.

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 as usual.

In the Grapevine: Transview - May run due to its stake in Trafford resource.

2010-01-04T20:18:00.000+08:00

Trafford Resources Limited is a Perth-based mineral exploration company which has been listed on the Australian Stock Exchange since Mid June, 2006.

Trafford’s primary focus is exploring for Iron Oxide, Copper, Gold and Uranium (IOCGU) deposits at the Wilcherry Hill Project in South Australia’s Gawler Craton. Trafford recently discovered large quantities of high grade magnetite iron and is currently investigating the feasibility of establishing iron ore operations at Wilcherry. Gold associated with some of the iron could be a major beneficial by-product.

Transview Holdings says wholly-owned subsidiary Transview Resources has signed a share placement agreement with Trafford Resources to purchase 6,203,486 new shares representing 10% of the share capital of Trafford at A$0.25 per share or a total of A$1,550,871.50 ($1,954,098).

Transview Resources also has the option to acquire a further 5% (3,101,514) of new Trafford shares at A$0.25 per share. Upon exercise of the options, Transview Resources will own 9,305,000 ordinary shares in Trafford, which represents 15% of Trafford’s current share capital. The investment is funded by the group’s internal resources.

Trafford last traded at A$0.89 and has been shooting up sharply lately since it announced the discovery of gold.

Head in the grapevine: Transview is being accumulated.

Do note: Transview liquidity has not been fantastic, so there is liquidity risk.
--> This note is send out around 9.30am this morning.. Transview has since move up to closed at 19cents today.

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 as usual.

Poised for New Year Rally?

2009-12-30T10:50:00.002+08:00

With only 4 days to go (and 1.5 trading days left), the year 2009 is coming to an end. 2009 has been an eventful year indeed as we swing from near hopelessness from the near collapse of the world financial market to a stock market euphoria, that took most stock indices back to pre-crisis level between April to December.

While the stock market has been largely in a sideway trading phase over the last few months, the fact is that the market has remained in an upward trendline, The key indices has in fact been holding surprisingly well over the past weeks despite the lower trading volume as a result of the holiday season. Technically, there is a chance that the market may be poising for a new year rally after recent months of consolidating move. I have attached the chart of Dow, STI and HS here for your reference.

Personally, I am bullish on the commodities and O&G related play. In fact, looking at some of the charts today, it seems that quite a few counters have either already started moving up or poise for a up move.

Some on my watchlist include:
ASL Marine - which show a breakout today on volume
Ezion - been on a slow uptrend from recent consolidation. Good fundamental on Gorgon.
Ezra - 2nd time testing the resistance of $2.28
Straits Asia - which has been trending upward confidently
Also Noble, Olam, Ausgroup

Perhaps I am overly bullish, but I am putting my bet on a new year rally! Have a Prosperous 2010!

Chasing the abalone

2009-12-29T21:14:00.001+08:00

OCEANUS: TDRs likely to surge post-listing, says issue manager

Written by Sim Kih source: Nextinsight

Thursday, 24 December 2009

Huang Chiyuan, who heads Polaris' Greater China investment banking, is bullish on new listings of TDRs.

OCEANUS TDR’S valuation is unlikely to be dampened as a result of the Singapore market’s conservative valuation compared to Taiwan, according to Polaris Securities’ Huang Chi-Yuan.

Mr Huang heads Greater China investment banking at Polaris Financial Group, and spoke from Taiwan to NextInsight this week in an exclusive interview via long distance call when he aired his views about the outlook of TDR prices.

TAIEX, which is Taiwan’s capitalization-weighted index of all listed common stocks trading on the Taiwan Stock Exchange has a price earnings of about 200, compared to about 30 for the FT ST All-shares index.

The reason for its richer valuations is that retail investors in Taiwan are very sophisticated, very open-minded and highly attuned to international developments, resulting in strong liquidity in the stock market there, according to Mr Huang.

Polaris is Oceanus’ appointed issue advisor and lead underwriter for its TDRs that are expected to commence trades on 31 Dec.

The book builders decided yesterday that the 200 million Oceanus TDRs will be issued at NT$9.50 (41.5 cts) each, amounting to a float of S$83 million.

Polaris typically manages TDR deal sizes valued between US$20 million to US$40 million (S$28 million to S$56 million).

The non fungible nature of TDRs mean that Oceanus will be traded like a small cap stock in Taiwan, said Mr Huang, even though the integrated abalone player has in reality a market cap of over S$700 million on the Singapore bourse.

As the Taiwanese stock market is dominated by small to medium-sized companies, its investors are more receptive to TDR listings, said Mr Huang.

