They have mistaken or misprint the % Change (YTD) for Sembcorp Marine as -100%.

For a stock closed at $4.04 at 31 December 2007, it have to drop $4.04 to ZERO in order to get YTD change of 100%. However, the lowest price a share can plunged is floor at half a cent.

The actual YTD change is -5.9%. Pretty small compare to STI overall.

Continue to read more...

Published @ The Strait Times 30 August 2008 (Pictures are difference)

Well-matched outfits
Does not have to be expensive but should be made of good material, co-ordinated and fitting. Favourite brands are Brooks Brothers, Massimo Dutti (suit, right), Versace, Nina Ricci and Raoul

Massimo Dutti is a clothing retail chain with about 397 stores in more than 29 countries.

Minimal make-up
Regular facials, a great complexion and a natural look works best. Just sheer powder, earth-tone lipstick and blusher will do

Branded Bags
Handbags that match one’s togs, with clasps that show some class. Favourite brands: Gucci, Louis Vuitton and Ferragamo.

Twinkly cufflinks
Starched shirts must be finished with cufflinks from Dunhill, Brooks Brothers or Raoul. The colour of the belt and shoes – preferably polished and dark-coloured without scruff marks- must match

Locked cellphone
Classy mobile phones with all their clients’ precious numbers stored on it and a lock function in case the phone is ever lost or – worse – stolen by a rival. BlackBerrys are banned by certain banks, as this could compromise client confidentiality. Some models: Nokia N78, Vertu Monogram, LG Prada, Motorola Q9h6.

Dependable, not flashy, car
A good car but no ostentations sports cars like Ferraris. Safe bets are the BMW 5 series and Lexus IS250.

Elegant accessorizing
Discreet diamond or pearl necklaces for women, hign-end watches from Patek Philippe and Hublot for the man

Leader writing pad and case
Leader writing pad and case (Yves Saint Laurent laptop case) to hold documents and investment presentations. Don’t forget a calculator.

Mont Blanc fountain pen
Signatures should be scrawled only with a fountain pen, no less, say some bankers from the great Swiss private banking tradition

Clean teeth
Last but not least, wear a smile all the time.

Continue to read more...

There is no prize for guessing correctly who is in the spot light this week: The group President and CEO of SembCorp Industry, Mr. Tang Kin Fei.

It is in the bear market that people start to re-examine the blue chips as safe harbour.

Powering Ahead!

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DENTED by a bad debt provision of 139.5 million yuan, Bio-Treat Technology said yesterday its net profit for the full year ended June 30 slumped 62 per cent to 125.43 million yuan (S$26 million).

The fall came as revenue also slid 11.6 per cent to 1.41 billion yuan, mainly because of fewer turnkey projects, resulting in a 19 per cent decline in revenue from its wastewater treatment services to 1.1 billion yuan. At the same time, administrative costs, tax expenses and other operating costs - of which bad debt provisions were a part - rose.

Earnings per share fell to 0.14 yuan from 0.37 yuan.


Bio-Treat explained there were fewer turnkey projects in the fiscal year because of slower business activities and longer credit cycles in China.

The group will continue its practice of cherry-picking quality wastewater treatment projects while avoiding long credit periods and minimising its risk exposure, Bio-Treat said in a release. It will also seek out suitable strategic partners in developing new businesses.

'Bio-Treat's sound business fundamentals have mitigated the effects of difficult market conditions to post a reasonable set of results,' Bio-Treat chief executive Dennis Chan said. The group expects to stay profitable in fiscal 2009.

He added that the group will continue to focus on renewing its business model, including reducing its reliance on turnkey projects and growing its build-operate-transfer (BOT) and transfer-operate-transfer (TOT) segment.

Higher water tariffs from BOT and TOT projects in the near future is expected to cushion some of the group's cost pressures and improve operating margins, he said.

In a separate filing with SGX, Bio-Treat said it has received notices from Morley Fund Management, Highbridge Asia Opportunities Master Fund, Highbridge International and Citigroup Global Markets, each claiming that the group failed to redeem the full amount of bonds that were put to the company on Jan 18.

The financial houses said this constitutes an event of default which entitles them to accelerate the bonds held by them, making them immediately due and payable. They stated that they held bonds with a total face value of $23 million.

In response, Bio-Treat said it is seeking legal advice.

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With the advice from its independent financial adviser, JAPAN Land has urged its shareholders to reject the takeover offer by tycoon Oei Hong Leong as 'there are insufficient compelling reasons to accept the offers and the options proposal'.
Based on the report, the evaluation of the offer seems to focus on the NTA and revalued NTA.

Current audited NTA per share is 56 cents as at March 31.

