Singapore Stock Screener

First REIT Dividend History

2012-01-26T21:12:00.000+08:00

First REIT has just declared its distribution for 4Q2011 at 1.93 cents per unit that will be payable on 29 Feb 2011. First REIT's dividend or distribution history for the past few years are as follows:

2009
1Q - 1.88cents
2Q - 1.92 cents
3Q - 1.90 cents
4Q - 1.92 cents

2010

1Q - 1.90cents
2Q - 1.92 cents
3Q - 1.94 cents
4Q - 1.96 cents (including rights issue, otherwise 0.87 cents)

2011

1Q - 1.58cents
2Q - 1.58 cents
3Q - 1.92 cents
4Q - 1.93 cent

The distribution for 4Q 2011 includes distribution coming out of portion of the gains on divestment of the Adam Road property in 1Q 2011.

As of Jan 2012, First REIT has a total of 5 hospital properties in Indonesia, 1 hotel and country club in Indonesia, 3 nursing homes in Singapore and 1 hospital in South Korea. It is targeting to increase its asset base to S$1 bil in the next 2 to 3 years.

Investing in REITs

2012-01-25T19:19:00.004+08:00

A real estate investment trust, or REIT, is an investment vehicle for companies that invest in real estate. This designation allows it to reduce the level of corporate tax that it pays or perhaps even eliminate those taxes completely.

To retain their special tax status, a REIT should be able to satisfy four tests every single year:
1, A REIT should distribute 90% of its annual taxable income back to the investors in the REIT.
2. Invests at least 75% of the assets in real estate, mortgage loans or shares in other REITs.
3. At least 75% of the gross income should come from property rents, mortgage interest or property sales.
4. Ownership of the REIT consists of at least 100 shareholders and the five largest individual shareholders own less than 50%.

Passing these tests is not a guarantee that the REIT is being well-run and will make a profit, but that it meets any legal requirements for the special tax status.

Different REITs focus on different types of real estate or properties. Some might invest in residential property and other business property, or even agricultural land. Another way to define REITs depends on whether they own any real estate outright or use loans to cover the purchase costs.

Other Benefits of REITs

Aside from the obvious tax benefits, REITs offer a number of other advantages to property investors. Depending on your experience in the field, one of the best of these is professional property management. Investors that buy through a REIT can have the property managed by a professional real estate team that has first-hand knowledge of the market and deal with any issues that arise.

Personal Risk

An investor that buys real estate will often need to borrow money to fund the purchase. The investor is then personally responsible for repaying that debt that can be financially crippling if the investment does not work out. The alternative is to raise the capital from savings or cashing in investments.

Neither situation is ideal, but a REIT offers an alternative to property investment for a fraction of the amount. With careful investment, it is possible to get a similar return from a relatively small investment in a REIT as from a much larger investment on your own.

Publicly-Listed REITs

REITs can be held both publically and privately, with some public REITs listed on stock exchanges around the world. It is possible to buy shares in any of the publicly-listed REITs just like any other stock through your broker.

Over recent years, the majority of Singapore REITs have outperformed normal shares listed on the Straits Times Index. This makes them an excellent choice for an investor, who should see these stocks continuing to perform well over the next few years.

Anyone considering property investment should research using a REIT instead of taking all the risk on their own. It might not be the most suitable investment for everyone, but the special tax status and profit redistribution can make it a great place to put your money.

Suntec REIT sells Chijmes, Asset Enhancement Initiative of $410 mil

2012-01-19T22:48:00.000+08:00

Suntec REIT was reported to be selling Chijmes for $177mil, 23% over its valuation price to PRE 8 Investments late last year. Chijmes only contributes to a small percentage of Suntec REIT's net property income and accounts for only 2.3% of its entire portfolio which comprises Suntec City, Park Mall and a one-third stake in One Raffles Quay and Marina Bay Financial Centre Phase 1. Suntec REIT bought Chijmes for $128mil in 2005. Some have said that it makes sense for Suntec REIT to have divested Chijmes since Chijmes being a conservation property might have been challenging to be enhanced as an asset in a manner that will increase its rental yield.

Asset Enhancement Initiative

At the same time, Suntec REIT plans to go through a $410 mil asset enhancement initiative (AEI) that will include spending $230mil on Suntec City and $180mil on Suntec Singapore. The AEI is a 4 phased project stretching from 2012 to 2015 and might affect DPU a bit. Some observers have questioned on the amounts spent and whether it might have been better for this money to be spent on acquiring new properties that would be yield accretive instead. The AEI is also only expected to increase the retail net lettable area by 14% to 1 mil square foot. Some people are wondering whether the slight increase in net lettable area will translate to huge enough yields to compensate for the money spent.

From a different perspective, the AEI is expected to result in retail presence of 980,000 sq ft up from the previous 855,000 sq ft with an exciting new tenant mix of anchor and mini-anchor stores. It is also expected to result in higher yielding NLA with overall stabilised rents projected to increase by 25%. The average rent psf of Suntec REIT is expected to increase from existing $10.10 psf per month to $12.59 psf per month.

Funding

Suntec REIT will be funding the AEI from the sale proceeds of Chijmes and bank borrowings.

[The writer is vested in Suntec REITs]

Lippo Malls Indo Retail Trust (LMIR) - OCBC Maintains Buy Call

2012-01-07T07:42:00.001+08:00

OCBC maintained its BUY position on Lippo Malls Indo Retail Trust (LMIR) with a $0.45 fair value on it. They believe that LMIR trust is in a comfortable position for further growth as the gearing remains low. Aggregate leverage is still expected to be around 10% post acquisition giving it quite a bit of headroom for taking on further debt to fuel future acquisitions if necessary. LMIR trust has also refinanced its bank borrowings that were due 26 Mar. There are no immediate refinancing requirements over the next year.

Other comments about it as follows:

Demand for retail malls/spaces remains strong...

OCBC remain positive on Lippo Malls Indonesia Retail Trust’s (LMIRT) financial performance in 2012. Retail sales in Indonesia have been treading along a positive trend line since 1Q11, based on survey by Bank Indonesia. In Jakarta and Medan where the most of LMIRT’s retail malls/spaces are located, we note that Oct retail sales accelerated by 41.1% and 22.3% YoY respectively, following Sep sales growth of 26.1% and 16.3%. While the Consumer Confidence Index in Nov eased slightly by 1.6% MoM to 114.3, respondents were still optimistic that retail sales in 1Q12 are likely to remain high. As such, we believe the demand for its retail malls/spaces is likely to remain healthy.

Recent acquisitions to drive growth...

LMIRT had also recently announced the completion of acquisitions of Pluit Village and Plaza Medan Fair. It expect these new additions, which collectively make up around 26.3% of its portfolio NLA, to contribute significantly to its rental revenue in 2012. According to management, the investments are likely to boost its distributable income by 61% from S$47.9m seen in FY10, while its adjusted DPU yield would increase to 8.43% from 8.38%. The acquisitions are expected to be DPU yield accretive and were done at a discount of 4.1-5.7% to their average valuations.

Fortune REIT intends to buy 2 Hong Kong properties for HK$1.9bil

2012-01-01T14:21:00.002+08:00

Fortune REIT is looking to acquire two retail properties in Hong Kong for a total consideration of HK$1.9bil (S$319mil) that will bring its gross rentable area up by 23 per cent. Belvedere Garden Property comes with a price tag of HK$1.25bil, while Provident Centre Property costs HK$650mil. They will increase the gross rentable area of Fortune Reit's retail portolio by some 23% to 2.4mil sq.

The total consideration to be paid of HK$1.9bil is below the respective valuations (as at Sept 30, 2011) of HK$1.98bil and HK$2.02bil by independent valuers Knight Frank and Savills. It expects the purchases to be yield‐accretive.

Fortune will have to pay HK$49mil in fees and expenses for the acquisitions, raising the total cost of the acquisition to HK$1.949bil. It does not have plans to raise new equity ‐ it will fund the HK$1.9bil using both debt and internal funds. Its aggregate leverage, at 20.1% as at Sept 30, is expected to go up to around 26.3% immediately after the transactions.

Fortune REIT believes that the deals will be yield accretive. The two properties generated a net property income yield of 4.2% for the year ended Dec 31, 2010 ‐ higher than the yield of 3.9% from its existing 14 properties.

It estimated that if it had owned the properties since Jan 1 this year, its distribution per unit for the six months ended June 30 would have been 6.7% higher, at 13.66 HK cents.Fortune REITs units closed at HK$3.77 after the news was released.

SMB United - Mystery Bidder Revealed

2011-12-29T17:54:00.001+08:00

This mystery bidder that is going head on with Boer Power for all of SMB United's issued shares has been revealed. It is Tokyo listed Osaki Electric Co. Osaki Electric Co has an offer price that is 25 per cent more than the hostile bid put in by the Hong Kong listed Boer Power. This puts Osaki's offer for SMB United at 40 cents per share versus Boer Power's bid of 32 cents. SMB United last traded price before trading was halted stood at 36.5 cents.

The offer is conditional on Osaki securing more than 50% of SMB. It has also already secured support from a group of shareholders including the directors of SMB, who together own 37.4% of the company. Osaki has no intention to keep the listing status of SMB United.

Ascendas India Trust - Substantial Shareholder Capital Group selling

2011-12-29T13:00:00.000+08:00

US fund manager, the Capital Group, has ceased to be a substantial unit holder of Ascendas India with the sale of some 8,131,000 units on 23 Dec 2011 while the REIT was trading around 69-70 cents. The US fund manager has been selling since Sep 2011 and probably explains the REIT's share price which has dropped from 90 cents since Sep 2011.

One possibility is the outlook for the Indian economy and currency. Lim and Tan Securities expects the REIT to remain at current levels while the Capital Group continues to sell its remaining balance of 36.8 mil units or 4.79% of the overall shareholdings.

Ascendas India Trust closed at S$0.695 yesterday.

SembCorp Utilities and Hyflux News

2011-12-29T08:50:00.000+08:00

SembCorp Utilities and Hyflux are among 16 companies that are contending for a license to develop, own, finance and operate an US$350-400 million independent water project (IWP) in Oman. This is according to news reports from Oman.

An increase in population as well as the decommissioning of older desalination plants makes it necessary to meet demands to alleviate the predicted shortfall. Due to urgent demand for water, the qualification stage for this project will be skipped. This will be the 2nd IWP to be developed in Oman and will take place over 2 phases with Phase 1 to be completed by May 2013 and Phase 2 by Apr 2014.

SembCorp is actually developing the US$1 billion Salalah IWPP (integrated water and power project) in which it holds a 60% interest. Coincidentally, Hyflux is one of the subcontractors building a desalination plant.

SATS - Phillip Securities Maintains Buy Call

2011-12-28T19:34:00.003+08:00

Phillip Securities maintained its Buy Call on SATS with the same target price of S$2.96. This is based on SATS' winning bid to operate the new Singapore International Cruise Terminal at Marina South through the consortium Creuers del Port de Barcelona. The Singapore International Cruise Terminal is scheduled to be completed soon by end 2011 and works started in 2009.

The 28,000 sqm terminal is one of the largest in Asia and is able to handle 6,800 passengers at one time with the ability to also host the world's largest Oasis-class cruisers.

With the winning bid, SATS is expected to expand its hospitality business and develop synergies with its existing airport ground handling operations.

At the close of today, SATS was trading at S$2.19.

Noble - Downgrade to Sell

2011-11-14T15:58:00.001+08:00

Quite a few analysts have downgraded Noble to a SELL following CEO Ricardo Leimain's resignation as well as the Q3 loss. The Q3 loss was supposedly hit by commodity price swings but most are taking a cautious approach and waiting till further details are out before making further decisions. Though management has attributed the surprise Q3 loss to transitory events, it is not certain when these transitory events will pass.

OCBC has downgraded Noble to a SELL with $1.16 fair value. With the global economy likely to hit a slump coupled with the uncertainty on the outlook for the global commodity market, Noble is perhaps facing certain challenges.

On a positive note, the group's plan to spin off its agricultural business has also received approval from SGX

Singapore Stocks Dividends Pay Date

2011-11-04T23:34:00.001+08:00

Just tracking for my own purposes the dividend payout date for various Singapore stocks. As most will know, I am sort of a income investor and am always on a constant look out for good dividend stocks or even Real Estate Investment Trusts (REITs). Please note that this list is not comprehensive and does not contain all stocks.

Oct 2011

New Toyo Intl

November 2011

800 Super Holdings
Ace Achieve Infocomm
Amtek Eng
Ascendas REIT
ASL Marine
Avitech
Boardroom
C&O Parm Tech
Cache Log Trust
Cambridge Ind Trust
Capitamall Trust
CH Offshore
Cheung Woh Tech
Chosen Holdings
CM(Pacific)
Creative Tech
Duty Free Intl
Elite KSB
Ellipsiz
Epicentre Holdings
Eu Yan Sang
First REIT
FJ Benjamin
Fragrance Grp
Frasers Comm Trust
FSL Trust
Fujian Zhenyun
Guocoland
Guocoleisure
Hafary Hldgs
Hai Leck Holdings
HupSteel
K1 Venture
Karin Tech@
Kian Ann Engg
Koda Ltd
L.C. Dev
Latitude Tree Intl
Lion Asiapac
Lion Teck
Loyz Energy
Lum Chang Hldgs
MCT
Mapletree Industrial Trust
Micro-Mechanics
Noel Gifts
Olam Intl
Pac Ship Trust
PEC Ltd
Pertama Hldgs
Ryobi Kiso
Sabana Shariah Com Reit
Serial Sys
SGX
Silverlake Axis
Sin Ghee Huat
Sin Heng
Singapura Finance
Spindex Industrial
Starhill Global REIT
Suntec REIT
Teho Intl
Tiong Woon
Union Steel
Yuexiu Prop

Dec 2011

Chuan Hup Holdings
Datapulse Tech
Memstar Tech
PCI Ltd
Qingmei Grp
Second Chance
SPH
Sunright
Tai Sing Electric
Tee Intl
Transit Mixed
TTJ

SGX, CapitaMalls Asia, SPH

2011-10-13T20:22:00.002+08:00

CIMB kept its NEUTRAL rating for SGX cutting its target to S$5.93 from S$8.14. This was based on trading volumes that are expected to dry up after the recent market volatility. It also expects weaker earnings in the upcoming quarters.

CapitaMalls Asia announced yesterday that it does not expect its multi billion dollar investment in China to have any impact on its near term earnings. Its CEO Lim Chee Beng said that while the company was boosting its investments in emerging Asia like India and China, these projects might take some time to produce any returns. In the mean time, Singapore and Malaysia will continue to be the main contributors to its bottomline.