Richer valuations by Taiwan investors mean that investors can expect TDRs to stay above their issue prices, as brokers often refer to prices transacted on the primary exchange when book building.

A random sampling of 6 TDRs issued this year show TDRs have stayed above water so far (see table below).

TDRs in 2009	Started trading	Issue price NT$	Close price NT$	Price gain
WANT WANT	28-Apr-09	15.50	22.80	47%
JU TENG INTL	25-May-09	17.30	36.90	113%
NEW FOCUS	12-Oct-09	7.00	8.81	26%
VIETNAM MAN	3-Dec-09	13.50	13.85	3%
SOLARGIGA	11-Dec-09	10.10	13.30	32%
TINGYI CAYMAN	16-Dec-09	45.00	45.90	2%

Compiled by NextInsight, Dec 23

Mr Huang expects Oceanus TDRs to perform well, as Taiwanese investors like China-concept plays, especially those that benefit from China’s consumption growth.

Investors were very excited by Oceanus’ integrated business model encompassing agriculture, food processing to retail (restaurant chain), after the phenomenal showing by Want Want, which was the first TDR listing this year.

Small floats tend to show more upside due to the relative scarcity of TDRs available, said Mr Huang.

Like Want Want's crackers, Tingyi's Master Kong instant noodles also dominate China's convenience food scene, but the later's TDRs are trading at close to issue price.

The difference is Want Want raised S$140 million, while Tingyi raised 5 times the amount.

Taiwan investors were also won over by the abalone farmer’s eloquent and charismatic chairman, Dr Ng Cher Yew, said Mr Huang.

To them, 10 times PE for a profitable stock like Oceanus with high growth potential is very cheap, compared to Tingyi which trades at 37 times.

Why do Taiwan investors to prefer TDRs over the cheaper underlying shares on a foreign exchange?

First, opportunities arise when there is high demand for a company's TDRs versus its small float.

Second, it is more convenient to trade on one’s local exchange.

Third, research is availabe in a local language, and

Finally, there is no exchange rate risk.

Difference between depositary receipt and primary listing

Top volume stocks, led by Oceanus, on Wed 23 Dec 2009

Prices of Singapore stocks with overseas listing plans took a beating on Wed on top volume after all approvals of dual listing on the Hong Kong Stock Exchange were suspended due to concerns by regulators over recent price hikes of the shares listed by introduction.

Z-Obee, which had recently received approval for its dual listing on HKSE, was sold down 19%.

In contrast, the chairman of Taiwan’s top financial regulator, Financial Supervisory Commission (FSC), Sean Chen, had earlier this month shrugged off press speculation that TDR prices had been artificially jacked up.

The difference between a depositary receipt and a dual primary listing is that the later comes with more stringent listing and disclosure requirements, as the exchange takes upon itself the fiduciary role of the primary regulator.

A second difference is only a small portion of a company’s issued capital are maintained with a custodian institution for depositary receipts.

For dual listing however, a shareholder who holds part of the float on the primary exchange may trade on the second exchange by transferring his share membership from the Bermuda register (for Singapore shares) to the branch register of members in Hong Kong. Share transfer between the registers takes about 2 weeks.

Singapore Listco with second listing intentions	Overseas listing announcement	Platform	Stock price at announcement	Last close stock price	Price change
CHANGTIAN	16-Oct-09	TDR in Taiwan	0.210	0.190	-10%
CHINA TAISAN	13-Oct-09	ADR	0.225	0.175	-22%
CHINA XLX FERTILIZER*	28-Jul-09	Dual listing in HK	0.54	0.585	8%
MAP TECH	7-Dec-09	TDR on GreTai	0.06	0.065	8%
MIDAS	22-Sep-09	Secondary listing in HK	0.895	0.875	-2%
OCEANUS	27-Oct-09	TDR in Taiwan	0.365	0.385	5%
Z-OBEE	28-Sep-09	Dual listing in HK	0.145	0.190	31%

Compiled by NextInsight on 23 Dec 2009
* China XLX has already achieved a dual listing recently

The good news is: Investors can look forward to a spate of TDRs from Singapore next year.

Mr Huang reveals that he has received a fair number of enquiries from Singapore as the relative ease of raising money via TDRs has generated much interest from companies looking for cash.

As long as a company has been profitable in the year prior to its proposed TDR listing, has a pretax margin of at least 6%, funds can be raised within 3 months of appointing an issue manager.

My take:

I have attached my chart for Oceanus here. Personally am hesitant to chase this stock, although there are talks that it may go to 47-48 region. However....talks after all are just talk.