NTA is 66 cents per share when factoring in gains from the sale of a 48% stake in KHC Ltd which was completed in April.

Estimated NTA is 72 cents per share if the share swap between its 14.13% associate Japan Asia Holdings Japan (JAHJ) and Jasdaq-listed ATL Systems goes through.


Revalued NTA of 69-71 cents per share if TSE trades at 14.79 times PE upon listing (if it listing go throught)

Revalued NTA per share of 72-76 cents if TSE trades at higher PE of 26.98 times.

What Oei put on table is 60 cents per share. Do not bite, shareholders are advised!

The job of the advisor is much easier then general perception if the scope of work is just to sum up the NTA figure and do the arithmetic calculation to derive the conclusion.

The fact that Japan Land is trading below 60 cents prior to the cash offer and rumors is ignored.

The fact that a lot of company in stock exchange trading below NTA is ignored.

The fact that the market valuation is getting cheaper since the offer is made is ignored.

The business prospect and challenge of Japan Land is ignored.

When the offered expired or lapsed, we will probably see how Japan Land cross the 60 cents marks again.

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In bear market.

Catalist listed Tritech has been reported won a $1.77 million study award from JTC Corporation to study possible economic uses for Singapore's underground rock caverns (URCs), which could range from power stations and wafer fabs to research and development labs, airport logistics centres and water reclamation facilities.


Tritech has just been listed last week. Albeit the contract value is small compare to multiple hundred million contract from Kepcorp/SembCorp Marine, the contract value still significant in relation to their market capitalisation.

However, the response of the market is 'ZERO' trading volume.

If I am the majority shareholder of Tritech, I would rather let the share price slumped after the news confirmation instead of facing zero market interest.

Continue to read more...

IPO dry-up
Trading volume dry-up
Speculation dry-up

Avoid any IPO until sentiment improve.....


It will be hard to find another bargain to make quick bucks like Kercana in this type of market.

Continue to read more...

Personally I subscribed to the idea that a true bottom is formed when capitulation take place.

Let have a look at the defination of caputulation in investopedia again:

Military term. Capitulation refers to surrendering or giving up.

In the stock market, capitulation is associated with "giving up" any previous gains in stock price as investors sell equities in an effort to get out of the market and into less risky investments. True capitulation involves extremely high volume and sharp declines. It usually is indicated by panic selling.

After capitulation selling, it is thought that there are great bargains to be had. The belief is that everyone who wants to get out of a stock, for any reason (including forced selling due to margin calls), has sold. The price should then, theoretically, reverse or bounce off the lows. In other words, some investors believe that true capitulation is the sign of a bottom.


We do not have 'extremely high volume' and 'sharp declines' now. Instead, we have a slow and steady plunge with trading volume almost dry-up.

To quote a word from Brother 7s: DJ is overbought, STI is oversold. Until both are extremely oversold, all, include the hardcore value/longterm investor is giving up, we are not going to have a solid bottom.

Meanwhile, just try to avoid falling into bear rally by controlling our greed.

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U.S. stocks fell the most in a month as a Kansas bank's failure and speculation American International Group Inc. will post a loss heightened concern that credit writedowns will keep rattling the financial system

For STI, technically, there is no sign of a trend reversal from the downtrend in near term. In ADX, DI- is widely space above DI+. With DI- looks like cutting down and ADX line moving up, STI might be bottoming up around the 2700 level. MACD still in negative region and no sign of convergence detected. RSI and Stochastic still unable to move up above the 30% and 20% level respectively indicating the market lack strength for rebound.


Today, STI look set to break 2700 psychological support level.

God bless STI!

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The previous list of best bargain is one to two months old now.

CIMB has released their list of top pick on 21 August 2008. Their choices are mainly yield stocks and those with bombed-out beta bets.

The favourite sectors are financial, offshore & marine, S-REITs and media. Sectors to avoid are plantations, transport and tech.


1. AREIT
2. City Devt
3. SembCorp Marine
4. SGX
5. SPH
6. Swiber
7. Tat Hong
8. UOB
9. Wheelock

The previous top picks from varios analysts and broking house is as follow. There are some consensus found among the lists.

Resilient Singapore Sevens
OCBC Investment Research dated 24 July 2008
ST Engineering
StarHub
Noble
Suntec REIT
SPH
Sino-Environment
Micro Mechanics

Top S-Chip Picks
CIMB-GK dated 18 July 2008
Celestial
China Zaino
FerroChina
China Sky
FibreChem
Sino Techfibre

Top picks of the highest-dividend stocks
CIMB-GK dated 7 July 2008
ART
Rotary
SPH
Areit
Cerebos

3Q08 Small Cap Stock Strategy and Stock Picks
DBS Group Research dated 24 June 2008
China Sky
KS Energy
Parkway Life Reit
Rickmers Maritime
Swiber

Continue to read more...