Singapore Press Holdings net profit for FY fell 22 per cent on year to S$388.6 mil as a result of a one-time gain in the previous period. Net profit in 2010 then included a S$154.2 mil profit from residential property Sky@eleven. SPH said it will pay a dividend of 17 Singapore cents. This is down from 20 Singapore cents a year ago.

CapitaMalls - S$1.28 billion Joint Venture in Suzhou

2011-09-30T22:33:00.002+08:00

It has been reported that CapitaMalls Asia will sign a conditional agreement to form a joint venture (JV) to develop a shopping mall and office tower project at an estimate project worth of S$1.28 billion. This will take place in Suzhou in Jiangsu province, China.

According to reports, CapitaMalls Asia will take a 50% stake in the JV and contribute about S$637 million. It will fund this through a combination of debt and equity.

The 310,000 sqm project includes a 250,000 sqm seven-storey shopping mall and two 20 toery office buildings covering 60,000sqm. WIth this development, CapitaMalls Asia will now have 55 shopping malls in 35 cities across China.

SREITs Valuation Compelling Again

2011-08-13T18:27:00.002+08:00

Based on CIMB's research:

S-REITs’ valuations have become compelling again, with average CY12 yields now at 7%. With investors moving away from risk positions, their relative attractiveness as yield instruments will likely be enhanced. The Fed recently pledged to keep US interest rates low till mid-2013, which would support yield spreads, and create a more favourable environment for refinancing and acquisitions, we believe. Capital structures for S-REITs are also more robust than in 2008. We see these as powerful catalysts for share-price outperformance. We upgrade the sector from Neutral to Overweight and upgrade CMT and CDLHT to Outperforms following their recent pullback. We prefer the hospitality, industrial and retail segment over office. Our key picks are AREIT, FCOT, Starhill, Cache and CDLHT. CCT remains an Underperform.

Looks like it is time for me to load up on the SREITs again soon.

Real Estate Investment Trusts (REITs) Listed on Singapore Stock Exchange

2011-07-30T14:45:00.010+08:00

Based on my last count, there are a total of 24 real estate investment trusts (REITs in short) that are listed on the Singapore Stock Exchange or SGX. Interestingly, when I was doing some research on REITs, I was using SGX's website to filter out the REITs and found that there were only 20 listed when I applied the filter.

I did a quick scan and realised that CDL Hospitality Trust, CapitaRetail China Trust, Ascendas India Trust and K-REITs was not listed under the REIT section in the SGX website. I am not too sure why this is so. It is perhaps because these are not really REITs and just business trusts. This will probably explain it but nonetheless, I will treat them in the same light as REITs. So do take note that these 4 trusts included in my universe of 24 REITs are perhaps not true REITs in a certain sense.

Anyway, out of boredom, I also compiled and made a listing of the 24 REITs according to the kind of properties they are invested in. I hope this listing will prove useful if you intend to do some research of any kind.

Retail/Office (Total of 12)

Fortune REIT (HK)
CapitaRetail China Trust
LippoMaple Indonesia Retail Trust
Frasers Centrepoint Trust
CapitaMall Trust
Mapletree Commercial Trust
Fraser Comm Trust
Starhill Global
Suntec REIT
K-REIT
Capita Comm
Ascendas India Trust

Industrial REITs (Total of 7)

AIMSAMP REit
Sabana
Cambridge
CACHE
MapleTree Log
Ascendas
MapleTree Industrial Trust

Hospitals (Total of 2)

First REIT
PLife

Residential (Total of 2)

Ascott Residence Trust
Saizen (Japan)

Hotel (Total of 1)

CDL Hospitality Trust

As you can see from the listing, a total of 12 REITs are in the retail/office sector. Out of these 12 REITs, 4 are in pure retail (s/no. 1 to 4 in listing above), 2 are in pure office (s/no 10 and 11) while the remaining 5 are in a mixture of office/retail (s/no. 5 to 9). 1 of them (s/no. 12) is involved in business parks in India so I don't know whether there is any retail element in it.

The 2nd largest sector is the industrial sector where there are a total of 7 REITs. The remaining sectors are in the residential, hospital and hotel.

So if one wishes to diversify amongst the REITs listed on the Singapore Stock Exchange, one actually has quite a few options. As the saying goes, don't put all your eggs into one basket. When investing in REITs, it is perhaps worthwhile to consider diversifying across the various sectors too.

Mapletree Logistics Trust

2011-07-28T23:46:00.004+08:00

Mapletree Logistics Trust share price has been hovering around $0.935 cents. Gross revenue and net property income for the quarter rose quite a fair bit (26% year-on-year). The robust performance was largely attributed to Mapletree Logistics Trust enlarge portfolio size as well as strong organic growth of around 5%. This was backed by rental renewals and high occupation. DPU rose by 7% to 1.6 cents.

In Jun 2011, Moody also upgraded Mapletree Logistics Trust corporate rating to a Baa1 from Baa2. This in recognition of MLT's stable and dependable earnings.

Other news:

MLT's deputy CEO just resigned.

MLT is expanding its presence in China

Ascott REIT Annual Report 2010

2011-03-26T00:03:00.004+08:00

Just received the annual report for Ascott REIT. Here are the few pointers that I gleaned from the short report:

Firstly, Ascott REIT has enhanced it geographical diversification of its portfolio quite substantially. Compared to 2009 when it was in 11 cities across 7 countries, 2010 saw Ascott REIT increase its portfolio to 23 cities across 12 countries. Its wide geographical footprint is expected to allow it to enjoy diversification across property and economic cycles.

Secondly, Ascott REIT has almost doubled its asset size Its asset size increased 74% from $1.56b in 2009 to $2.71 b in 2010. This is quite a significant leap and should bode well for the REIT in the future. This strategic move to double its portfolio size should also lead it to deliver stable returns. For info, Ascott REIT's distribution per unit is as follows:

2006 - 6.37 cents (Annualised)

2007 - 7.70 cents

2008 - 8.78 cents

2009 - 7.32 cents

2010 - 7.54 cents

59% of 4Q 2010 Gross Profit arose from non-master lease and non-guaranteed income while 41% arose from master lease and guarantee income. The masters leases are from France, Germany, and Phiippines while the minimum guaranteed income is derived through serviced residence management contracts from the United Kingdom, Belgium, Spain and Vietnam.

The 12 countries that Ascott REITs footprint extends to includes Singapore, Indonesia, Australia, Vietnam, Philippines, Japan, China, Belgium, Germany, France, Spain, United Kingdom.

How investment in stocks helps to evade debt?

2011-01-21T22:37:00.000+08:00

Debt is a major problem in the US these days. A large number of people are finding it extremely difficult to get out of the clutches of debt. Having some extra bucks in the current economic situation can definitely help you to clear your debts. You can consider investing in share market as a possible way to earn some much needed cash and pay off the debt. Thus, you can avoid debt relief programs like debt consolidation services or debt settlement program.

Try to diversify your investment plan by buying high risk and low risks stocks. Then you can lower your risk by investing in combination stocks. Following are a few share investment tips that would help you to get a few bucks richer.

You need to have enough knowledge before making an investment plan. Evaluating the stock market would give you a platform to know the investment market. Therefore you would be confident investing in stocks. It would also lessen the risks associated with investing.
A close examination of the stock market would help you to distinguish between a good and a bad investment. The fluctuating market can be fathomed only by someone experienced in this field. If you are investing in a rather less known company then try to find out the risks associated with the share you are investing in. A good company stock, on the other hand, would increase the profit margin for the shareholder and diminish your loss.
Search for a stock broker or a firm dealing in stock as they might help you to take the right decision. But be careful as these brokers charge a commission fee for the investment. Do a comparative analysis of various shares and crack the finest deal.
You need to know the market rates of the stocks that you have invested. Try to retain a record of the stocks through Google Doc Stock portfolio, a tracking tool found on the Google Doc Tool. Google Finance would guide you to know the stock price and do not have spent a penny for this.

Investing is not easy for a beginner in the stock market as you need to do an extensive research. Whenever you are investing make sure that the profit margin exceeds the loss. Follow the above steps to safeguard your monetary situation. They would help you to make decent profit with which you can pay off your debt.

Author Bio:

Kevin Craig is a financial writer who gives advice on debt management program. He is here to give suggestions on personal finance and solve the financial issues of the readers through his articles.

OCBC - Overweight SREITs

2010-12-12T23:06:00.002+08:00

OCBC issued an OVERWEIGHT call on SREITs, an upgrade from NEUTRAL. The extract of the report is below:

Going into 2011, we upgrade our rating for the S-REITs from NEUTRAL to OVERWEIGHT. The persistently low interest rate environment is expected to stimulate the property market and continue to drive prices higher. Together with "hot capital inflows" pouring into Asia, it is likely that spot rental rates and asset prices will continue to be inflated. At the same time, many REITs managers are capitalizing on the recovery cycle for further asset enhancements initiatives and acquisitions. Being an inflation hedge, we think investors' interest in S-REITs is likely to remain piqued in 2011. However, we noted that different sectors may experience different rates of recovery. In our opinion, the recovery is likely to be more pronounced for the office sector, followed by the industrial sector as the catch-up potential is greatest for these two sectors. The retail sector is likely to remain subdued next year in view of new retail supply (additional 612k sq ft of lease-able retail space in 2011), moderate rental escalation as well as lesser spending power from foreign visitors affected by the appreciating SGD. Within our coverage universe, our preferred picks are MLT [BUY, FV: S$1.00], ART [BUY, FV: S$1.38] for large-caps and FCOT [BUY, FV:S$0.18], Starhill Global [BUY, FV: S$0.66] for small-caps.

Economic Recovery and Luxury Stocks

2010-12-10T22:56:00.003+08:00

It seems that the economic recovery is aiding luxury brand stocks. Just read the news that Tiffany & Co stock price ahas more than tripled to $62.57 since Mar 2009.

During the recession, I remembered clearly that Osim's stock price was really depressed. Now it is above $1.50.

It shows that luxury brand stocks do in some ways benefit from cyclical trends. With consumer spending on the rise, these companies tend to have better sales during an economic recovery.

Another factor is also the increase in consumer spending in Brazil, Russia, India and China which together for a strong consumer base for these luxury goods. In fact, analysts have opined that emerging market shoppers will provide some of the better opportunities of investment in our life time.

Stock Calls - Kep Corp, Olam, Midas, UOL Group, CO Pharmaceuticals

2010-12-05T23:33:00.003+08:00

Osim to Have 100 "Rich Life' China Outlets End 2010

2010-12-05T22:47:00.002+08:00

In an interview with Bloomberg, Peter Lee, CFO at Osim International Ltd, Asia's biggest maker of massage chairs outside Japan, talked about the recent financial results for his company and the business strategy in China

Osim has announced a 3rd quarter profit increase of 86% to $13m.

In the recent financial results, Osim announced the following:

"We expect product innovation and our competitive position to continue to create higher consumer demand in the coming quarters.

We launched uSoffa Petit and uSoffa this year with international celebrity Lin Chi Ling to strong market reception. uMama Warm also performed above expectations.

In China, we are in 40 cities, have 251 OSIM outlets and plan to open another 20 to 30 outlets in Q4 FY 2010. We continue to enjoy strong sales and with more new products being introduced, we expect this market to contribute positively.

Our GNC outlets are doing well and we are building RichLife outlets, a new brand in China which will create a new profit stream. We have 69 RichLife outlets. We are targeting to have 100 RichLife outlets by end of this year. We are collaborating with GNC to carry their products in our RichLife outlets.

The consumer market in China is expanding. After 16 years in China, OSIM is able to leverage on its experience and contacts to ride on the increasing wealth of and consumer demand from the middle class."

Singapore Active Stocks: Golden Agri, Osim, United Engineers, Osim

2010-12-04T04:48:00.003+08:00

Singapore's Straits Times Index has climbed to a high. These are some of the active stocks in the STI.

Golden Agri Resources Ltd is the world's second biggest palm-oil producer. It climbed to close at around 75 cents

Capitaland is Southeast Asia's biggest developer. It is trading quite low now due to Government's measures to curb the sizzling hot property market. The company plans to build 3,000 residential units in China annually as part of its growth strategy. It also plans to increase the number of serviced residences in the country to 12,000 units by 2015. This is up from the current 6,000 plus serviced residences. Last done price at $3.67.

Osim is Asia's biggest maker of massage chairs outside Japan. It is seeking to list Taiwan depositary receipts. This stock has recovered quite a fair bit since its lows during the crisis years. IIFL Securities Pte, a unit of Indian brokerage Infoline Ltd has initiated coverage of this stock with a "Buy" rating and target price of $1.80. Osim climbed to close at $1.56.

United Engineers is planning to raise $72.3 million by selling shares in its engineering and construction business. Has been giving out stable dividends over the years. It climbed to close at $2.67.

Stock Calls

2010-12-01T22:54:00.003+08:00

Asiatravel.com - Hold by DBS Vickers. Downgraded from Buy. Price target cut from 63 cents to 40 cents after group reported a loss in quarter 4.

Straits Asia Resources - Buy by OCBC Investment Research. Upgraded from Hold and target price increased from $2.24 to $3.13. OCBC expects the Indonesian coal miner's FY11 earnings to rise, driven by recovery in thermal coal prices and increased output from the mines.

Black Friday - Better This Year?

2010-11-28T00:00:00.005+08:00

Black Friday is the day immediately after Thanksgiving in the United States. The day after Thanksgiving is expected to be the day when consumers are least likely to require any groceries. But Black Friday is traditionally named as such because it is the day of the year when retailers hope to exit the "red" and enter the "black", meaning breaking even or making a profit.

Black Friday is a crucial event for US retailers and analysts use it as an indicator since it is traditionally the start of the Christmas shopping season.

Millions of Americans are expected to hit the shops where many are opened overnight with bargains being offered.

Economists are hoping that consumers will spend even in the uncertain environment facing them. Despite a high unemployment rate of 9.6% currently, analysts are predicting a better holiday season than last year.

Some have even resorted to looking at how many cars are parked outside shopping malls as a proxy to measure how well the economy might fare. But of course, more customers does not necessarily translate to higher sales for retailers.

Nevertheless, sales figures are expected to be higher and this would bode well for the US economy as consumer spending accounts for about 70% of total economic output.

Better Bonuses and Pay Raise

2010-11-16T22:27:00.003+08:00

Based on newspaper reports today, workers in Singapore can expect at 2.7 months of bonus and pay increments of 3.5 per cent to 4 per cent. Those in the financial sector or shipping industry can expect to get even more.

The bonus to be paid out is expected to be higher compared to the year before where only 2.2 months of bonus was paid on average due to the recession.

The upbeat numbers were disclosed by NTUC based on the talks it had with various unionised companies.

During the recession last year, many companies froze wages and cut bonuses. With the economy doing well this year, employers have been urged to treat workers fairly.