Also note the early euphoria usually related to dual listing (just like IPO), although I would not deny that some of these stocks do deserve a better valuation...especially china-related play.

Taking a leaf out from Oceanus experience, dual listing should give the counter some head up in term of valuation, however, it is important that such valuation be pegged back to fundamental.

Chart wise, I see resistance at 43, then 47 level.

For trading play, as usual, place your stop.

Noble Rise on Gloucesther bid - deal a sign of Noble Pedigree status

2009-12-23T17:39:00.001+08:00

Gloucester Takeover - Good Deal for Noble?

23 Dec 09

Yesterday, Noble Group announced that Macarthur Coal proposal to buy Noble's 87.7% owned Gloucester Coal. If the deal which includes Noble’s stake in Gloucester (88%), Middlemount (24%) and Donaldson (80%) is sealed, Noble will get approximately 24% stake in Macarthur and A$175m in cash. In a note published this morning, Macquarie Research Equities (MRE) analyses the proposed deal and makes the following observations…

Yesterday, Noble Group announced that Macarthur Coal proposal to buy Noble's 87.7% owned Gloucester Coal. Macarthur will offer Gloucester's shareholders 0.84 of Macarthur shares for every 1 Gloucester share, implying an offer price of A$8.16 per Gloucester share. Macarthur has also made an all cash alternative to Gloucester’s shareholders at A$8.00 per share. If the deal, which includes Noble’s stake in Gloucester (88%), Middlemount (24%) and Donaldson (80%) is sealed, Noble will get approximately 24% stake in Macarthur and A$175m in cash.

MRE sees this positively as it consolidates Noble's varied coal assets in Australia in one stroke, leaving it with a large stake in a visible listed entity.

Proposed price for Gloucester is 14% higher. Macarthur will acquire Noble's stake in Gloucester (88%), Middlemount (24%) & Donaldson (80%, raised from 68% prior) with Noble ending up with 24% of Macarthur. Citic Group is currently the single largest shareholder of Macarthur with a 22% stake. Macarthur's bid values Gloucester at A$8.16 a share (or cash of A$8.00 a share for minorities who elect cash). The proposed price for Gloucester is A$1 (or 14% higher) than Noble's own takeover offer for Gloucester concluded about 6 months ago (which took its stake from 20% prior to 88%).
Consolidation, not a sell-down. Noble is not selling down its effective stake in these assets though future marketing fees for Middlemount and Donaldson's output has been reduced (accounts for part of the A$175m in cash and 22.5m Macarthur shares as compensation). Rather, MRE sees this as a consolidative move with a strategic twist as Noble ends up as the single-largest shareholder (though not controlling) at Macarthur. From material posted by Macarthur, the enlarged Macarthur group will be diversified over six mines over three coal basins, with about 7.5mt of coal output for 2009(pro forma), with about 50% as thermal output.
Marketing rights remain. Noble will retain marketing rights for Donaldson & Middlemount (albeit with lower fees) which will help it drive volume at its core energy segment. Energy segment volumes accounted for 38% of total volumes for 3Q09.
Stronger balance sheet. Noble's balance sheet will be enhanced by the AS$175m in cash compensation. As of 3Q09, Noble was ungeared (adjusted for working capital) post the injection of US$646m in fresh capital from CIC (~11% of its enlarged share base) or ~50% based on nominal gearing.
Action and recommendation
Assuming this proposal succeeds, Noble will be on its way to extracting greater value from its portfolio of assets. MRE has an Outperform rating on Noble Group and a 12-month target price of $3.30.

Mike's Take:
Noble has once again demonstrate its strong deal making and execution capability. Having to just acquire Gloucester at A$7.00 just about 6 months ago, the company is now sitting on a nice A$1 profit for the sales to Macarthur. What is more impressive is the structure of the deal as in that noble opt for a part cash part share structure, which 1) will give it a share in Macarthur hence consolidating all its coal asset into 1 single listed vehicle, and 2) A$175m of war chest for it to play the game going forward.

Price wise the share was pushed to a high of S$3.17 versus its last closing of S$3.01. It reach its peak of $3.26 on 9th Dec, which should pose some resistance as it approach this region. However, the chances of it testing this peak and establish new peak is very high.

There will be some pullback after the euphoria, but these should be good time for some accumulation. If you believe that the commodity cycle will remain bullish in 2010, Noble is definitely a good counter to consider.

Noble Halted. Bid for Gloucester. News expect to be positive.