This is the verdict on second set of hot stocks from The Edge after just one week. When STI and S-Chip continue their fall, they are some bright spot in offshore plays showing the resilent nature of their performance: SembCorp Marine.

Here is the verdit:

Sinking Feeling for Offshore Plays


SembCorp Marine – Momentum Breaks Down
$3.77 to $3.90

Cosco Corp – No Bottom Yet
$2.28 to $2.12

Keppel Corp – Set for Decline
$10.28 to $10.28

YangZiJiang Shipbuilding – Support Gives Way
$0.635 to $0.605

SembCorp – Testing Support
$4.28 to $4.24

Jaya Holdings – Poised for Breakdown
$1.36 to $1.24

The plunge of offshore play is lesser then 1% over one week. SembCorp Marine has offset the down fall of other offshore plays. It is wiser to stick to 'local' offshore plays for extra margin of safety in this volatile period.

Continue to read more...

There is a lot of interest on BBSFF now, once a darling of yield lovers. Here is a review from The Edge this week.

BBSFF - This much-neglected fund came to life last month in the most unwelcome manner - a price collapse. Much of htis has to do with its parent's business model and sentiment surrounding listed infrastructure funds in Australia, which are all in decline. BBSFF has been tending down ever since the subprime crisis broke last year. How much further can prices fall or have they bottomed? There is no easy answer. Going by the charts, it doesn't look like the decline is over. As for target, it's difficult to say. Prices have fallen from the IPO prise of $1.06 to 26.5 cents, so it's fair to assume the largest decline is over.

Is it? Let's read on.....

The comment from The Edge stop as abovementioned. As a gender reminder, we shall carefully look at what was cited as "the largest decline is over". This statement does not imply that the stock will not decline in large amount again. Good to remember: A stock that drop 90% is first drop to 80% and then half, i.e: Do not assume that it is safe to enter when it drop from $1.xx to 2x cents now, it can cut 50%of your invested capital really fast.

For those laughing at people entered at $1xx, yes, they are suffering 80% of lost right now. If you intend to bottom fish now and it happen to drop another half from current level, then you will suffer 50% lost, and the former 90%. The risk is very high. Therefore, do not enter if no reversal or bottoming signal.

Continue to read more...

Charting a come back - Chemoil?

Yes, it is Chemoil. The story is :


Chemoil see opportunities in better marine fuel business based on the following 2 factors:
1. Major oil company reducing their presence from this sector because this is not their core business
2. Smaller competitors are out of business due to tripling of energy prices drive up working capital requirement.

We will see if they really can triple the size of Chemoil within 5 years times as inspired by the late Mr. Chandran.

Continue to read more...

Are you interested in balloting for tombstone?

There are 120 persons have participated and each duly allocated at least one lot, some as much as l00 lots!

Yes. They are actually not balloting for a piece gravestone. They have subscribed the IPO and participated in a balloting for a share of Tritech Group Limited.


Here is the balloting result:

BallotingTombStone200808.pdf

I am wondering: Is there a better word to name the file of the balloting result?

Or this is a standard practice and governs by code?

By the way, the IPO lot holders are not too far from their tomb now. The stock commenced trading on Thursday, 21 August 2008 with trading volume of 106 lots. Barely second day into trading on Friday, 22 August 2008 the transaction volume is a big ZERO.

An unfortunate investment in Catalyst new IPO stock means get stuck in an illiquid small company forever, likely.

Sad, for IPO.

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Analysts' accuracy in predicting US profits dropped to the lowest level in at least 16 years last quarter, adding to a worsening track record since regulators forced companies to stop leaking information to Wall Street.

Earnings estimates from analysts matched results for 6.7 per cent of companies in the Standard & Poor's 500 Index that reported second-quarter profit, the fewest since Bloomberg began compiling the data in 1992.

Accuracy peaked at 30 per cent in the fourth quarter of 2000, the year Regulation Fair Disclosure, known as Reg FD, was adopted, and has fallen for six of the seven years since.

'They're winging it,' said John Kornitzer, who oversees US$5 billion as chief investment officer of Kornitzer Capital Management in Shawnee Mission, Kansas. 'They can't find out the stuff they want to find out, and they've got so much to do because there have been so many cuts.'

The Securities and Exchange Commission's (SEC) law stripped analysts of their edge in forecasting earnings by making companies release information that affects profits to the public. More than US$500 billion of bank losses from the collapse of the sub-prime mortgage market has made predicting company results even harder.


Morgan Keegan's Mr Wilson, who uses technical and quantitative analysis to make investment decisions, says investors can't rely only on analyst reports because 'nobody knows right now how bad it could be' as the US economy slows and banks' credit losses continue to climb.