Goodbye Wall Street- International investment options for the future

2010-11-13T14:01:00.003+08:00

The old days of The Masters of the Universe on Wall Street are going, rapidly. The extremely neurotic behavior of the US investment market has done a lot to finally defuse the mythos of Wall Street infallibility. Managed funds, hedge funds, Exchange Traded Funds and other financial major leaguers are no longer confined to the single market context. Even American funds are hedging in effect, spreading the risk rather than concentrating on the nervous spasms of Wall Street.

The fact is that you can’t invest with any level of certainty in a market which has shown itself to be lacking both judgment and accountability on such a selective basis. Wall Street’s credibility has been crippled since the 2008 crash, and big investment funds are voting with their dollars for more reliable sources of income and capital gain.

Foreign markets

Another issue has also emerged- the “China factor”. Even those who know the Chinese markets and their external investment behavior are sometimes stunned by the speed big capital moves in this region. Chinese equity market investment isn’t quite hair trigger, but it’s something very like it. The Chinese market tactics are based on rapid positioning in the face of market conditions. They’ll pull out of markets like Australia and Japan to take advantage of moves elsewhere, and flood back into those markets when they’ve made a profit.

The Shanghai index also doesn’t follow Wall Street like a lost dog, as many other markets do. That’s starting to appeal to more global investors as The Street and its battered indices rattle around the 10,000 average. The occasional surge of a percent or so doesn’t make up for times in limbo and the irritating process of picking good short term trades.

The European markets are also pretty groggy, except for Germany. The DAX may not be the most glamorous market around, but it’s reasonably well tuned to the current investment environment and the German investment products, backed by Europe’s powerhouse economy, are looking a lot more attractive.

Commodities

Performance factors in terms of investments are hardly recommendations for Wall Street. One of the most glaring cases of the demise of Wall Street as the only show in town is gold. Many consider gold overpriced, or priced more in relation to a weakening greenback than anything else, but the interest in gold is so strong that it’s hard to believe that investors are picking gold for sentimental reasons. With the whole of the US investment market to choose from, gold has spiked where even oil has been comparatively sluggish.

Other commodities, like wheat, spiked 90% in a month after the Russian drought. Metals and materials commonly outperform equity markets on a daily and sometimes hourly basis.

The New Economy and the markets

The New Economy is systematically obliterating old markets, and indications are that the traditional investment markets are next for demolition. The hedge funds carved up this market effortlessly in the 90s, and New Economy banks and wealth managers are doing the same, just more thoroughly. They’re targeting investors with better deals, better values and much better costs, even on staples like share trading.

Shop around, you won’t be bored.

[The above is a guest post]

STI hits 35 month high

2010-11-08T21:08:00.002+08:00

I just read the news that STI has hit a 35 month high. This was on the back of better than expected jobs data from the US as well as news about QE2 (or quantitative easing 2) - the stimulus plan the US Fed is planning.

The blue-chip Straits Times Index (STI) closed 60.09 points at 3,300.40, as investors caught up with the commodities-driven rally in Asian shares seen on Friday.

How long will this bull run last? Anyone care to give a shot or prediction?

My Updated Portfolio

2010-10-24T00:41:00.003+08:00

Just for record keeping purposes, my portfolio is as follows:

1. Ascott REIT

2. Suntec REIT

3. China Aviation Oil

4. Unifood

5. Capitaland

6. Innotek

7. Kingboard Copperfoil

8. Pacific Andes

9. Citigroup

Global Logistics Properties Debut

2010-10-18T23:09:00.003+08:00

Global Logistics Properties oversubscribed IPO saw its shares gain over 10 percent in its debut trading on the Singapore Exchange on Monday.

The shares closed up to $2.17 from its IPO offer price of $1.96 per share. The IPO is the 2nd largest in Singapore after SingTel's IPO.

Analysts are still upbeat about the stock.

Time to get into it??

Singapore Peter Lim bids for Liverpool

2010-10-13T23:43:00.003+08:00

Singapore's very own billionaire who made his fortune as a remisier (or stock broker) is making a bid to buy Liverpool. Peter Lim is a well-known remisier who made profitable investments in companies like Wilmar, FJ Benjamin and the like. Peter Lim is one of Singapore's 40 Richest People.

While he has kept a low-profile, the recent news that he has made an offer to buy Liverpool has sparked so much interest that it even made it to the front page of the Straits Times today. In fact, Google search trends also reveal that the word "Peter Lim" has also been Googled quite a fair bit in the recent few days that the news was made known.

Mr Lim's offer is indeed an attractive one as he will require no financing. He will also clear the club's debts and even inject additional funds to allow new players to be bought.

Most Singaporeans are probably keeping their fingers crossed and hope that the deal will eventually materialise.

Wall Street hits 5 month High

2010-10-08T23:32:00.004+08:00

Wall Street soared to its highest level in 5 months!

This was after recent news that Japan was going to lower interest rates and inject cash into its economy. This sparked interest that the US Federal Reserve might do likewise and re-introduce crisis era measures should the economy lag.

Job data from the US has not been looking good recently and there are fears that the economy still will not take off after all the measures taken.

Let's hope this translates into good news for the Singapore stock market too.

Jurong Tech delisting

2010-09-23T23:02:00.002+08:00

SGX rejected Jurong Tech's appeal for postponing of its delisting on 30 Sep 2010.

Jurong Tech was ordered to delist after it bust the deadline on Sep 8 to submit a resumption proposal to the exchange. The shares of Jurong Tech have been suspended from trading since Jan 2009. The resumption proposal would have highlighted a plan that would involve a new business for the company.

From CNA:
JTIC has been under judicial management since February 2009, after at least seven banks demanded repayment of more than $200 million in loans. The judicial managers have since found 'questionable' accounting and business practices at the company that would significantly affect its finances, and have forwarded their findings to the regulatory authorities. Among these are findings that JTIC was carrying more than $100 million in doubtful or non-existent assets on its balance sheet months before it went into judicial management, which allowed the company to report a respectable financial position for the quarter to Sept 30, 2008. It is now known that the company was by then technically insolvent.

China Aviation Oil

2010-09-23T11:13:00.000+08:00

China Aviation Oil is another one of my pet stocks. I have seen it gone up and down over the past 1 year or so. I hope that it goes up too as it seems undervalued to me. Based on China's growth story, this stock ought to be flying. Unfortunately, it is still see-sawing around the 1.40 price region.

Capitaland - Time to Go Up?

2010-09-22T23:08:00.002+08:00

Is it time for Capitaland to fly up? Bought this sometime back and still sitting on a paper loss. Not too sure whether the recent regulatory measures to cool down the property market in Singapore has had an impact on this stock's price. But I sure hope that the price will continue to trend upwards.

First Ship Lease Trust (Update)

2010-06-11T07:19:00.001+08:00

Two FSLT-owned vessels detained. Over the last week, First Ship Lease has announced the "arrest" of two of its vessels, Nika 1 and Verona 1 at ports in China (Qingdao) and Japan, (Shimotsu) respectively. In maritime parlance, "arrest" implies the detaining of the ships by the nearest maritime port authorities, usually on the request of a creditor. In the case of these ships, the vessels have been "arrested" by Daxin Petroleum, a Singapore-based bunker supplier, for the nonpayment of bunker fuel supplied to these vessels, which are currently on bareboat charter to affiliates of Groda Shipping. The amount outstanding is estimated to be about US$4.1m. What is still unknown is the legal intricacies, given that jurisdictions of two separate countries are involved.

AsiaTravel

2010-06-10T12:27:00.003+08:00

Valuations now look attractive. Asiatravel’s share price has fallen 38% since our last report in Apr 10. At the current price, Asiatravel is trading at 14.7x P/E, which is 35% below its peers. Although Asiatravel’s operations are smaller, we do not think it warrants such a deep discount, given that it has a well-developed online booking platform. Although it’s near term performance may be somewhat affected by the situations in Thailand, Dubai and the continued closure of the Battlestar Galactica at Universal Studios Singapore (USS), we remain positive of its long term prospects. The recovery in ARRs from 2HFY10 would provide support for FY revenue growth (despite lower revenue in 1HFY10), but earnings growth is likely to be dampened by start up costs for its new products. We expect Asiatravel to be able to maintain its dividends, which translates into a decent yield of 5.7%. We have lowered our FY10 earnings estimate to S$5.7m (previously S$6.2m) and our revised TP is now at S$0.56 (previously S$0.61). With the dip in the share price, we think it is a good opportunity to accumulate this stock. We are upgrading our recommendation to BUY.

Well-developed online platform allows it to be different. Asiatravel recently rolled out a state-of the-art Online Packaging Module with instant confirmation to end-consumers. Travellers can now book travel packages through its website, to all major destinations in Asia with instant confirmation. It has also developed an online B2B platform, which allows contracted travel agencies to book travel products online with instant confirmation, making it a more efficient for travel agencies (travel agencies traditionally had to book travel products offline).

Visitors staying longer. Visitor arrivals in Singapore have been rising (Apr: 20.4% YoY; Mar: 17.3% YoY) and visitors are also extending their stay (visitor days in Apr rose 15.5% YoY from a year ago). Asiatravel could possibly benefit from this trend, as this indicates higher general demand for room nights, which would support the recovery of ARRs in the industry, and also possibly higher demand for in-bound travel packages.

Bharti Acquires Zain Group's Mobile Operations

2010-06-10T12:20:00.002+08:00

Bharti Airtel has finally taken the step towards becoming a global emerging market telecom player by successfully completing the acquisition of Zain Group's mobile operations in 15 countries across Africa. With the acquisition of enterprise value of US$10.7b, Bharti becomes the 1st Indian player to go truly global with a footprint that spans 1.8 billion people.

Bharti has now transformed into a major Indian MNC with operations spanning across Asia and Africa. It will lead to combined revenues of over US$12.4 B and EBITDA of over US$4.7b. Bharti now ranks among the top 5 largest mobile operators in the world.

Impact on SingTel

While the news is exciting, it should be noted that a few of the acquired assets by Bharti are loss-making and have questionable track records. This still ties in with SingTel's strategy of expanding into rapidly growing mobile markets. Most analysts remain neutral on the price of SingTel even though it is a major shareholder of Bharti.

Olam - Maintain Buy by DMG (10 Jun 2010)

2010-06-10T11:55:00.003+08:00

Acquisition of Gilroy another inorganic initiative, which we view positively. Olam’s US$250m acquisition of Gilroy will strengthen Olam’s dehydrated and vegetable products business, and also bring on significant synergies with its earlier acquisitions such as SK Foods and Key Foods Ingredients. Olam expects its combined US dehydrated vegetable operations to give EBITDA margin of 14- 15%, sharply wider than current Olam’s overall EBITDA margin of 6.2%. As our FY11 and FY12 earnings forecast have already factored in acquisitions, we are maintaining our forecasts. Olam remains a BUY with target price of S$3.24.

Olam announced it will acquire the dehydrated and vegetable products business and operating assets of Gilroy from ConAgra, including its dehydrated onion, garlic, capsicum, Controlled Moisture vegetables, purees and fresh vegetable operations. The transaction is expected to be completed in 30-60 days. As part of the acquisition, Olam has entered into a long term (5-year) supply agreement to cater to ConAgra’s ongoing requirements for dehydrated vegetable products.

Management expects wide EBITDA margin of 14-15%. Olam expects the acquisition to be earnings accretive from the first year of consolidation. Together with Olam’s existing US dehydrated vegetable operations, this is expected to generate revenues of US$300-350m (4% of Olam’s FY10F revenue) and an EBITDA margin of 14-15% (versus Olam’s 3QFY10 EBITDA margin of 6.2%).

Olam still has the capacity to make acquisition of up to US$1b, and we expect further earnings growth from more acquisitions in the future. Management indicated that there is no intention to do any equity raising in the short term

Prudential Calls Off Deal to Buy AIA

2010-06-04T11:34:00.003+08:00

It has been reported that Prudential has called off the deal to buy AIA. In what was a "surprising" move after what seemed like months of headline news, Prudential seems to have bowed down to shareholder pressure and called off the US$35.5billion deal that would have made it the largest non-Chinese insurer. The decision came after AIG refused to reduce the price tag for AIA to a reported US$30billion.

Good news for consumers

This is certainly good news for consumers as with distinct AIA and Prudential brands, consumers will have a larger pool of insurance products to choose from. Not to mention that this two giants will continue to compete with one another and create better products for consumers to choose from

Bad News for Prudential

The stock price for Prudential fell after it announced the news. Prudential chairman has however stated that no heads will be rolling for the failed deal. Prudential chief executive Tidjane Thiam has come under fire for the failed deal. This can only be worsened by the fact that many shareholders were not supportive of the deal in the first place as they felt that Prudential was overpaying for AIG's Asian unit.

What Now?

It now looks certain that AIG will IPO its AIA unit in the Hong Kong Stock Exchange. GIC is reported to be interested in taking a stake in the IPO of AIA.

Meanwhile, Prudential has also listed its stocks in Singapore and Hong Kong for the purpose of raising capital for the failed acquisition. It remains to see whether the stock will remain listed in the two exchanges.

AIG to explore other options for AIA?

2010-05-29T21:53:00.003+08:00

With sources close to the Prudential bid for AIG's AIA revealing that the British insurer intends to lower the bid to US$30b, insiders have again said that AIG will be unlikely to accept such a low bid which is US$5billion lower than the original bid.

Prudential is facing pressure from certain shareholders who feel that the insurer is overpaying for AIG's Asian unit. This despite Prudential having successfully carried out its listing of shares in both Hong Kong and Singapore over the past week.

Sources close to the deal have reported that AIG still has other options open and will not want to sacrifice value. Previously, AIG had explored launching its own IPO for AIA when the target price for the acquisition of AIA was not met due to the financial crisis. That was put off after Prudential signalled its intention to acquire AIA in what will be one of the largest acquisitions this year.

Prudential trying to lower AIA acquisition cost

2010-05-28T09:44:00.002+08:00

A source familiar with the situation has revealed that Britain's Prudential is trying to lower the cost of US$35.5 billion for the acquisition of AIA. This price tag was agreed in March when Prudential signed an agreement to buy AIA from troubled AIG.

However, concerns have been raised over the ability of Prudential to convince shareholders who feel that it is overpaying for the deal. It has around a week to persuade shareholders to approve the deal and sign up for the US$21 billion rights issue.

The US Financial Times reported that Prudential was looking to offer as low as US$30billion for the acquisition. Another person familiar with the deal has revealed that there is "less than a 50/50 chance" that the deal will be done.

Meanwhile, AIA and Prudential have both refused to comment on the matter.

Prudential Asia Listing

2010-05-25T22:11:00.003+08:00

Prudential Plc shares fell during their Asia debut on Tuesday. This could be attributed to the global sell-off (Greece debt and Korea crisis) as well as concern by investors over shareholder support for its planned purchase of AIG's Asian life insurance business AIA.