2009-12-22T13:54:00.001+08:00

0136 GMT [Dow Jones] Noble Group (N21.SG) halted pending announcement; media report says that Macarthur Coal (MCC.AU) set to make bid for Noble's 87.7%-owned Gloucester Coal (GCL.AU). Sydney Morning Herald reports on website Macarthur offering cash and share option or all cash alternative,
cites sources close to transaction, newspaper says Noble is supporting Macarthur bid. Both miners requested trading halts today and people familiar with situation tell Dow Jones Newswires trading halts are related.
Noble only took control of Gloucester in June this year, scuppering Gloucester's merger plan with miner Whitehaven Coal (WHC.AU). Noble's A$7/share offer valued Gloucester at A$572 million, Gloucester currently has market cap of about A$537 million. "It's a little bit surprising as Gloucester was a nice fit and a good asset, but on the other hand there is a price for everything," says analyst. Noble shares closed flat at S$3.01 yesterday. How stock reacts to news depends on price fetched for Gloucester; if high premium is paid, shares may react positively but if premium disappoints, move may be seen as strategic u-turn, raise questions over company's execution.

My take:

No reason for Noble to sell Gloucester at a low premium. Expect news to be largely positive.

Chinese Banks stock under pressure...for a while

2009-12-21T14:52:00.002+08:00

CNBC 21 Dec 2010

"Chinese banks will need to raise 500 billion yuan ($73 billion) in capital next year, the country's bank regulator said. According to Li Fuan, a director at the China Banking Regulatory Commission, capital adequacy ratios have been stretched by expanded lending.
Agricultural Bank of China, which is expected to launch an initial public offering, needs to raise 100-200 billion yuan, he said at a forum.
China's banks are under pressure to bolster their capital after new loans surged to record levels in the first half of this year, and while the pace of
lending has since subsided, it is expected to remain relatively high next year."
My take:
Chinese banking stocks fell today across the board. Beside Agricultural Bank fo China, I understand that there are several other chinese banks that are looking to tap the market next year. This could pose some liquidity issue for the chinese and HK market, since such listings are expected to be quite huge in size. At the same time, banking stocks will continue to be susceptible to news of capital adequacy requirement, hence putting pressure on their price.
I personally believe the capital adequacy requirements will remain as the Chinese regulator key instrument to blunt any potential asset inflation, as the chinese central bank has limited room to raise their interest rate next year with the US and other developing countries maintaining a loose monetary policies, without having added pressure on the RMB and export.

Attached are the chart for ICBC, China bank of construction and bank of China (H-Shares). Seems like all is showing a breakdown from trendline.
Avoid short term buy on chinese banking stocks for now. Can look to short on rebound.

Nonetheless, chinese bank long term prospects remain robust.

Citigroup

2009-12-19T16:40:00.000+08:00

Send out Dec 17

Attached is Citibank Daily chart for those vested in this counter.

Seems to be touching the base trend line (Assuming this is the right trendline). Sitting on support at $3.44. If support broken, may have overshoot effect, taking the stock further downward.

Near term trend is definitely downward. New share offering at 3.10. I am not clear on the dilution effect on the share price. Will let you know once I get more information.

Please do your own charting and research before taking any position. Always have a stop. Play safe.

Singapore Property

2009-12-19T16:31:00.000+08:00

Send out Dec 16

CIMB Daily Note:
URA released the new private home sales data for Nov 2009 yesterday. 600 new private homes were sold or a 26% MoM fall in transaction volume, bringing total sales YTD to 14,370 units. This is the second month that the sector saw new private home sales below 1,000 units post cooling measures announced in Sep. We are not concerned by this though, as we believe the seasonally weak year-end and lack of meaningful new launches played a part in the property breather. The positives from this set of data came from improving sentiments for the mid to high-end segment, evidenced by relatively good demand for larger units. In our coverage universe, we see Hobee (Outperform, TP: S$1.95) and Allgreen (OUTPERFORM, TP: S$1.50) as main beneficiaries to the mid to high-end recovery theme going into 2010. We maintain our Overweight call on the sector on strong financial positions both at the developer and buyer level, and improvements in the real economy going into the new year.

Meanwhile pls see attached DBS daily note giving the same call on property counter.

General take is that the start of the IR early next year should create some hype in the property market especially in the mid to high end segment. While the mass market segment has cooled down, ground talk continue to see transaction in the mid to high end segment in line with the recovery of the global economy.

The high end segment is also less affected by the Singapore government recent measure to cool down the property market.

Attached is the daily price chart of SC Global, which show a recent short-term breakout on the 11 of Dec with good volume. Expect any pullback to be supported by the lowest trendline. On the whole, it has been trading at the lowest band lately, which will give it room for more upside ahead when property counter runs again.

As usual, my mantra...invest in what you understand only!
God bless!