'You've got to do lots of other things beside read an analyst report and take an earnings estimate at face value,' he said. 'Schmoozing the company doesn't help any more.' - Bloomberg

Continue to read more...

This is the excerpt of an interesting article found on The Business Times today. It is good to find out and understand how our attitude affects our investment decision.

The original article: Why he just leaps when she hesitates 20/08/08

The excerpt:

Men tolerate more risk than women, which means that over time, women's returns could be less.


'It's true that most men are willing to take more risks than women. 'Women sometimes take overly conservative positions, and then sometimes they don't make as much money as men

Women prefer to invest in large-cap, slower-growth companies and that men prefer riskier, small-cap firms with big upsides.

'Men are more willing to make decisions without studying them

'Men also feel like they can beat the market. On the other hand, when women get involved, they are more diligent workers. They study. They talk. They learn. They don't have the urge to beat the market.'

Men were also more likely than women to allocate too much money to one particular stock, buy a hot stock without doing any research, attempt to beat the market and ignore the tax consequences of their trades.

Men also reported that they traded stocks far more often than they should, which is a considerable problem.

'if you are a male investing alone, you should adopt a female perspective

'If you are a female investing alone, you should adopt a male perspective.

If you put the two groups together, you get balance.

My take: Bisexual make a perfect investor?

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This is a posting not related to investing.

For those walk through the era of Netscape Navigator, the browser war is over and the clear winner is IE. There is no even a remnant of corpse for Netscape now. Good job, Gate!

I am surprise that so many visitors are still using IE version 6 when IE version 7 is available for quite some times already. Same to Firefox visitors with comparable number of old and new version, when both of them are available free of charge. Why do you use the old version of browser?

I am using IE 6 to blog now.

Continue to read more...

I have a small problem reading the prospectus of Qian Feng Fabric Tech in my office space: A sexy bikini girl on the cover page!

By looking at the public offer size of just 1 million shares out 123 million shares, we know that the job of issue manager is a tough job in this bear market, definitely not as easy as 1, 2, 3 to sell 123 million of shares now.


Qian Feng Fabric Tech Limited is an integrated manufacturer of functional knitted fabrics, and to no surprise, from China again.

The offer price is 20 cents and the application will close on 25 August 2008. For information, the recently listed Zhongguo Pengjie Fabrics Limited is IPO at 23 cents and closed at 17 cents on 18 August 2008, down 6 cents. This IPO never closed above 23 cents since listing.

Can the Qian Feng Fabric Tech make a difference? I will scrutinize further.


Links:
Prospectus at MAS/OPERA

Continue to read more...

This is second set of hot stocks from The Edge. Of course, this is not a list to long, but a list of stocks technically poised like a nice short target.

With the "excellent" outcome of last week's Hot Stocks: No Olympic play for S-Chip, we can take a look and monitor it to see how the new list performed in coming week.

Even though STI has plunged below 2800, the offshore plays still holding pretty well (yes, exclude S-ship like Cosco and YZJ). They have a lot of meat left for shortist, if they proven to be a better predator.


Sinking Feeling for Offshore Plays

SembCorp Marine – Momentum Breaks Down
$3.77 to

Cosco Corp – No Bottom Yet
$2.28 to

Keppel Corp – Set for Decline
$10.28 to

YangZiJiang Shipbuilding – Support Gives Way
$0.635 to

SembCorp – Testing Support
$4.28 to

Jaya Holdings – Poised for Breakdown
$1.36 to

Update will be on coming Friday, after market closed.

Continue to read more...

Out of the last 30 IPO in SGX, there is only 5 counters trade above water now. They are:

CHINA FIBRETECH LTD (IPO price $0.21, Last Closed $0.245, Up 16.7%)
YONGMAO HOLDINGS LIMITED (IPO price $0.35, Last Traded $0.37, Up 5.7%)
WEE HUR HOLDINGS LTD. (IPO price $0.25, Last Traded $0.265, Up 6%)
OLD CHANG KEE LTD. (IPO price $0.20, Last Traded $0.24, Up 20%)
KTL GLOBAL LIMITED (IPO price $0.28, Last Traded $0.295, Up 5.4%)

One fact worth to note is that 2 out of 5 winners, Wee Hur and YongMao are construction related stock.

Now, we have another potential hero coming on board: HAI Leck Holdings


Hai Leck Holdings Limited is an integrated service provider of scaffolding, corrosion prevention and insulation works mainly for the oil & gas and petrochemical industries.

Hai Leck Holdings launches IPO at 26 cents a share with market capitalization of S$84.5 million. The net proceeds from the issue of the New Shares (after deducting estimated issue expenses) is approximately S$19.8 million.