Prudential is acquiring AIA for US$35 billion (S$50 billion), and aims to raise US$21 billion from a rights issue. The listing of shares in both Hong Kong and Singapore is aimed at attracting Asian investors who might be key to the success of the rights issue. After all, some institutional investors have criticised the monster buyout and are warning that they will try to block it.

The listing of Prudential in Hong Kong and Singapore is by way of introduction and not the issue of new capital. In Hong Kong, shares were down 1.3 per cent to S$10.61 while shares in Singapore were at US$7.41. Fewer than 400,000 shares changed hands in Hong Kong while only 489,000 shares changed hands in Singapore.

Meanwhile, Prudential chairman, Harvery McGrath defended the planned takeover. He said that while some shareholders might vote against it, he expects the vast majority of shareholders to be comfortable with the deal. The acquisition by Prudential will also make it the biggest non-Chinese insurer, surging past its closest rivals AXA and Allianz.

AIA chief executive, Mark Wilson , has however told friends and industry executives of his plan to quit if Prudential succeeds in buying AIA. He said that the proposed takeover is a "disaster waiting to happen".

With AIA and Prudential having a large customer base in many countries, it is not surprising if Prudential will choose to synergise certain functions. This could lead to job losses. Perhaps that is what Mark Wilson has in mind. After all, he was credited with saving AIA last year when AIG almost collapsed.

Tiger Airway posts profits of $28.2m

2010-05-14T09:53:00.003+08:00

After a $50.8 million loss in the previous year, recently IPO-ed Tiger Airways has returned to the black with a full year profit of $28.2m.

This is due to lower fuel costs and strong passenger numbers. The company has seen an increase of 53.8% passengers compared to the previous year.

Expansion plans are also in the pipeline with Tiger Airways expanding its network of routes to include Trichy and Trivandrum in southern India. Its Australian unit will grow with the opening of a third base at Avalon near Melbourne.

President and CEO, Tony Davis also said that Tiger was looking to start new airlines elsewhere in the region.

While rivals Jetstar and AirAsia have expanded their operations to include long-haul routes, Tiger will continue to stick to the low cost model of short-haul operations.

Tiger Airways is a subsidiary of SIA and often takes up flight routes that SIA drops. It has a fleet size of 10 and currently flies to 19 destinations.

SMRT - Proxy for Property

2010-05-04T13:56:00.002+08:00

I read with interest the commentary by Christopher Tan on the Straits Times regarding SMRT as a possible proxy property counter.

SMRT is currently trading at a Price Earnings Ratio (P/E) of 20 compared to Comfort Delgro's 14.5 and SBS Transit's 10.3.

Its primary business include running the Mass Rapid Transit (MRT) train system in Singapore (which includes the North South line, East West line and the Circle Line), bus business and taxi business. Lately, it has been involved in rental business.

In the financial year ended Mar 31, 40 percent of MRT's takings came from rental income. That amounted to a total of $51 million in operating profit.

While its bus and taxi business is not performing on par, it seems that its rental income has improved its profit margins by quite a fair bit.

As such, Christopher Tan suggests that SMRT might no longer be a pure transport play but instead could serve as a proxy to the property market, thus justifying its higher P/E ratio.

Capitaland Limited Summary Report 2009 Highlights

2010-04-15T10:12:00.003+08:00

CapitaLand Limited is one of Asia's largest company dealing with real estate. Headquartered and listed in Singapore, I got to look at the summary report 2009. I liked the way the report was crafted and how it highlighted the few key achievements CapitaLand has accomplished not just in 2009 but over the years.

Financial Highlights

1. Profit = S$1.05 billion
2. Earnings before Interest and Tax = S$1.55 billion
3. Return on Shareholders' Funds = 8.7%
4. Return on Total Assets = 5.5%
5. Group Managed Real Estate Assets = S$47.7 billion
6. Revenue Under Management = S$6.3 billion

Apart from these financial highlights, the summary report also highlighted the following information on the cover page:

1. Group raised S$5 billion through four rights issues
2. Listed Capitamalls Asia, largest IPO in 16 years
3. More than 110 cities in over 20 countries.
4. Over 100 awards and accolades.

This is quite an amazing achievement considering that 2009 was the year of the global financial crisis. As it states plainly on the face of the summary report : "Ahead of the curve: Growth during global crisis".

Golden Agri-Resources Ltd - Buy by OCBC

2010-04-09T10:51:00.003+08:00

OCBC maintained its Buy call on Golden Agri-Resources Ltd on 6 April 10 with a fair value price of $0.72. This is in spite of the negative news that have been announced with regards to GAR's Indonesian subsidiary - PT Sinar Mas Agro Resources and Technology Tbk (SMART).

Recently, SMART has appointed independent verification from Control Union Certification (CUC) and BSI Group to conduct thorough verification of GreenPeace reports regarding sustainable oil palm production. GreenPeace has alleged that SMART has done improper land conversion and illegal planting of oil palm in deep peatland forests. These claims have resulted in Unilever (world's largest buyer of Crude Palm Oil) and Nestle (world's biggest food company) to drop SMART as their CPO supplier. Cargill, the largest trader of agricultural commodities, is also reconsidering its relationship with SMART.

However, with strengthening CPO prices, OCBC expects revenue and earnings for FY10 to improve.

ASL Marine

2010-04-07T17:40:00.003+08:00

OCBC reported on 6 April that the successful rebound at key support suggests more upside ahead.

I investigated the charts and it looked really promising. The initial resistance is reported at $1.01 (next resistance at $1.12) while the immediate support is at $0.89.

I have entered into ASL Marine with 10 lots at $0.965 on 7 April 10.

United Food Holdings Ltd Future Plans

2010-04-06T14:59:00.003+08:00

The Group's plan for the future will be as follows:

Provide superior quality soybean related products to our valued customers via total quality management with streamlining cost structures.
Apart from the North Easter region of China, the Group will actively penetrate new market in the middle region of China, such as Sichuan, Hunan & Anhui Provinces

Group's action plans would include:

Fully utilize the existing capacity and fine-tune the purchasing, asset cash conversion cycle (including stocking of raw materials and finished products) and sales cycle (including collections)
Close monitoring of soybean price movement
Keep abreast with the market development to increase the flexibility and strength of distribution channels.
Expedite the completion of phase II soybean processing plant.

The phase II soybean processing plant (with a maximum production capacity of 720,000 tons of soybean per annum) is targeted to be completed in the 4th quarter of 2010. The plant will go through a trial run for one to two months.

United Food Holdings Ltd has gone from pig rearing to soybean processing.

China Aviation Oil Corporate Profile

2010-04-05T15:51:00.003+08:00

CAO is the largest purchaser of jet fuel in the Asia Pacific region and the key supplier of imported jet fuel to the People's Republic of China ("PRC") civil aviation industry. In recent years, we have proactively expanded into the international trading of jet fuel and other oil products.

CAO owns investments in strategic oil-related businesses, which include Shanghai Pudong International Airport Aviation Fuel Supply Company Limited and China National Aviation Fuel TSN-PEK Pipeline Transportation Company Ltd.

Incorporated in Singapore on 26 May 1993, CAO was listed on the mainboard of the Singapore Exchange Securities Trading Limited on 6 December 2001.

The single largest shareholder of CAO is China National Aviation Fuel Group Corporation ("CNAF"), which holds about 51% of the total issued shares of CAO. A large State-owned enterprise in the PRC, CNAF is the largest aviation transportation logisitics service provider in the PRC, providing aviation fuel distribution, storage and refuelling services at most of the PRC airports.

BP Investments Asia Limited, a subsidiary of BP, is a strategic investor of CAO and holds 20% of the total issued shares of CAO.

China Aviation Oil

2010-03-31T23:29:00.005+08:00

I just received the Summary Report 2009 for China Aviation Oil. I have been holding this stock for quite a few years now. Bought into it after the trading debacle that made this stock a stock everyone was afraid to touch.

In the heading of the summary report 2009, it shows the words EXPANDING HORIZONS.

Here is the vision and mission statement from CAO:

Our Vision

To become an internationally competitive and growth-oriented integrated energy trading company with synergetic assets, characterised by integrity and innovation.

Our Mission

1. To maintain our position as the preferred importer and most important international supplier of jet fuel in the People's Republic of China.

2. To be a leading jet fuel supplier/trader in the Asia Pacific region.

3. To be an important international trader/supplier of other oil products and petrochemicals.

4. To achieve sustainable growth in shareholder value.

5. To create a secure working environment where employees feel motivated and have a sense of belonging.

6. To be a socially responsible corporation, proactively undertaking economic, cultural, educational and environmental responsibilities.

Vision and Mission statements are always important to me as it provides an indicator to me on what the company's business is really about and what they hope to become.

Neutral on Shipping Trusts - OCBC

2010-03-22T14:38:00.003+08:00

Singapore has 3 shipping trusts listed on its stock exchange. This include FSL Trust, Pacific Shipping Trust and Rickmers Trust. I usually try to stay away from shipping trusts as I do not really understand the business and I find it hard to convince myself to buy trusts that own ships versus a trust that own real estate. Anyway, OCBC gave a neutral view on the shipping trusts sector recently. Please see report below:

Highlights from SSW's FY09 conference call. Seaspan Corp [SSW, NOT RATED], a container-focused US-listed comparable of the Singapore-listed shipping trusts reported FY09 earnings earlier this week. Basic 4Q09 EPS of US$0.22 was three cents below consensus. SSW discussed its newbuild order book - 23 vessels will be delivered over the next three years, costing roughly US$1.8b total. SSW has been addressing the financing need on several fronts: 1) reduced dividends; 2) a US$200m preferential share issuance; 3) debt facilities. We note that while SSW is not constrained by loanto- value covenants on existing loans, access to the roughly US$270m remaining from a US$1.3b credit facility is restricted because of market value covenants. SSW has other committed debt available, however. Management estimates further equity needs of US$180-240m over a period of 18 months.

SSW optimistic on a 2-3 year horizon. SSW's management noted that line majors have done a good job managing effective supply. A primary contributor is slow-steaming - SSW said that, the number of vessels required on the Asia-Europe trade has increased from eight to 10 or nine to 11. SSW very frankly said the recent demand side pick-up was due largely to inventory re-stocking, and that the market would "normalize once the stocking is finished" and as more supply was added. It said that the current "abnormal" market would trend down but 2010 would still be much better than "2009 and even 2H08". Management was more optimistic on a longer time horizon saying rates could "reach the level of average historical amount over the next two to three years [and asset values would follow]".

Sector view intact, prefer PST. Pacific Shipping Trust, a pure container play, is not struggling with capex commitments or debt issues with no loan-to-market value covenants on its loan documents. On the flipside, it has a fairly concentrated charterer base of two, its sponsor Pacific International Lines and South American liner CSAV, which had last year requested for rate renegotiations (ongoing issue). As a result, we continue to rate PST as a HOLD. A key risk for FSL Trust, in our opinion, is that LTV covenant concerns may drive the manager to raise expensive unsecured debt. Rickmers Maritime, the other pure container play, is facing high capex commitments and LTV covenant issues as well. A positive resolution of its US$130m April loan maturity could be a turning point for the sector. The outlook for the broader ship finance industry remains uncertain, and we stay NEUTRAL on the sector.

Warren Buffet on Corporate Governance

2010-03-10T14:34:00.007+08:00

"Although our form is corporate, our attitude is partnership." - Warren Buffet

Warren Buffet in his annual reports states that he hopes Berkshire's shareholders do not view themselves as merely holding a piece of paper whose prices fluctuates daily. Instead, he encourages shareholders to view themselves as part owner of a business that they intend to stay vested in for an indefinite period of time.

In fact, Berkshire has a low turnover of stocks compared to other major American corporations. It shows that most of Berkshire's shareholders have embraced this partnership concept espoused by Warren Buffet. In this particular case, it seems that "like-minded people are attracted to each other".

Afterall, people who trust and believe in Buffet's methodology of acquiring stocks will necessarily stick to Berkshire stocks as they are mostly investors who are there for the long term.

Owner's Mentality

Warren Buffet and Charlie Munger have more than 90% of their networth tied up in Berkshire itself. So while they cannot promise stellar results all the time, what they do promise is that their financial fortune will move in lockstep with shareholders.

This is perhaps what should be rightly defined as an "Owner's Mentality"

Annual Meetings - A Royal Waste of Time

Many times, shareholders are to concerned about their own moment on stage than they are about the affairs of the business. At times, management might be reluctant to open up on matters that really matter. So what is meant to become a forum of business discussion becomes a forum of theatrics, and advocacy of certain issues. The company spends time and money organising and preparing for an event that eventually becomes a royal waste of time to the business itself, the management, the employees and the shareholders.

Analysing a Company's Economic Moat

2010-02-23T12:35:00.003+08:00

In ancient times, cities were defended by having a moat around its walls. This was one effective strategy to keep attackers at bay and give the city an added advantage when it comes to defending itself in war.

A company's economic moat does the exact same thing. It keeps competitors at bay. Analysing a comapny's economic moat is thus of important relevance to stock investors.

A few methods have been proposed to analysing a company's economic moat. Here are the steps:

1. Evaluate the firm's historical profitability. (Focus on free cash flow, net margins, returnon equity and return on assets)

2. Source of economic moat. Is the economic moat built through product differentiation, low costs, locking in of customers or locking out competitors through high barriers of entry?

3. How much money the firm can make and for how long? How profitable is the firm might be easy to analyse but for how long it can retain its competitive advantage is really difficult to analyse. Various competitive advantages depend on the source of economic moat and this in turn will determine how long the firm can remain profitable. Basically, economic moats that are based on technological innovation tend to be highly profitable in the short term but also is likely to be short-lived.

SingTel Update

2010-02-19T10:57:00.000+08:00

SingTel's Indian associate Bharti Airtel has made a US$9 billion bid to buy Kuwait based Zain's African assets. Bharti is South Asia's biggest mobile phone company and contributed fourth-quarter profit of S$235 million to SingTel which owns almost a one-third stake in it. Last year, Bharti was engaged in merger talks with South Africa's MTN Group but the deal was hampered due to the regulatory hurdles.

If the takeover is successful, Bharti would gain a foothold in Africa's mobile market. The handphone penetration rate in Africa is very low where only 36 out of 100 people own a mobile phone. In developed countries, there are often more mobile phones than people.

It is still not clear how SingTel's shareholders will benefit from the indirect exposure to the African mobile phone market.

SingTel, StarHub and M1

2010-02-12T12:10:00.004+08:00

A measure of indebtedness commonly used in the Telco industry is debt divided by EBITDA. With a ratio higher than 3, investors are advised to proceed with caution.