This amount is insignificant if compare to the dividend distributed upon their Restructuring Exercise amounting to S$78,874,000 (among others dividend declared) in respect of FY2007.

The dividend is mainly come from the disposal of their stake in Hiap Seng Engineering Ltd. If this proceed is retained for expansion instead of distributed to their shareholders pocket, then there is no need for this IPO.

This company basically is debt free with stable stream of revenue and profit from their operation. What surprises me is the valuation of the company, even with relatively high NTA of 16.5 cents.

This is what we read from The Business Times 15 August 2008:
“At 26 cents a share, the offer is pegged at a price earnings ratio of 8.1, based on net earnings per share of 3.2 cents for the financial year ended June 30, 2007, and pre-IPO capital of 240 million ordinary shares.”

However, this is flaw.

When we pay 26 cents a share, we are actually paying for one share out of 325,000,000 shares post-invitation. Based on the same net earning and financial year, we are actually paying price earning ratio of 11.0 times!!

They have many competitors on Jurong Island and Bukom but none of them is public listed except CWT Limited with a small segment of corrosion protection activity. The more realistic comparison is with Rotary Engineering, OKP Holding Limited, Tat Hong and Tiong Woon, even though they do not do the exactly same trades.

I do not have convenient access to the financial data for all these companies. However, you may comfortably assume that they are not traded at double digit price earning ratio. An analyst report by CIMB on Yongnam Holdings Limited dated 15 August 2008 show that a basket of 5 construction stocks has simple average of 5.56 times FY08 and 4.6 times FY09. (Note: I think there is some error in calculating the simple average on the said report, my figure is re-calculated)

Noted also the small market capatalization.

I may have missed something but I am not buying anything appeared to have been priced exorbitant in this type of bear market. Disclaimer as usual. Please correct me if I’m wrong.


Important Date To Note:
26 August 2008, at 12.00 noon Close of Application List
27 August 2008 Balloting of applications
28 August 2008, at 9.00 a.m. Commence trading

The Invitation is for 85,000,000 New Shares at S$0.26
- 4,500,000 Offer Shares and
- 80,500,000 Placement Shares

The Company Website:
http://www.haileck.com/

The Prospectus at OPERA

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We have BEATING the credit crunch on 19 July 2008

We have Construction CRUNCH on 2 August 2008


We have Sailing into another STORM on 8 August 2008.


Why mostly pessimistic headlines for The Edge? If that is not enough, then this week we will have Time to HANG UP.


The only more positive perspective view is More growth ahead on 26 July 2008 which was referring to how to profit in the correction of plantation stocks.



Small Note: If you really go for bottom fishing in plantation stocks at that points of time, you should be poorer by double digit percentage of invested amount by now.

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The fact that Cosco Corp has hovering around $2.3x for the last few days has give some cash rich investors a good reason for bottom fishing.

The collapsed of Cosco Corp share price is unwarranted to some extend. However, in view of “the break below $2.80 indicates a target of $1.70 based on a measured move”, I would rather err on the safe side. The failure to rebound to higher ground after a huge sell down reflects a very weak buyer in the market.

Olympic has failed to bring stock rally before the event. It may be a better choice to enjoy the game now.

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Last Friday afternoon, we have received The Edge one day earlier when the market is still open due to National Day. If we have followed the technical analysis in ‘Hot Stock’ and invest according to the lead, how our portfolio will perform now?

Title: No Olympic play for S-Chip
China Sport – Momentum Breaks down
At $0.375 then, now drop to $0.360


China HongXing – Set for decline
At $0.475 then, now drop to $0.415

China Farm Equipment – Continued decline
At $0.41 then, now drop to $0.39

China XLX – set for retreat
At $0.72 then, now drop to $0.61

China Aviation Oil – Current levels set to give way
At $1.30 then, now drop to $1.13

Capitaretail China Trust – Attempting to bottom
At $1.17 then, now drop to $1.11

The hit rate is 6 out of 6!

The total return of portfolio if we shorted accordingly with CFD is 9.8% (excluding transaction cost). Not bad if we consider that S-Chip has actually plunged to much lower level before stabilized at current price.

The current date is 14 August 2008, based on mid day closing price.

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When SBS Transit Q2 profit down 56% to $6.39m, will this help to justify the impending fare hike in October?

Higher fuel and electricity costs put the brakes on SBS Transit's net profit for the second quarter ended June 30, 2008, causing it to fall 56.0 per cent to $6.39 million.


Fuel and electricity costs in Q2 had surged 73.7 per cent to $52.4 million compared to the previous corresponding quarter, pushing the bus and rail operator's total operating expenses up by 16.0 per cent to $173.6 million.

Earnings per share for the quarter fell to 2.07 cents in Q2 from 4.72 cents in the same quarter last year.

Continue to read more...

The idea for the Catalist sponsor to take shares in lieu of cash payment for their professional fees is not a potential conflict of interest, but a confirmed one.
How could a sponsor keep watch over a listed company when they are the shareholder of the same company?


Those company whose simply too small to afford the sponsorship fees and continuing fee shall think twice before taking public listing as an option.
It is laughable that some was quoted as suggesting to has another independent continuing sponsor to work with the prime sponsor. If an entity is so poor to afford a sponsor, how could they afford the second one?
The sponsorship system for Catalist, the Singapore Exchange's (SGX) platform for smaller firms may require a review to patch the loop holes.

Reference Post from Business Times

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The sank of Cosco share price on the surprise 'early retirment' of Ji Hai Sheng is hard to be ignored by The Edge this week. As highlighted, there are concern that the turnover of senior management at Cosco is a harbinger of bad news.

Also highlighted is a new contract worth US$1.46 won by Cosco's peer, Daewoo Shipping in Korea. This alleviated the concern of contract cancellation in recently.

Continue to read more...

Freddie Mac, one of the big players in the US mortgage market, on Wednesday posted its fourth straight quarterly loss as it braced for a prolonged housing sector slump by setting aside twice as much money for bad loans and cutting its dividend by at least 80 per cent.


The worse-than-expected results came just three weeks after the Treasury orchestrated a Congressional rescue plan to prop up the US No 2 provider of residential mortgage funding and its rival Fannie Mae.

Freddie Mac's chief financial officer Buddy Piszel reiterated that the company has adequate capital, and said it can wait for 'choppy' market conditions to improve before raising capital, which could exceed US$5.5 billion.

Continue to read more...

Cosco Corporation (Singapore) somehow has a way of spooking the market without intending to. What should have been seen as a normal management change came across as a sudden shake-up, causing its stock to sink further amid concerns already about slowing orders.


The counter closed almost 10 per cent lower at $2.44 yesterday after losing as much as 13 per cent intra-day, as the market reacted to news of the sudden announcement of the retirement of vice-chairman, president and executive director Ji Hai Sheng on Wednesday, and his response to media queries that he had only just been told of the board's decision.

According to industry sources, the change was expected and had been well known in the market since the announcement two weeks ago that Cosco chairman Wei Jia Fu would step down.

'It was a planned transition and everyone in the market knew about it since the changes with Captain Wei last month,' said a source. 'I'm surprised it sounded like a sudden decision because it makes the company look bad.'

DMG and Partners analyst Serene Lim said in a report released yesterday: 'A confluence of concerns over possible cancellation orders and rising steel prices has plagued global shipyards in the past week. Cosco has not been spared. This led to a slump in investors' confidence in Cosco shares.

'A new and sudden change in a key management role does not bode well in this weak investor climate, in our view. We believe that the share price is likely to be pressured, at least in the near term.'

Cosco called a briefing for analysts last night, apparently to reassure investors. It is believed that management sought to emphasise that Mr Ji's move was a normal internal transfer and that nothing is amiss.

Several poorly handled developments at the company have dragged the stock down in recent months. In March, rumours swirled that accounting problems were the real reason behind the resignation of Cosco's financial controller.

Then in April, news of a US$202 million order cancellation caused the stock to fall more than 15 per cent to $2.85 on concerns of more withdrawals.

Continue to read more...

In the era of construction rush, the main contractor would like to lock in the price with steel product supplier for steady supply of material throughout the construction period. However, some strategic adopted by some supplier may land themselves in hot soup one day.

There are two separate interviews with steel product suppliers published by The Edge last week. One with executive director of Asia Enterprises, another one is with CEO of HG Metal.

HG Metal pointed out that they don’t want to carry too much inventory for fear of being caught wrong-footed by the volatile prices. In other hand, Asia Enterprise has anticipated an upward trajectory in steel and a limited supply, therefore, the company had early this year sought to increase its inventory level. In short, the company stocks up the steel product now with hope to sell it at higher price when market price surged up.

As Asia Enterprise rightfully pointed out, a sharp downward swing in the price of steel would leave itself with very expensive stock that the company has to sell at low prices.

In view of the volatile nature of steel price, this may be not the risk investors want to take for investment in a steel product supplier. If investors need exposure to future price trend of steel price, there are plenty of choices offered by professional managed fund.

Continue to read more...

There is a surge of web traffic to search for Hai Leck Holdings initial public offer lately. Leave me wondering what the specialty of this coming IPO?