I did a little calculations of the debt to equity ratios for the three telcos in Singapore (SingTel, StarHub and M1). Here are my findings:

SingTel

Total debt = $12,754.4 million
EBITDA = $4,431.2 million
Debt/EBIDTA ratio = 2.8

StarHub

Total Debt= $1606.80 million
EBITDA = $653.5
Debt/EBIDTA = 2.8

MobileOne (M1)

Total debt = $581.4million
EBIDTA = $309.7million
Debt/EBIDTA = 1.8

It seems like M1 has the lowest Debt/EBIDTA ratio though all three companies meet the criteria of having ratios below 3.

5 Rules for Successful Stock Investing

2010-02-11T12:54:00.005+08:00

I have been reading 5 rules for successful stock investing by MorningStar. Here are the 5 rules:

1. Do Your Homework
2. Find Economic Moats
3. Have a Margin of Safety
4. Hold for the long haul
5. Know When to Sell

Do Your Homework

The common mistake investors make is failing to investigate a company before they buy the shares. Take time to understand the business inside and out. A certain amount of accounting skills will be required to understand the financial shape of the company too. The time spent on research can also be treated as a time to cool-off from the stock market where the pressure to purchase the stock immediately is so great.

Find Economic Moats

Economic moats are basically used to describe a firm's competitive advantage. This is the same way medieval castle kept invaders at bay. An economic moat keeps competitors from the profits. A key question to ask is this: How does a company keep its competitors at bay and earn consistent profits? The answer to that question is the economic moat.

Have a Margin of Safety

Finding a great company is only half the battle won. Make sure that the price you pay is not too high. As they say: " Price is what you pay, value is what you get". The goal then is to buy stocks for less than they are actually worth. This can be at low price earning ratios (compared to historical P/E) or at significant discounts to the company's asset value. Sticking to a strict valuation discipline help avoid blowups and improves your investment performance.

Hold for the Long Haul

The cost of frequent trading will drag down your performance over time due to brokerage fees. Treat your stocks like major purchases and hold them for the long term.

Know When to Sell

Don't sell just because the stock price has gone up or down. Some questions to ask:

You made a mistake buying it in the first place
The fundamentals has deteriorated
Too much money in one stock
Stock has risen well above its intrinsic value
Better opportunities elsewhere

So there you have it. 5 simple rules for successful stock investing.

Singapore Stocks Yield Greater Than 10%

2010-02-03T10:59:00.001+08:00

Here are some stocks with dividend yields greater than 10% :

1. Datapulse
2. Second Chance Properties
3. MAP Technology Hldgs
4. CDW Holdings
5. Vibropower Corp
6. Sun Vic Chemical Holdings
7. NSL
8. Omega Navigation Enterprises
9. Rickers Maritime
10. FSL Trust
11. Courage Marine Group
12. Pacific Shipping Trust
13. Australand
14. Cambridge Industrial Trust

Is there A Bubble In China?

2010-01-30T22:31:00.003+08:00

China seems to be able to record year after year of incredible GDP growth rates. How it achieves this is simply by building more and more infrastructure. Construction spending results in GDP growth which is what the central government wants.

Watch this video below and see the empty city that China has built. Scary indeed.

Ascott REIT - Buy by OCBC (25 Jan 10)

2010-01-25T12:46:00.002+08:00

The following is a report by an analyst from OCBC, Meenal Kumar. The analyst's immediate family owns 419,000 shares of Ascott REIT. Compared to my current holdings of 12,000 shares, that is indeed a far cry.

Ascott REIT recently announced DPU of 3.77 cents with payment to be made in Feb 2010.

4Q09 in line with our estimates. Ascott Residence Trust (ART) posted S$46.1m in 4Q revenue, down 2.4% YoY but up 3.8% QoQ. ART will distribute S$11.5m, up 11.8% YoY but down 2.5% QoQ. This is equivalent to 1.87 S cents DPU, just 1.5% shy of our estimate of 1.90 S cents. ART booked an S$11.7m gain in property values versus June 2009. Overall RevPAU was S$124 compared to S$133 in 4Q08 (-6.8% YoY) and S$124 in 3Q09 (flat).

Tone of guidance positive. The manager said that it expects "improvement in hospitality demand in 2010 in line with the more positive economic sentiments, though the extent of the economic recovery is uncertain." Occupancy levels have stabilized and in some markets, approaching levels where there is scope for rate increases. The manager did say that visibility was still limited, and 1Q10 results would bring more clarity. ART will "seek accretive acquisition opportunities to expand [ART's] portfolio". It sees opportunities in China, Vietnam, India (a new market for ART) and potentially Singapore.

Full speed ahead on asset enhancement plans. ART reiterated it is taking advantage of the occupancy lull to press ahead on asset works. The manager guided that it is targeting refurbishments of five properties each in 2010 and 2011. This includes Somerset Liang Court and Somerset Grand Cairnhill in Singapore and Somerset Grand Hanoi in Vietnam. These properties were last refurbished 10-12 years ago. The planned works will be funded using a combination of debt and operating cash flows.

"Comfortable" with current leverage quantum. The manager said that bank commitments & existing facilities are sufficient to re-finance debt maturing in 2010 (15% of total outstanding). It has already initiated talks with lenders on refinancing the much larger proportion of debt due in 2011 (59% of total). ART also said it was satisfied with current leverage of 41.2%, and is comfortable going up to 45-50% debt-to-assets.

We still see value in ART as a recovery play. We had previously projected a flat FY10F RevPAU. Keeping 1) FY09 performance; 2) manager guidance; and 3) our expectations for a recovery in corporate travel in mind: we now expect a pick-up in RevPAU in Singapore, China and Australia this year itself. We hike up our FY10F revenue and distributable income estimates 7-10% over previous estimates. We have also adjusted our WACC assumption down slightly. Our fair value estimate is accordingly up 10% from S$1.25 to S$1.38. Maintain BUY.

Pacific Andes - Buy by OCBC

2010-01-24T23:25:00.002+08:00

CFG to seek secondary listing on Oslo. Pacific Andes Resources Development's (PARD) subsidiary China Fishery Group (CFG) announced yesterday that it is seeking a secondary listing on the Oslo Bors (the Oslo exchange). This will be carried out via an offering of new shares. The group said that it intends to target both retail and institutional investors in Norway.

Higher valuation on the Oslo market. One of the key rationales for the secondary listing is that the Oslo exchange is the listing venue for 17 listed seafood/fishing companies. As a result, there is better investors awareness and the possibility of higher valuation multiples (or an average of about 10-13x for seafood companies listed there). With better investors' awareness, there is also the possibility of tapping into this pool of ready investors who are familiar with seafood/ fishing companies. This dual listing, if approved, will also allow the stocks to be traded at different time zones in addition to providing another channel for additional equity fund raising for future expansion.

Prospects remain healthy. CFG's vessels are ready to commence fishing in Feb. Management expects this year to be "the year of significant growth". We believe this will come from higher utilisation of its fishing assets as some have been re-deployed to the South Pacific to enhance its total group catch volume. In addition, worldwide consumption of seafood remains good due to the preference for healthier food alternatives.

Positive move; maintain BUY and raised fair value to S$0.40. This move, if approved, is positive as it offers the possibility of higher valuation from a market that is more familiar with the dynamics and the demand trends of the seafood/ fishing industry. CFG has moved up about 37% from three weeks ago versus only 18% for PAH even though it is the majority shareholder. In addition, the sum-of-parts calculation shows that PARD's stake in CFG is now worth more than its own market capitalisation. This is not justifiable, and there is a possibility for this gap to narrow as we believe a re-rating should also be accorded to PARD. We have upped our valuation to 8x earnings (from 6x) to be in line with other listed F&B/ consumer stocks although most have flat or negative growth versus growth of more than 30% for PARD in FY10. We are retaining our BUY rating and raising our fair value estimate to S$0.40 (up from S$0.31).

First REIT 4Q DPU 1.92 Cents

2010-01-22T11:55:00.000+08:00

Bowsprit Capital Corporation Limited ("Bowsprit"), the Manager of First Real Estate Investment Trust ("First REIT"), Singapore’s first healthcare real estate investment trust, today reported a stable distributable income of S$5.3 million for the fourth quarter ended 31 December 2009 ("4Q 2009") – similar to that achieved last year.

4Q 2009 distribution per unit ("DPU") remained steady at 1.92 Singapore cents. Based on its closing price of S$0.860 on 20 January 2010 and the annualised DPU of 7.62 Singapore cents, First REIT registered a healthy distribution yield of 8.86% for the period.

Genting Stock Slumps Amidst Delay

2010-01-21T23:36:00.004+08:00

Genting International will not be getting much of a headstart to its casino operations after the issuance of its license was delayed. This delay coupled with its "overvaluation" could be one of the reasons why the stock price has dropped. See article below:

GENTING Singapore, a unit of Asia's largest publicly traded gaming company, fell in Singapore on concern the issuance of its license to operate a casino in the city-state may be delayed, Bloomberg news reported.

The stock dropped as much as 3.2 per cent to S$1.22, and traded at S$1.23 as of 3.59 pm in Singapore. Genting more than tripled in the past year, compared with a 68 per cent gain for the benchmark Straits Times Index.

While the company's US$4.5 billion (S$6.32 billion) Resorts World Sentosa started accepting guests at its four hotels and 10 restaurants on Wednesday, the operating licence for its casino may only be issued by the end of February or in March.

Goldman Sachs Group Inc said it had expected the casino and the Universal Studios to open by the end of this month. The brokerage reiterated its 'sell' rating on Genting, saying a delay in the casino opening is a 'major negative.'

'Even ignoring the disappointment on the opening delay, we believe Genting Singapore is overvalued versus its global casino peers,' Goldman Sachs analyst David Ng wrote in a report today.

Read Related Articles:
1. Singapore Stock Summary (15 Jan 2010)
2. Stick With the Winners (OCBC)
3. Stock Picks - Kenneth Ng

Ascott Residence Trust

2010-01-21T12:36:00.003+08:00

Ascott Residence Trust announced its DPU for 3.77 cents per unit.

NOTICE IS HEREBY GIVEN THAT the Transfer Books and Register of Unitholders of Ascott Residence Trust (“Ascott Reit”) will be closed on 29 January 2010 at 5.00 p.m. (the “Books Closure Date”) to determine entitlements of holders of units in Ascott Reit (“Units” and holder of Units, “Unitholders”) to Ascott Reit’s distribution of 3.77 cents per unit for the period from 1 July 2009 to 31 December 2009 (the “Distribution”). Unitholders whose securities accounts with The Central Depository (Pte) Limited are credited with Units as at the Books Closure Date will be entitled to the Distribution to be paid on 26 February 2010.

Ascott REIT receives Yield Protection from Somerset West Lake

The Manager wishes to announce that further to its announcement made on 5 November 2008 in relation to the Acquisition, Ascott Reit will be receiving a total of USD 0.3 million (approximately S$0.5 million) from TAHL, being yield protection amount in relation to Somerset West Lake for the Initial Period. The Manager is making the announcement pursuant to Rule 1013(3)(a) of the Listing Manual.

In connection with the Acquisition, a Deed of Yield Protection was entered into with TAHL under which the latter agreed to provide yield protection to Ascott Reit for 70% of a shortfall of a minimum threshold EBITDA per annum for the JV Company for five years from Completion. For the Initial Period, 70% of the minimum threshold EBITDA was USD 1.0 million (approximately S$1.5 million).

Based on the unaudited management accounts of the JV Company for the Initial Period, 70% of the EBITDA of the JV Company was less than USD 1.0 million (approximately S$1.5 million) by USD 0.3 million (approximately S$0.5 million), resulting in TAHL being required to pay the shortfall. The shortfall was due to lower operating performance as a result of global economic slowdown. The amount of yield protection is subject to adjustment (if any) based on the audited accounts of the JV Company, and will be fully settled after the issue of the audited accounts of the JV Company, in accordance with the Deed of Yield Protection.

Capitaland Buys OOIL China Property for $2.2 Billion

2010-01-19T09:42:00.001+08:00

CapitaLand Ltd., Southeast Asia’s biggest developer, agreed to buy the Chinese property assets of Orient Overseas (International) Ltd. for $2.2 billion, doubling its real estate holdings in the world’s most-populous nation.

The purchase of the Orient Overseas Developments Ltd. unit includes seven sites in Shanghai, Kunshan and Tianjin, with about 1.48 million square meters of floor space, the Singapore- based developer said in a statement after markets closed yesterday. About half is residential and the rest is office, retail and hotel space, CapitaLand said.

CapitaLand has cash after it raised S$2.8 billion ($2 billion) from the initial public offering of CapitaMalls Asia Ltd. in November. Orient Overseas, Hong Kong’s biggest container line, is exiting real estate projects in China after a slump in global trade and excessive capacity in the shipping industry led to its first loss in 10 years. Orient Overseas posted a $231.8 million loss in the first half ended June 30.

“It’s a good price,” said Geoffrey Cheng, a transport analyst at Daiwa Institute of Research in Hong Kong. “Orient Overseas should be using the cash to focus on shipping.”

CapitaLand, which was suspended yesterday, rose as much as 3.7 percent, the biggest intraday gain since Oct. 22, to S$4.44. The stock traded at S$4.43 as of 9:16 a.m. in Singapore. Orient Overseas will resume trading today after being suspended in Hong Kong yesterday.

Capitaland - Buy by OCBC (15 Jan 10)

2010-01-19T09:36:00.004+08:00

OCBC issued a buy call on Capitaland on 15 Jan 2010. It looks like the special payout might be affected though because of news released on 18 Jan 2010 regarding Capitaland's investment of its IPO proceeds. You can view the other news here.

Shareholders can expect a special payout in 2010. After selling 34.5% of its stake in CapitaMalls Asia (CMA) during its IPO in November 09, CapitaLand (CapLand) successfully raised gross proceeds of S$2.8b from the transaction and part of the proceeds could be paid out as special dividend to shareholders. We estimate that the transaction will generate a one-off net gain of S$936.8m (after deducting the cost of the IPO payable by CapLand). Assuming CapLand pays out 100% of its one-off gain as special dividend, this will translate to a payout of S$0.22 per share and including its regular dividend of S$0.07 per share, a total payout of S$0.29 per share could be expected when CapLand announced its FY09 results, translating to a dividend yield of 6.8%.

Dismissing concerns on holding company discount. After the listing of CMA, investors can now invest in CMA to gain direct exposure to the retail assets held under the CapitaLand group, without the need of going through 2 layers of ownership (i.e. gaining exposure to CMA via CapLand) and the additional layer of management costs. There are concerns that the market may ascribe a holding company discount on CapLand but we disagree with this view. A holding company discount is only applicable when the holding company destroys value or generates no value-add to the subsidiaries or associates, but CapLand still plays an important role in the overall strategy of CMA, providing CMA with access to its wide business network, strong branding and multi-sector expertise.