This is a new local candidate for IPO applying to be listed into SGX-ST on 10 June 2008. The principal activities are scaffolding, corrosion prevention services and insulation services. You will hardly see this company in Singapore because they are specialize to serve petrochemical plant in Jurong Island, where profit margin is significantly higher then ordinary job. Other listed company ‘hiding’ on Jurong Island include Rotary Engineering.

Let wait and see the valuation for this new construction counter soon.

Continue to read more...

This is a very important good news for Straits Asia Resources which I think the market has overlook today.

The upgrade is significant in view that they have just 2 mines: Jembayan and Sebuku mines.


The following text is quoted from DBS Group Research which has provided quick and insightful update on the latest development.

Story:
Straits Asia Resources (SAR) announced an upgrade in its Jembayan coal reserves and resources. Total reserves were increased by 152% to 92 million tonnes (mt) from 36.5mt previously while total resources was upgraded by 203% to 138mt from 45.5mt previously. This upgrade is the first stage of an ongoing drilling program at Jembayan mine.

Point:
The upgrade announcement at Jembayan mine reserves is positive for SAR as it will ensure continuing production capability from the mine area. Noted as well that the intensive exploration program will continue for at least another 18 months as current exploration only covers 15% of the total concession area.

Relevance:
We reiterate our BUY recommendation on the counter and maintain our target price of S$4.77,
implying 20.2x and 7.7x FY08-09 PEs. Addition of reserves and resources will further solidify our optimistic view on the counter as it will extend the company’s capability to conduct its operations. Recent pressure on prices of coal companies stocks is over-done in our view
as coal price benchmark are still well above our estimates of US$120/t for 2008 and decline in oil price will actually help reduce production cash costs.

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Hyflux Water Trust (HWT) has reported distributable cash of $4.5 million for the first half of the year. HWT is forecasting full-year DPU of 4.88 cents, reflecting a yield of about 7.7 per cent.

In another front, Bio-Treat is looking into setting up a similar business trust that will contain all its water-related infrastructure assets. Bio-Treat is in dirt need of cash to repay $206 million debts owed to its convertible bond holders.

In comparison to HWT with a reputable sponsor of Hyflux Limited, Bio-Treat has an uphill task to entice investors to park money with its new trust, especially to beat the 7.7% high yield projection with HWT.

The target to raise $250 million to $350 million from the new trust is more than Bio-Treat’s current market capitalization of $250 million. Since they intend to hold 30% of trust upon listing, they are likely overvalued the 70% stake of their assets.

The actual valuation should be at the lower bound or below $200 million in order to push up the yield percentage in view of the market competition. Bio-Treat is unlikely to get excess cash for future investment too after paying their convertible bond holders.

I am not investing in Bio-Treat new business trust if the yield is not significant better then HWT’s 7.7%.

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HDB has in their latest survey showed that the support for Selective En bloc Redevelopment Scheme (SERS) stood at 85%. This is not surprising as SERS offers a new home nearby with new 99-year lease at a subsidized price. If gobernment putting goodies into your pocket, you may have a difficulty to feel unpleasant. BUT, this is a survey conducted on residents selected for SERS, how about those not?

If the survey is conducted to include those residents staying at older estate but NOT selected for SERS, especially those in opposition ward, you will see more unhappy face.

When same pool of national resources is distributed among citizen, no one shall be discriminated or disadvantaged due to their political position.

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Cosco Corp has post 60% growth in net profit in 2Q versus analysts expectation of 42%. Will this set of good result win over the analysts for upgrading of stock price?

The first report I read this morning is from Phillip Securities Research which maintain BUY rating, but fair value has been lowered to S$3.44, citing significantly weaker USD and persistently high steel prices to impinge on profitability for the year.

The second quote is from ccloh: JPMorgan downgrades Cosco to Neutral from Overweight on concerns over impact of high steel prices, lack of earnings visibility; Cuts target price to S$3.00 from S$3.80

News BEFORE Result, 4 August 2008
0205 GMT [Dow Jones] Cosco Corp. may post 42% growth in net profit in 2Q at S$114.4 million vs S$80.4 million in 2Q 2007, shows Dow Jones Newswires poll''s average of 5 analysts; growth likely due to offshore related, higher value added ship repair activities. "With oil prices at record levels, business for Cosco is likely to remain robust as exploration and production activities will continue to drive the demand for rigs and ship repairs," says analyst at foreign bank. 2Q Revenues expected at S$985 million vs S$265.3 million year ago. Results due today after market closes at 0900 GMT. Shares last - 3.3% at S$2.94 vs S$3.04 Friday''s close. (PRV)

News AFTER Result, 5 August 2008
Cosco Corporation (Singapore) Ltd remained on its growth track as it achieved another record quarterly financial performance in Q2 2008. Net profit attributable to equity holders of the Company surged 60% to $128.7 million, while turnover increased by 104% to $1.05 billion, mainly due to ship repair, ship building and marine engineering businesses, which are supported by buoyant order book.