Fair value raised to S$4.95; maintain BUY. Since our strategy report on 2nd Dec 09, CapLand's share price has underperformed its peers despite the positive developments in the group. While the share prices of its peers gained 13.3% on average, CapLand's share price rose by just 4.9% over the same period. Going forward, the announcements of special dividend and capital deployment initiatives are likely to be the key share price drivers. Following the adjustments made to our valuation model to take into account the market value of CMA, our RNAV estimate has now been raised to S$4.95 per share (previously S$3.72). Pegging our fair value at parity to our RNAV, we derive a fair value of S$4.95 on CapLand (previously S$4.15). With a 16.1% upside to fair value and a potential FY09 dividend yield of 6.8%, we maintain our BUY rating on CapLand.

Hongguo Conditional Offer at $0.435

2010-01-19T00:45:00.002+08:00

After a trading halt that was annouced last week, the news is finally out for Hongguo.

Apparently, some investment company is offering a conditional offer of $0.435 for each share of Hongguo. Hongguo last traded at around $0.32 -$0.34 range for the few weeks before the annoucement.

The highest price that Hongguo ever reached before was around $1.

Considering that certain fund managers already form close to 47% of the shareholdings, it might be only a matter of time before Hongguo is brought private again.

Investors are advised to wait for the independent financial advisors report to be out before making any decision or trading.

Hongguo should open at a price around $0.43 tomorrow.

SGX posts 4% rise in first half net profit

2010-01-19T00:32:00.002+08:00

Got this article from the Straits Times. I am still wondering whether there is any conflict of interest considering that SGX is a listed company and yet manages the IPO for companies trying to get into SGX. Perhaps a separate regulator might be needed?

BOURSE operator Singapore Exchange (SGX) posted a 4 per cent rise in first-half net profit to $165.8 million after a bullish stock market in the later part of last year drove up trading volumes.

Revenue rose 6.3 per cent to $324 million as daily average total trading values of stocks rose to $1.6 billion for the period July 1 to Dec 31 last year, compared with $1.2 billion a year earlier.

Chief executive Magnus Bocker, who chaired his first briefing of SGX's results since taking over on Dec 1, said: 'Our stronger IPO pipeline suggests that the issuance side of our business is expected to see a better year across our markets and key sectors.'

Although Singapore lagged well behind Hong Kong last year with its strong listings record, Mr Bocker argued that SGX is doing a better job than many other global and regional exchanges. He also said that valuations for stocks in certain sectors such as banking remain very attractive.
Second-quarter revenue rose 2.7 per cent to $150.7 million. But net profit for the three months fell 3.9 per cent to $71.8 million.

One reason was a rise in operating expenses due to the payout to outgoing chief executive Hsieh Fu Hua and an initial payment to Mr Bocker

Singapore Airlines Update (15 Jan 2010)

2010-01-18T12:57:00.001+08:00

Singapore Airlines , the world's largest airline by market value, said on Friday it filled 71.7 percent of the space available on its planes for passengers and cargo in December.

The figure was lower compared to 72.3 percent in November.

Singapore Airlines said passenger load for December was at 84.3 percent.
Table - Singapore Airlines capacity usage*

Dec 2009 Dec 2008 Change Overall load factor 71.7 65.8 5.9 points Passenger load factor 84.3 79.9 4.4 points Cargo load factor 63.4 55.2 8.2 points Passengers carried 1.531 mln 1.607 mln -4.7 pct

* Load factor in percent; passengers carried in million.

Singapore Stock Summary - 15 Jan 2010

2010-01-17T23:42:00.007+08:00

The STI was down slightly to 2908.42 with losers leading gainers 322 by 170

Z-Obee (Update). Z-Obee warned investors that its dual-listing in HK might not materialise and has plans instead to issue 78million new shares with pricing still not known. This comes in response to HKSE's recent ruling that they are putting a stop to dual-listing via introduction due to the huge volatility of China XLX share price during the first day of trading on the HKSE.

Genting (Maintain Trading Buy) CIMB maintained its Buy call on Genting International. With the soon to open Resorts World, the novelty effect is expected to be strong with a target price ofS$1.50. Resorts World has confirmed that its first phase will commence on 20 Jan, starting with 4 hotels. With Marina Bay Sands slated to be open only in Jun 2010, Resorts World will be the only casino in Singapore for three months.

AusGroup (Maintain Buy). OCBC Investment research maintained its buy call on Ausgroup but warned on the need to keep a lookout for future outlook including big projects like the Gorgon LNG project which Ausgroup is tendering for. Fair value is priced at S$0.78

Marco Polo Marine - Buy by DMG (14 Jan 2010)

2010-01-17T23:40:00.002+08:00

Initiating with BUY; Target price at S$0.745. With the completion of its Batam shipyard facilities, Marco Polo Marine (MPM) is set to receive a massive kicker to its earnings. Its shipyard facilities, which occupy ~34ha land with a seafront of ~650m, will boost MPM’s shipyard business with the additional shipbuilding and ship repair capacity. In addition, MPM also intends to increase its chartering fleet size beyond 80 tugs and barges as of end 2009 (46 wholly owned, 24 JV owned). We expect the demand for MPM’s tugs and barges to remain strong with >90% utilisation, driven mainly by the implementation of Indonesia’s Cabotage rule effective from 1 Jan 2010 and increasing demand for coal in Indonesia. Furthermore, MPM is ready to capture a slice of action in the Indonesian offshore oil and gas sector through chartering 5-8k bhp AHTS via JV companies with experienced players such as PT Rig Tenders, a subsidiary of the Malaysia-based Scomi. Initiate with BUY and TP of S$0.745.

Beneficiary of Indonesia’s Cabotage rule. With effect from 1 Jan 10, the shipments of specified commodities, which include coal and oil, within the Indonesian waters can only be conducted by Indonesia flagged vessels. Foreign operators may continue to operate on Indonesia’s domestic waters provided if it utilises >5k GT of Indonesia flagged vessel manned by Indonesian crews. This regulation will benefit companies with Indonesian links, such as MPM whose controlling shareholder own Indonesia-based BRJ, one of the largest granite aggregator exporters to Singapore.

Additional shipyard capacity ready to contribute. From FY10 onwards, MPM will be able to harness its new shipyard capacity in Batam. The shipyard facilities are now able to handle up to eight vessels of 150m in length for ship building and up to five vessels of length between 50m and 130m for ship repair at any one point of time. Given Batam’s proximity to Singapore, MPM is well-poised to gain a steady stream of income from its ship repair business.

Low base, high growth justifies premium. We arrived at a TP of S$0.745 based on peers’ average P/E to growth of 0.73x FY10 and estimated growth rate of 15% for MPM. At this TP, MPM will be trading at of 11.0x FY10 earnings vs peers’ average of 11.2x.

Thomson Medical Centre - Buy by DMG (12 Jan 10)

2010-01-17T21:46:00.002+08:00

With a target price of S$0.78, DMG maintained its buy call on Thomson Medical Centre.

It cited the following reasons

Thomson Medical’s 1QFY10 results were within our expectations. Earnings jumped 23.9% YoY to S$3.5m on the back of a 14.6% YoY increase in revenue to S$18.8m, due to increased baby deliveries and higher utilisation of its specialist services. Its growing Thomson Women’s Cancer Centre (TWCC), which started operations in Feb 09 also contributed to the improved revenue. Going forward, its Singapore operations are expected to continue doing well, with the addition of another O&G specialist tenant in 3QFY10 and opening of new Thomson Women’s Clinics (TWC) in its network. Its Vietnam ventures are progressing well. Its hospital in Binh Duong is set to start operations in 3QFY10 and Thomson Medical has completed the business plans for another hospital project in Hanoi. Maintain BUY and target price of S$0.78.

In addition, Thomson Medical Centre will be establishing the Thomson Pediatric Centre to expand its services. Patient admissions and baby deliveries are also expected to improve.

Tiger Airways IPO

2010-01-15T13:41:00.002+08:00

Tiger Airways will launch its initial public offering at the maximum price of $1.65 despite the less than optimistic response from analysts.

The airlines intends to use its money to buy aircraft, fund "potential new airlines or operating bases" and to pay down short-term loans.

Shares are expected ot start trading on Jan 22 on the Singapore Stock Exchange.

In the financial year ended 2009, Tiger Airways made a loss of 50.8 million compared to a profit on 9.9 million in the previous year.

NOL Chart

2010-01-15T13:14:00.003+08:00

I generated this chart using ChartNexus. From it, I can see that NOL's price has been increasing over the past few days with its MACD above zero.

S-Shares Dual Listing - DBS Vickers

2010-01-09T10:48:00.003+08:00

Epure is going for dual listing in the Hong Kong Stock Exchange.

It seems that dual-listing will be the flavour for the month as people start to pick up S-shares once again on the possibility of dual-listing.

The possible candidates are as follows:

1. Midas
2. China Fishery Group
3. Pacific Andes
4. Yangzijiang
5. China Animal

Futhermore, some companies which have the attributes of previously privatised counters are:
1. China Hongxing
2. China Sports
3. Synear.

Capitaland's Urban Suites Update: 60 units of 165 sold

2010-01-07T06:37:00.000+08:00

Read this from the Straits Times. It seems that the property market is really doing well (especially the high end sector). Capitaland also looks likely to benefit with its recent project currently selling very well. Please see the article below:

It was a tall order: buyers were required to purchase at least two units at the plush new CapitaLand project Urban Suites in the Orchard area.

But they enjoyed a one per cent discount. As well, CapitaLand was flexible and allowed purchases by family members to count towards the multiple unit requirement.

In just a matter of weeks, the first 60 units on offer at the 165-unit condo spread across three stylish towers have been snapped up, mainly by foreigners.

The prices ranged from $2,400 to $2,700 per sq ft, the company said.

It added that most of the units sold were three-bedroom apartments ranging from 1,550 sq ft to 1,615 sq ft. Most buyers signed up for two units each.

The bigger three-bedroom apartments would have gone for up to $4.36 million, based on the top end of the stated price range.

Singapore Property Sector Update - DBS Vickers

2010-01-07T00:24:00.003+08:00

1. Capitaland pushes out Urban Suites

2. HDB launches another 1,291 BTO flats. May launch up to 12,000 flats in 2010

3. First confirmed list site for 2010 launched by URA.

4. Recommends high end sector (Ho Bee, SC Global and Capitaland)

SREIT Wishlist for 2010 : OCBC

2010-01-05T11:03:00.003+08:00

OCBC Investment Research is neutral on the Singapore REITs sector.

It maintains its BUY call on MapleTree Logistics Trust (Fair value: $0.78) and Ascott Residence Trust (Fair value: $1.25)

See other stock picks for 2010

1. Stock Picks by Carmen Lee
2. Stock Picks by Terence Wong
3. Stock Picks by Janice Chua

Stock Picks 2010 - Terence Wong,

2010-01-05T10:08:00.000+08:00

These are the stock picks by Terence Wong, co-head of research at DMG Securities.

Overall, he expects hospitality to see good growth with the return of the tourism dollar. He also sees better year ahead for retailers like FJ Benjamin and favors high end property sector. With firm oil prices, the offshore and marine sector will also benefit.

Stocks mentioned by him in the Straits Times interview are as follows:

1. CDL Hospitality Trust
2. SC Global
3. FJ Benjamin
4. Otto Marine

Read Related Articles:
1. Stock Picks - Janice Chua, DBS Vickers'
2. Stock Picks - Carmen Lee, OCBC

Stock Picks 2010 - Janice Chua, DBS Vickers' Head of Research

2010-01-04T21:58:00.004+08:00

The following is a summary of the stock picks by Ms Janice Chua who is currently DBS Vickers' Head of Research.

Tips:

1. Expects STI to hit 12 month target of 3,200

2. Favors property stocks focused on high end market such as SC Global and Ho Bee.

3. Amongst REITs, favors the hospitality and retail sectors for their healthy organic and acquisition growth potential. Likes Ascott REIT and CDL Hospitality Trust.

4. Be vigilant and selective because easy money has already been made.

Read Related Articles:
1. Top 10 Companies by Market Capitalisation (2009)
2. Stock Picking Rules
3. Stock Picks - Gabriel Yap
4. Stock Picks - Kenneth Ng

Small & Mid Cap Stock Strategy - DBS Vickers (4 Dec 09)

2010-01-04T01:46:00.000+08:00

DBS Vickers have given certain recommendations for 2010 with the V-shaped recovery expected to taper off to a gradual growth. Since price increases will most probably be seen in certain pockets of growth rather than a broad based lifting, it is important for investors to be extremely selective for the coming year.

Here are a few of their small & medium cap picks for 2010:

1. Swiber
2. Ezra
3. Ascott Residential Trust
4. SC Global
5. China Fishery

Top 10 Companies by Market Capitalisation (2009)

2010-01-02T21:43:00.002+08:00

These are the top 10 companies listed in the Singapore Stock Exchange by market capitalisation based on 31 Dec 2009

1. Singtel
2. Wilmar
3. DBS Group
4. UOB
5. OCBC
6. Jardine Strategic
7. Jardine Matheson
8. Capitaland
9. Singapore Airlines
10. Hongkong Land

Stick with the Winners - OCBC

2009-12-21T14:13:00.002+08:00

So 2009 has been a spectacular recovery year for stocks. OCBC's Carmen Lee has advised caution against over-exuberance and has highlighted the top picks for 2010 as the following stocks:

1. Ezra Holdings,
2. Genting
3. Hyflux
4. Keppel Corp
5. Keppel Land
6. Midas Holdings
7. Mobile One
8. Noble Group
9. Olam International
10. Wilmar International
11. Sembcorp marine
12. SingTel
13. SMRT
14. StarHub
15. UOL Group

Are any of these stocks in your current stock holidngs?

Singapore Stock Summary - 11 Dec 09

2009-12-12T10:10:00.001+08:00

STI (UPDATE) STI closed up 18.89 points to 2,800.75 on a volume of 1.2billion with a value of S$1.16 billion. Gainers led losers 239 to 220.

Stamford Tyres Corporation Limited (UPDATE) The company reported revenues for the first six months of the current fiscal year (1H2010) was $145.7 million, which was lower by 11.5% when compared to 1H2009. Gross profit was S$30.2 million compared to S$38.8 million a year earlier. Gross profit margin was 20.7% compared to 23.6% the year before. It returned a net profit of S$2.9 million for 1H2010, compared to S$1.0 million for the same period a year ago.

Achieva Limited (UPDATE) The company announced that it had received notification that Mr Henry Lim Yong Choon, a controlling shareholder of the Company, has sold his entire shareholding of 121,478,009 ordinary shares, representing approximately 23.36% of the issued ordinary shares in the capital of the Company at a price of S$0.125 per share, in a married deal. The buyer is SUTL Global Pte. Ltd. (“SUTL”). Achieva Limited is a IT distributor and solutions provider in digital and lifestyle products.

Keppel Corp (MAINTAIN OUTPERFORM) CIMB maintained its Outperform rating on Keppel Corp with a target price of S$10.80 after it managed to clinch three more contracts worth S$160m. They remained positive over wider opportunities and the recovering economy.

Singapore Stock Summary - 10 Dec 09

2009-12-10T12:01:00.001+08:00

Singapore Economy (UPDATE) According to a median forecast in a quarterly survey of economists by the Monetary Authority of Singapore, Singapore's GDP is forecasted to expand 5.5 per cent next year. This will be mainly driven by manufacturing and private consumption. This compares with September forecast of 4.5 per cent growth next year and the government's estimate of between 3 and 5 per cent.

Commodities and Plantations (MAINTAIN OVERWEIGHT) OCBC expects continued Outperformance in 2010 for both commodities and plantations citing the global economic recovery with demand on commodities to rise. They maintain their Overweight on the commodities sector and highlight a Buy on Noble and Wilmar.

Wilmar International (MAINTAIN BUY) OCBC maintains its Buy Call on Wilmar International with fair value rmaining at S$8.23. It cited Wilmar's expressed interest to further invest in Asia with expansion likely to bring about better valuations.

Noble Group Ltd (MAINTAIN BUY) OCBC reiterated Buy rating on Noble and raised their fair value estimate to S$3.73 based on higher earnings projection. They cited that the group has performed consistently through both peaks and troughs of commodity cycles and expect contributions from its recent investments to drive volume growth and increase the group's profit.

Olam International (MAINTAIN BUY) OCBC maintained its Buy on Olam but cautions that key risks still include acquisition risk and poorer than expected performance from acquisition targets. With Temasek as its strategic partner, it should benefit from increased financial flexibility and that should help fuel its inorganic growth.

Golden Agri-Resources Ltd ( BUY) OCBC upgraded GAR to a Buy due to CPO prices that are believed to be well supported due to the potential smaller supply in 2010. The market has also re-rated CPO stocks positively due to the more upbeat outlook. Fair value of S$0.58 estimated for GAR.

Straits Asia Resources (HOLD) OCBC advocated caution on SAR due to its recent sharp appreciation since their upgrade a month ago. They remain cautious on the medium term outlook and suggest re-entry at S$1.09 and below with a fair value estimate of S$2.11 (increased from S$2.07).

Singapore Stock Summary - 9 Dec 09

2009-12-09T21:49:00.002+08:00

STI Index The STI closed at 2,797.21 down 8.29 points on a volume of 2.1 billion shares worth S$1.74 billion. Losers led gainers 250 to 237.

SembCorp Marine (MAINTAIN BUY) AmResearch reitereated a Buy call on SembCorp Marine after it announced that it had signed a contract to sell its West Elara jack-up rig to the Vietsopetro. The impact on the group's order book will be insignificant. SembMarine is however likely to see more upside with improving prospects of a global recovery in the oil & gas sector.

CapitaCommerical Trust (DOWNGRADE TO SELL) Kim Eng recommended a downgrade to sell rating on CCT based on valuation stating that the share price has run ahead of fundamentals and it is a great opportunity to take profit now. It has a target price of S$0.99 for CCT with a preferred entry at S$0.93 for 15% total returns.

KS Energy (MAINTAIN HOLD) OCBC Securities maintained its Hold rating on KS Energy with a fair value price of S$1.20. KS Energy reported that it would be acquiring Aqua Terra Supply and SSH Corporation through its newly form subsidiary KS Distribution. The rationale is to build an integrated Oil and Gas and Marine distribution business that is better placed to penetrating markets such as China, Indonesia and the Middle East. The proposed acquisition requires consent from majority of the shareholders before it can be materialised.

Plantations (MAINTAIN OVERWEIGHT) CIMB-GK Securities maintained its Overweight position on plantations with key picks being Golden Agri, Indofood Agri, Wilmar, Astra Agro, Sampoerna Agro, London Sumatra and Sime Darby. This is because of the higher Crude Palm Oil price, better than expected earnings and M&A activities. Earning prospects for 2010 also look brighter with probably higher selling prices and lower operating cost due to the drop in price of fertilisers.

S-REITs (MAINTAIN NEUTRAL) OCBC Securities maintained its Neutral rating on SREITs stating that valuations in the sector are currently trading at 0.78x book compared to 2006 average of 0.89x. The limited upside coupled with book value risk gives an unexciting risk-reward ratio. Within their coverage universe, OCBC however has Buy ratings on Mapletree Logistics Trusts (FV:S$0.78), Ascott Residence Trust (FV:S$1.25) and Suntec REIT (FV:S$1.40). They have also downgraded Frasers Centrepoint Trust to Hold due to limited upside, acretion uncertainty over pending acquisitions and unexciting risk-reward ratio.

Singapore Stock Summary - 8 Dec 09

2009-12-09T14:41:00.002+08:00

STI Faces Downside Risk based on Technicals Phillip Securities Research reported that STI faces downside risk due to RSI divergence with market setting up for weakness in the short term.

China XLX Fertiliser (UPDATE) Due to the dual stock listing in HKSE on 8 Dec 2009, China XLX Fertiliser has surged to S$0.77. The surge is probably due to its conservative valuation in comparison to its peers that are listed in the HKSE which are listed at higher PERs than China XLX Fertiliser.

First Ship Lease Trust (UPDATE) Due to the Dubai World credit crisis, FSL Trust has decided not to issue up to US$200 million senior notes due 2016. The notes issue will be revisited when market circumstances change. This update will likely drag down the other two shipping trusts: Pacific Shipping Trust and Rickers Maritime Trust.

Singapore Telecom Sector (MAINTAIN UNDERWEIGHT) CIMB maintained its underweight on the Singapore Telecom Sector with M1 as the top pick, followed by Starhub and finally by SingTel. Among the risks cited are ARPU (Average Revnue per User) erosion in broadband for SingTel and StarHub, and the risk of losing more compelling content at StarHub.

SIA Engineering (MAINTAIN BUY) Kim Eng re-rated SIA Engineering to a target price of $3.75. Reasons for the re-rating was the increase in global air traffic and the soon to be completed integrated resorts early next year.

Soilbuild Group (MAINTAIN BUY) OCBC maintained its Buy call on Soilbuild Group Holdings Ltd after it announced about its S$51.7m new business space development project with a subsidiary of CSC Holdings. This is estimated to increase RNAV by 3 cents and fair value has been increased to S$1.36.

Yongnam Holdings Ltd (MAINTAIN OUTPERFORM) CIMB maintained its Outperform rating on Yongnam citing that it expects 2010 to be an even better year with Yongnam bidding for more than S$1b worth of contracts. It expects Yongnam to breach the S$600m mark in 2010 for its order books. While it expects Yongnam gross margins to dip due to intensifying competition in the industry, this would be mitigated by a stronger competitive position.

SREITs expected to pursue more acquisition in 2010 - OCBC

2009-12-09T13:58:00.000+08:00

Singapore REITs are expected to pursue more acquisitions in 2010 to drive growth, with deals likely to be funded by private placements, says OCBC Investment Research.

“Opportunistic acquisitions will be very much in vogue in 2010 as some REITs shore up declining earnings and others exploit favourable market conditions,” it says in a research note although funding sources may be limited as REIT managers unlikely to increase their aggregate gearing level to make new purchases.

OCBC adds that raising equity through rights issues may also be challenging as REIT sponsors, institutional investors are already over-leveraged. Steep discounts to ensure successful rights issues may also obstruct earnings-accretive acquisitions.

“As a result, private placements are likely the most promising source of funds in 2010 in our view.”

Pacific Andes Resource Development - Buy by OCBC (20 Nov 09)

2009-11-25T10:29:00.003+08:00

Lafayette - a great enhancement in South Pacific. We visited Pacific Andes Resources Development's (PARD, formerly known as Pacific Andes Holdings) latest addition - China Fishery Group's (CFGL) key flagship factory vessel christened as the Lafayette. The 228-metre long Lafayette can freeze up to 1,500 tonnes of fish per day and will be deployed to the South Pacific before the end of this year. This vessel will play a strategic role as the group positions itself for future fishing opportunities in the South Pacific. With the addition of the Lafayette, this brings CFGL's total fleet tonnage to 85,000 tons in the South Pacific. This could potentially mean a future 20- 25% market share of the Chilean Jack Mackerel market as the group gears up to participate in more fishing activities in the region before the implementation of the quota system (which is likely to be based on historical catch volume and gross tonnage).

Chilean Jack Mackerel likely to see wider human consumption. This could provide substantial organic growth for the group, which will filter up to PARD. Currently, demand for Chilean Jack Mackerel is mainly in the West African countries, but management is of the view that there will be increasing human consumption of this fish, and this will enhance the value of this fish, which has grown from less than US$600 per ton in 2001 to about US$1000 per ton (CIF) currently. Presently, the Chilean Jack Mackerel is the seventh most harvested fish species.

Fish is still a popular source of protein. According to the FAO, global demand for seafood will exceed supply from 2001 to 2015. Supply is estimated at 172m tons versus demand of 183m tons by 2015. The consumption of fish per capita in China is also expected to rise, increasing from 25.6kg in 2003 to an estimated 34kg by 2030. With the global movement towards healthier food choices, we expect fish demand to remain healthy.

Still a BUY. The group has changed its financial year end to 28 Sep (for both PCRD and CFGL). With this change, the next set of results is due out on 27 Nov 2009 which will cover the six-month period till 28 Sep 2009. We have made some changes to reflect the change in year-end, but our forecasts remain fairly unchanged pending the release of its results next week. We are also maintaining our BUY rating and fair value estimate of S$0.31.

MacarthurCook Industrial REIT and Cambridge Industrial Trust Update

2009-11-18T12:00:00.005+08:00

MacarthurCook Industrial REIT (MIREIT) recapitalization exercise took a twist with Cambridge Industrial Trust (CIT) taking a 9.76% stake in MIREIT.

􀂃 6 Nov 2009 – MIREIT announced a series of recapitalization measure
􀂃 10 Nov 2009 – MIREIT announced CIT has become a substantial shareholder with a 9.76% stake
􀂃 16 Nov 2009 – CIT announced it will be voting against the resolutions during MIREIT EGM to be held on 23 Nov 2009 and is proposing to replace the current MIREIT manager, then appoint CITM, the trust manager of CIT as the manager.

CIT rationale to vote against the resolutions stems from the inherent value it deems in MIREIT units and states that the proposed recapitalize exercise is “massively value destructive” to the NAV of $0.94 per unit. CIT has internally valued MIREIT at $0.479 per unit.

Possible Outcomes

Scenario 1: Unitholders vote in favour of resolutions during EGM MIREIT will proceed with the recapitalization exercise. The management of CIT mentions that they have the resources to subscribe for their pro-rata share of rights units. The total stake of 26 million units cost CIT $10.3 million which was funded from the private placement which raised $28 million. The subscription of the rights units will require a further $8.26 million.

Scenario 2: Unitholders vote against resolutions during EGM CIT will proceed to convene another EGM to replace the current REIT manager and appoint itself as the manager. In the event that this is the outcome, it leaves CIT with very little time to put together a refinancing package to address MIREIT pending debt maturity as well as funding needs. MIREIT debt comes due in Dec 2009. CIT has revealed little details about its plan, citing regulatory restrictions. We believe that CIT already has a refinance package on hand for it to suggest voting down the resolutions. Even if it does not, its deemed value of $0.479 per unit of MIREIT gives an indication of the residual value that unitholders can expect to receive in the event that CIT winds down the REIT.

Synopsis

On the overall, the surprise turn of events provided an alternative course of action for MIREIT unitholders. In a way, the move by CIT opens up the possibility that MIREIT unitholders will not be subjected to the heavy dilution. Either way the EGM turns out, the risk is more on the part of CIT unitholders rather than MIREIT unitholders. CIT management has not revealed much details of its plan and therefore MIREIT unitholders can only hope that they are in good hands should they vote against the resolutions. CIT unitholders on the other hand faces the same degree of dilution risk as existing MIREIT unitholders.

We currently have a Hold rating for CIT and a Sell rating for MIREIT.

Ascott REIT DPU 1.92 Cents (28 Oct 2009)

2009-11-05T19:36:00.003+08:00

Below is the report by Ascott Residence Trust on their 3Q results. From the looks of it, QoQ, the revenue, gross profit and DPU has increased. Compared to 3Q 2008, the yield has actually dropped significantly.

Singapore, 28 October 2009 – Ascott Residence Trust (Ascott Reit) achieved a unitholders’ distribution1 of S$11.8 million and DPU of 1.92 cents for the quarter ended 30 September 2009. Ascott Reit’s annualised distribution yield is 6.7 percent2 based on the closing price of S$1.09 per unit on 27 October 2009.

Mr Lim Jit Poh, Ascott Residence Trust Management Limited’s (ARTML) Chairman, said: “The severe challenges posed by the global economic downturn to the hospitality industry have eased. Our 3Q operating performance has shown further signs of stabilisation in hospitality demand. While we remain cautious over the pace and extent of recovery, we are confident of the longer-term growth in the markets in which we operate.”

Mr Chong Kee Hiong, ARTML’s Chief Executive Officer, said, “Ascott Reit’s portfolio operating performance continued to improve in the third quarter of 2009. The better performance was led by revenue per available unit (RevPAU) growth in Japan, Singapore and China of 24 percent, 15 percent and 7 percent respectively in 3Q 2009 compared to 2Q 2009. To ride on the expected upturn in demand as the economy recovers, we have accelerated our asset enhancement initiatives for selected properties. We will also continue to seek yield accretive acquisitions.”

Read Related Articles:

1. Stock Picks - Kenneth Ng

2. Outperform by CIMB (Oct 09)

Stock Picks - Kenneth Ng

2009-10-28T09:21:00.000+08:00

Mr Kenneth Ng is the head of CIMB-GK Research. In the recent Sunday Times, the following were his stock picks and reasons:

1. Sembcorp Industries. Utilities division will provide stable earnings growth. Will benefit from petrochemical industry in Singapore. Offshore & marine division will benefit in next few years.

2. Parkway Holdings. Position likely to be enhanced in Singapore with opening of its hospital in Novena.

3. Parkway Life Reit. Health care assets as one of the most stable asset class.

4. Ascott Reit. Well diversified within Asia.

5. DBS bank. Cheapest in valuation amongst the three Singapore banks.

6. Wilmar International. Proven management, forward looking with integrated exposure to manage prices and profits.

7, Genting Singapore. Will remain as one of Singapore's top five market cap stocks for the next few years.