Turnover soared 104% to $1.05 billion in Q2 2008, surpassing the $1-billion mark in a quarter for the first time fueled by solid performances across all key business segments. Gross profit surged 61% from $152.2 million in Q2 2007 to $245.4 million in Q2 2008. This was lifted by higher turnover despite lower gross margin from 29.7% to 23.4% mainly due to higher raw material costs.

Net profit attributable to equity holders of the Company rose 60% from $80.4 million in Q2 2007 to $128.7 million in Q2 2008 backed by strong business expansion and operational efficiencies. Compared to 1H 2007, net profit rose 74% from $122.3 million to $212.6 million in 1H 2008.

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In a development which is relevant to the listing of Zhongguo Pengjie Fabrics this week, China Printing & Dyeing Holding has reported a net profit of 1.29 million yuan (S$259,000) for the second quarter of 2008, a fall of 94.3 per cent compared to 22.66 million yuan in the corresponding period a year ago, hit by a strong yuan and higher energy costs.

The company said that the textile printing and dyeing industry in China has been facing an increasing challenging environment of strengthening RMB against US$, higher operating costs; especially high oil prices leading to higher material costs, freight, transportation and energy related costs. Reduction of export tax rebates, stringent environmental regulations and export restriction have placed the industry in an extremely unfavorable environment.

Most of these factors can be extended and applicable to Zhongguo Pengjie Fabrics which count the same targeted end users as their ultimate boss.

We reference to their statement: “extremely unfavorable environment”, we could understand better by now why there is a rush of the new listing from same industry and same country into Singapore.

The next up coming in fabric industry is Qian Feng Fabric Tech.

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Coveat emptor. Follow blindly to your peril!

Resilient Singapore Sevens
OCBC Investment Research dated 24 July 2008
ST Engineering
StarHub
Noble
Suntec REIT
SPH
Sino-Environment
Micro Mechanics

Top S-Chip Picks
CIMB-GK dated 18 July 2008
Celestial
China Zaino
FerroChina
China Sky
FibreChem
Sino Techfibre

Top picks of the highest-dividend stocks
CIMB-GK dated 7 July 2008
ART
Rotary
SPH
Areit
Cerebos

3Q08 Small Cap Stock Strategy and Stock Picks
DBS Group Research dated 24 June 2008
China Sky
KS Energy
Parkway Life Reit
Rickmers Maritime
Swiber

I would like to end this post by quoting a paragraph from BT 2 August 2008:
"So the next time you see a blue chip company with good business and good assets - not the CDO kind - trading at a low PE, it is almost certainly a good buy. And often, this only happens in crisis times."

Do you homework!

Small Notes:
- The original article: “Do small caps take a bigger thrashing?” by TEH HOOI LING, Senior Correspondent of Business Times dated 2 August 2008.

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The Edge has used a very bold word on their latest issue this week: CONSTRUCTION CRUNCH.

When construction sector has created the most highest number of new jobs in 2nd quarter of 2008, this title may appear to be a bit too pessimistic. However, it is the bad news of the property sector which has started to cast dark cloud on the sky.

If we look at the current performances of last year darling stocks: Lian Beng, Yongnam, Chip Eng Seng etc, we know that, fellow investors have learn a lesson from the burst of construction booms in last cycle.

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This is a very interesting article about dilemma of China's apparel and textile Industry. I believe for those interested to invest in company like Li Heng, Hong Xing, China Sky and the newest on going IPO- Zhongguo Pengjie Fabrics shall have read this.

Full article: http://www.nextinsight.com.sg/content/view/495/1/

纺织服装行业正遭遇严峻考验，业内人士叹道：中国纺织服装业陷入了近十年来最艰难的困境。面临国内持续紧缩的货币政策、国际市场需求相对萎缩、出口退税政策调整、人民币升值明显加快、原材料价格持续上涨、劳动力成本不断上涨、节能减排力度越来越大等恶劣营运环境，目前国内4万多家规模以上（年销售收入500万以上）纺织服装企业，有2/3处在零利润状态；其余1/3略有盈利，平均净利润水平不会超过3％.

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SINGAPORE'S two largest public transport operators have applied to raise bus and train fares later this year. Yesterday, SBS Transit and SMRT Corp confirmed they have applied to the Public Transport Council (PTC) to lift fares, citing the same reason: higher cost pressures because of rising energy prices.

SMRT said in a statement that even the maximum fare adjustment of 3 per cent - about four to five cents - would not fully offset cost increases due to an 'inflationary and higher operating cost environment'.

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