8. Noble Group. Increased volumes and value-added processing capabilities from projects.

First REIT announces distribution

2009-10-27T21:47:00.001+08:00

First REIT maintains stable 3Q 2009 distributable income at S$5.2 million
 DPU for the period at 1.90 cents per unit
 Annualised DPU of 7.62 Singapore cents translates to distribution yield of 10.7%
 Committed to maintaining a payout policy of 100% of distributable income for FY 2009

SINGAPORE – 22 October 2009 – Bowsprit Capital Corporation Limited ("Bowsprit"), the Manager of First Real Estate Investment Trust ("First REIT"), Singapore’s first healthcare real estate investment trust, today reported that its distributable income for the third quarter ended 30 September 2009 amounted to S$5.2 million which was similar to that achieved in the corresponding period last year.

Correspondingly, 3Q 2009 distribution per unit ("DPU") remained steady at 1.90 Singapore cents. Based on its closing price of S$0.715 on 20 October 2009 and the annualised DPU of 7.62 Singapore cents, First REIT registered a healthy distribution yield of 10.7% for the period.

Gross revenue and net property income also remained stable at S$7.6 million and S$7.5 million respectively as compared to the previous corresponding period.

Reflecting substantially lower market interest rates for fixed deposits, the Group’s interest income for 3Q 2009 decreased 85.4% to S$7,000, whilst trustee fees and finance costs grew by 11.1% and 28.5% respectively. Increase in finance costs was due to higher interest cost for the loan facility which was refinanced in June 2009.

Looking ahead

Improving stock markets and consumer demand are encouraging signs which point to a global economic recovery. With the general credit environment easing, a large part of the REIT sector in Singapore has been successful in their debt refinancing.

The Government’s recent push to raise awareness and boost palliative care services should help to boost the demand for private nursing care.

Bowsprit’s Chief Executive Officer, Dr Ronnie Tan, said "Our performance for the latest quarter continues to reinforce the stability of our Trust structure, which has cushioned us from the effects of the global financial crisis. In particular, we have seen stronger occupancy in our three Indonesians hospitals as more patients stayed back to seek medical care instead of travelling abroad. Continuing growth in this sector will provide an upside potential for First REIT as our Indonesian assets enjoy a variable rental growth component in addition to annual escalation.

In Singapore, demand for private nursing care continues to grow steadily with its aging population.

As First REIT faces no refinancing needs until 2012 and is well funded to meet anticipated growth, we expect the Trust’s performance to remain relatively stable and poised for improvement."

Balance sheet remains strong with a debt gearing of 15.6% which is significantly lower than the regulatory limit of 35%. This provides First REIT with headroom to pursue acquisition opportunities and carry out further asset enhancement works.

First REIT has received approval from the relevant authorities for comprehensive asset enhancement works for its Adam Road Hospital and is expected to commence work soon. Plans are also being proposed for extension works to Lentor Residence.

First REIT will continue its on-going review of the financial attractiveness of various projects in the pipeline, such as the Tech-Link healthcare logistics and distribution centre in Singapore which has received its temporary occupation permit on 2 September 2009.

Books Closure and Distribution Payment

First REIT’s Books Closure and Distribution Payment dates for 3Q 2009 payout of 1.90 Singapore cents are 2 November 2009 and 26 November 2009 respectively.

Stock Picks - Gabriel Yap

2009-10-26T00:43:00.003+08:00

These are the following stock picks by Mr Gabriel Yap, senior dealing director at DMG & Partners Securities:

" Investors should set aside at least $50,000 if they want to invest in the stock market. Wait for a good pull back of 6 to 12 percent to build up your investment portfolio"

His stock picks include:

1. OCBC Bank. Banks normally outperform in the second stage of recovery.

2. DBS bank. Cheapest valuation

3. Bukit Sembawang. Property developer owns a great landbank in Seletar.

4. CapitaMall Trust. Great porfolio of assets with good location, good yield and borrowing levels.

5. Ascendas Reits. Potential for higher rents.

6. Frasers Centre Point Trust. Acquisition of Northpoint 2 and Yew Tee Point will properl growth.

7. Noble Group. Recent investment by China Investment Corp will open doors.

8. Midas Holdings. To benefit from China's booming rail industry

APL Logistics wins Supply Chain Excellence Award (16 Oct)

2009-10-21T09:58:00.001+08:00

APL Logistics has received the award for ‘Outstanding Partner in Supply Chain Excellence' within the Technology Solutions and Service Provider category at the Supply Chain Excellence Awards 2009, held in Singapore.

The awards recognised the achievements of the top five logistics partners in the Asia Pacific region. Successful contenders were those providers that have proven their ability to deliver outstanding value to customer's operations and strengthened supply chains during the global economic downturn.

"In the last year we have worked increasingly closely with our customers to help them create end-to-end supply chains that have the flexibility to adapt to volatile market conditions. By doing so, we have been able to continue helping our global customers strengthen their presence in the Asia Pacific region and support the effectiveness of Asia’s increasingly diverse manufacturing locations," said Peter Knapp, Vice President, Contract Logistics, APL Logistics.

The judging panel, which was comprised of representatives from academic and commercial institutions across Asia, Europe and the US, selected all category winners based on their ability to help customers build resilient and flexible supply chains. Entrants also had to show evidence that demonstrated how they had created tangible cost savings or efficiencies for customers in the last year.

APL Logistics' industry leadership was acknowledged in several areas. This included its ability to help customers manage fluctuating inventory requirements and increasing cost pressures via its time-definite OceanGuaranteed® and APL Guaranteed® services. The environmental benefits of switching from air to ocean/truck transportation and 'big box' consolidation were also seen as an important part of this.

The business' focus on improving Asia's intermodal transportation connectivity, regionally and internationally also received recognition. A key element of this was APL Logistics' contribution to improving connectivity across India to support the country's economic growth aspirations via its IndiaLinx™ service, a joint venture with Hindustan Infrastructure Projects and Engineering (HIPE).

The awards were part of the SCM Logistics World Conference 2009.

YangZiJiang - Buy by DBS (13 Oct 09)

2009-10-15T07:40:00.004+08:00

Sturdy earnings
• Expect Yangzijiang to beat consensus and our forecasts for 2H09 and 2010 on lower steel costs.
• Upgrade 2009-2010 net profits by 11%-17% as we cut steel costs by 10%-11%.
• Raise target price to S$1.36, implied a 40% upside; Reiterate BUY on superior execution.

Lower steel costs. We re-examined our assumption for steel costs, the largest unhedged cost component (>20% of COGS) for shipbuilders. Based on recent price trend, steel costs in 2H09-1H10 will likely be lower than our expectation. Steel prices have hovered at low levels of RMB3000–4000/ton YTD and are not expected to pick up significantly in the near term, based on our industry checks.

Upgrade earnings. We have lowered our full year steel cost assumption from RMB4500-5000/ton to RMB4000-4500/ton in FY09-FY10 forecast periods. These have lifted our gross margins by 2ppt to 23.5% in FY09 and 22% in FY10, leading to upward revision in net profit forecasts for FY09 and FY10 by 11% and 17% respectively. The marginal declines in net profit forecasts in FY10- FY11 are due to cessation of tax holiday for new yard and margin normalisation.

Scope for consensus upgrades post 3Q results. On the back of favorable steel prices and on track delivery, Yangzijiang is expected to report a stellar 3Q09 results similar to 2Q09, when release on 3rd Nov. We project 3Q09 to record net profit of RMB550-600m on revenue of c. RMB2.4bn. With this, 9M09 bottomline could make up 80%-85% of consensus forecasts, which will likely call for a series of earnings upgrades by the streets.

Maintain BUY; Target price raised to S$1.36. Our target price is raised to S$1.36 following the earning revisions, still pegged to 11x FY10 EPS. This is in line with the average PE of regional peers. Superior execution track record. We continue to favor Yangzijiang for its solid execution and consistent earnings delivery. The shipbuilding track records of SGX-listed shipyards have generally been patchy, ranging from estimated losses to positive 23% gross margin. Yangzijiang has stood above its peers by achieving consistent and better 19-23% gross profit margin and 78% net profit CAGR in the 2004-08 periods; through its superior raw materials and forex hedging strategies and better order book quality.

Shipping Trusts - Underweight by OCBC (12 Oct 09)

2009-10-13T08:54:00.002+08:00

3Q results preview. We expect FSL Trust and Pacific Shipping Trust to release 3Q09 results next week, with Rickmers Maritime following later in the season. We will be tracking: 1) performance of the trusts' charters; 2) balance sheet factors including loan-to-market-value levels and repayment schedules; and 3) how this translates to forward strategy and DPU guidance.

Maintain UNDERWEIGHT on the sector as we believe the unwinding of this leveraged play structure is still playing out. The shipping industry is still hurting and counterparty risk and aggressive leverage remains a key concern. FSL Trust [BUY, S$0.72 fair value] is our preferred pick for its diversified vessel portfolio.

FSL Trust (FSLT). In September, FSLT secured loan-to-value (LTV) covenant waivers and raised equity through a placement. As such, we expect 3Q results to be fairly uneventful relative to the other two trusts. FSLT is the only trust to have given clear guidance for 3Q09 payout: 1.5 US cents is guided for pre-placement unitholders (1.27 US cents already paid out). We expect the trust to meet its guidance. The placement proceeds are earmarked for acquisitions but it may be too soon to expect concrete news on this front.

Pacific Shipping Trust (PST). Rate renegotiation discussions with customer CSAV are now in their sixth month with no resolution achieved so far. 3Q09 revenue will likely outperform our expectations as we had priced in a rate cut from 2H09 onwards. Our view is that it is only a matter of time before some flavor of rate concession is granted. Meanwhile, PST's Board is reconsidering its payout strategy and has only said that 3Q09 payout will be no less than 70% of distributable income. This may be a significant quarter as the Board spells out its forward payout and growth strategy. PST has already outlined its ambitions to grow, but any serious attempt would require fresh equity, in our opinion.

Rickmers Maritime (RMT). RMT paid out 0.6 US cents DPU in 2Q09, and its circumstances are unchanged. We don't expect any immediate resolutions to its challenges including LTV covenant breach concerns, maturing loans, and an outstanding order book. We do not believe there is scope for DPU increase till these issues are resolved and believe it more prudent to not price in any payout. While fresh equity may be eventually necessary, loan covenant concerns create a chicken and egg situation. Like FSLT, RMT may need to secure (at least conditional) LTV waivers before it can attempt to raise equity.

Straits Asia Resources - Hold by OCBC (9 Oct 09)

2009-10-12T12:57:00.001+08:00

Caught in the rain

Jembayan facility damaged by rain. Continuous rain over the past several days has dealt Straits Asia Resources Ltd (SAR) a setback. Its new loading facilities at the Jembayan mine, which were just commissioned this year, have been damaged as heavy rainfall led to a failure of its foundation structure. Although the extent and impact of the damage have yet to be ascertained, the group has warned that no further loading will be possible from this facility for at least some time. We expect production volume to be hurt as a consequence. The facilities are insured against business interruptions and we expect SAR to claim against these damages.

Production to take a hit. The failure of its new loading facilities will no doubt cast a shadow over SAR's expansion plans. The group had originally planned to raise Jembayan's output from 5.5m tonnes in FY08 to 7m tonnes in FY09 with the help of the enhanced capacity. With the destruction of its new facility, we have cut our projections to 5.8mt. Meanwhile, SAR will seek alternatives to boost its output via access from neighbouring mines. We understand that the latest damage merely cripples the transportation of coal from mine to barge. Actual production at its mines remains on track.

Operations supported by original facilities. On a comforting note, SAR's original loading facilities have withstood the rain. Operations continue to run normally both at Jembayan's original facilities (SAR operates two loading facilities at Jembayan) and also at Sebuku. Production from these facilities formed 83% of our original projections. The smooth running of their operations mitigates the negative impact brought on by the latest damages and also provides support to our projections.

Downgrade to HOLD with lower earnings forecast. SAR will provide further updates as they assess the impact of damages. We have cut our FY09 and FY10 earnings forecast by 18% and 15% respectively on lower production volumes. Accordingly, our DCF-based fair value estimate falls to S$2.20 from S$2.38. Downside risk could arise from (i) further disruptions to mining operations in the event of persistent rain and (ii) translation losses from a weakening USD. We downgrade SAR to HOLD.

Jim Rogers - Bond Bubble

2009-10-10T01:09:00.000+08:00

Read this article from Reuters about Jim Rogers and his opinions on the bond market. See article below.

NEW YORK (Reuters) - Investor Jim Rogers, a prominent commodities bull, said on Thursday the U.S. government bond market will be the next bubble to burst due to unsustainable borrowing, and agricultural commodities and precious metals are among his favorite investment picks.
Rogers also said stock markets could head for a pullback following a strong rally.

"It's overdue for a correction. Certainly, it would not be surprising if there were a correction after a straight-up move for six months," Rogers told Reuters Television in an interview.

He was not "selling the market short," and the equities market could keep rising for a long period of time, Rogers said.

After the Reuters interview, Rogers said at a seminar hosted by ETF Securities that the bull market in U.S. Treasuries has come to an end.

"The next bubble that I see developing is in the United States government bond market. It is inconceivable to me that anybody would lend money to the U.S. government for 30 years in U.S. dollars at 3 to 6 percent interest rate," he said.

"So, somewhere along the line, this bubble is going to pop. If any of you own bonds, I'd be terribly worried, I would think about getting out of the bond."

Midas - Buy by CIMB (08 Sep 09)

2009-10-09T12:52:00.000+08:00

Upgrade to Outperform from Neutral. We keep our FY09-11 EPS estimates unchanged but roll over our target price for Midas to S$1.14 from S$0.87, now based on 15x CY11 P/E (based on peer average). Our previous target price was based on 15.3x CY10 P/E. We upgrade Midas to Outperform on the back of better earnings visibility for FY11-12.

Rmb1.76bn metro train contract secured but more could come. Midas announced on 28 Sep 09 that its associate, NPRT, had been awarded a contract worth Rmb1.76bn by Hangzhou Metro to supply 288 metro train cars. The award of this contract should improve earnings visibility for FY11-13. Including this contract, Midas’s order book is Rmb6.26bn. We believe there could be more contracts to come from China as the Chinese government has yet to fully award all the contracts for its planned 800 High-Speed train sets.

China’s railway network set to become second largest in the world. PRC’s Vice Minister of Railways, Wang Zhiguo, announced in Aug 09 that China will increase its rail construction spending to Rmb600bn for 2009 and spend at least Rmb700bn per year on average over the next three years. With this increase, China’s operating railway network will be expanded from 80,000km to 86,000km by the end of 2009 and 110,000km by 2012, surpassing Russia and second only to the US.

Proposed secondary listing in Hong Kong. While a wider investor base would be generally positive for Midas, we believe its valuations are unlikely to improve as comparable companies in Singapore and Hong Kong are trading at similar valuations.