Wednesday, February 25, 2009
China HongXing
At China Hongxing, prepayments, deposits and other receivables increased from RMB0.3b in FY07 to RMB1.2b in FY08. The bulk of this amount were advances to distributors to facilitate the setting up of approximately 358 (FY07: 100) new stores in 21 (FY07: 20) provinces/cities during the year. While the Company was able to collect back the advances made in FY07, economic conditions have clearly changed and this form of ‘vendor financing’ (though already flagged to the investing public), may be giving institutional investors’ the cold feet, having learnt the dangers of vendor financing during the Internet bubble in the US. China Hongxing’s share price could rebound though on short covering and traders should take their profit. Fundamentally, we have a Neutral call with a target price of S$0.20. Given fears that the current crisis could yield another China Aviation style shock, traders are reminded to be nimble with their trades.
Friday, November 21, 2008
Earning Outlook by DBSV
Earnings to decline by 17% for 2008 and 6% for 2009:
In 3Q08, the earnings for Singapore listed companies under our coverage dropped 7% yoy and 22% qoq, of which 32% were below expectations. Dismal outlook for 4Q08 led us to further cut estimates, and we expect 25% qoq decline in 4Q08. We have cut our earnings for 2008F and 2009F by 5% and 19% respectively. This resulted in earnings decline of 17% for 2008F and 6% for 2009F for STI stocks.
Earnings downgrades have yet to bottom – earnings risk for property and banking sectors. The sharper than expected drop in October NODX implies there is downside risk for GDP, pushing the economy into recession next year. MTI has cut its GDP growth forecasts to –1% to +2% for 2009 and 2.5%for 2008, on the back of weak 3Q08 GDP growth of –0.6% yoy and –6.8% qoq.
Against this backdrop, we expect earnings downgrades to continue for the next few quarters, the biggest risk lies in property and bank earnings, as provisions and write downs take centrestage due to asset devaluation. In 1998, net earnings decline by 40%.
12-month STI target upside cut to 2010 (base case) :
At 1613, the STI istrading at PE of 8.5x(08F) and 9x(09F) with dividend yield of 7.1%(08F). Our bottom-up target has been cut from 2983 to 2010 on revised earnings and de-rating, translating to 11.2x on FY09 earnings.
Bear target of 1250 on STI :
Given the deterioration in earnings, and assuming a recession scenario of –2% in GDP growth next year, the STI could test a low of 1250 if we apply 1998’s valuation metrics. As we are still in the early phase of a recession, we will pick stocks whose earnings are more resilient, such as consumer staples, media, telecoms, and utilities. We will sell on strength asset plays, as we expect more downside in asset values next year, as the effects of recession, job cuts and financial deleveraging exercises take its toll on asset plays including Properties, REITS, Shipping and Hotels.
In 3Q08, the earnings for Singapore listed companies under our coverage dropped 7% yoy and 22% qoq, of which 32% were below expectations. Dismal outlook for 4Q08 led us to further cut estimates, and we expect 25% qoq decline in 4Q08. We have cut our earnings for 2008F and 2009F by 5% and 19% respectively. This resulted in earnings decline of 17% for 2008F and 6% for 2009F for STI stocks.
Earnings downgrades have yet to bottom – earnings risk for property and banking sectors. The sharper than expected drop in October NODX implies there is downside risk for GDP, pushing the economy into recession next year. MTI has cut its GDP growth forecasts to –1% to +2% for 2009 and 2.5%for 2008, on the back of weak 3Q08 GDP growth of –0.6% yoy and –6.8% qoq.
Against this backdrop, we expect earnings downgrades to continue for the next few quarters, the biggest risk lies in property and bank earnings, as provisions and write downs take centrestage due to asset devaluation. In 1998, net earnings decline by 40%.
12-month STI target upside cut to 2010 (base case) :
At 1613, the STI istrading at PE of 8.5x(08F) and 9x(09F) with dividend yield of 7.1%(08F). Our bottom-up target has been cut from 2983 to 2010 on revised earnings and de-rating, translating to 11.2x on FY09 earnings.
Bear target of 1250 on STI :
Given the deterioration in earnings, and assuming a recession scenario of –2% in GDP growth next year, the STI could test a low of 1250 if we apply 1998’s valuation metrics. As we are still in the early phase of a recession, we will pick stocks whose earnings are more resilient, such as consumer staples, media, telecoms, and utilities. We will sell on strength asset plays, as we expect more downside in asset values next year, as the effects of recession, job cuts and financial deleveraging exercises take its toll on asset plays including Properties, REITS, Shipping and Hotels.
Wednesday, November 12, 2008
SGX to launch extended settlement contracts on 23 Jan 09
Singapore Exchange Limited (SGX) announced today that it will launch Extended Settlement (ES) contracts on 23 January 2009. The launch is aimed at expanding the current suite of equity products available to investors.Previously referred to as Single Stock Derivatives (SSDs), ES contracts will be a new product class on the SGX Securities Trading (SGX-ST) market. The new product allows investors to buy into an underlying stock listed on SGX at the transacted price on the day of the trade, for settlement at a specified future date. Investors will have to put up an initial margin to trade ES contracts, which will be marked to market. ES contracts provide investors with an exchange-listed and -traded alternative to unregulated over-the-counter trades.To familiarise investors with the benefits and risks of trading the new product, SGX will work with its Member firms to extend its current investor education programmes in the 2.5 months between now and when the contracts are launched. Among various activities, participating brokers will be organising product education seminars in collaboration with SGX at venues such as the SGX auditorium in Shenton Way. “Extended Settlement contracts will be the first margin-based product in our securities trading market. The launch of ES contracts on SGX's securities platform will fill the current pressing need in the equity derivatives space for Singapore-based retail investors. It will also pave the way for more varied exchange-traded equity products to be introduced, and allow for hedging and arbitraging opportunities,” said Mr Chew Sutat, SGX Executive Vice President & Head of Market Development.“The Securities Association of Singapore is pleased to have had the opportunity to work closely with SGX, and at many levels, to develop Extended Settlement contracts as a new product and to get the trading infrastructure ready for the launch. All 10 local brokers welcome the opportunity to play a key role in training and preparing the professionals and informing and educating the investing public on how this new product can serve them well. We are excited about Extended Settlement contracts creating new interest and adding depth to our securities market,” said Mr Lim Eng Hai, Chief Executive Officer of the Securities Association of Singapore. ES contracts will offer the following benefits:- Exchange-traded and -cleared ES contracts facilitate orderly and transparent trading of forwards/futures needs and reflect the views of investors. Specifically, all short positions in ES contracts will be matched against equivalent long positions and open interest will be transparent and published. Both long and short positions are margined and marked-to-market for system integrity.- ES contracts enable more efficient margin-based trading. This provides better risk management for the industry and increased capital efficiency for long investors, which are especially relevant in volatile markets.- SGX expects that with the participation of liquidity providers, exchange-traded ES contracts will facilitate increased liquidity in the cash market for underlying securities which are impacted, thus benefiting all investors in the marketplace.The 10 stockbroking companies supporting the development and launch of Extended Settlement contracts are AmFraser Securities, CIMB-GK Securities, DBS Vickers Securities, DMG & Partners Securities, Kim Eng Securities, Lim & Tan Securities, OCBC Securities, Phillip Securities, UOB Kay Hian and Westcomb Securities.The key features of ES contracts are detailed in the Annex.
AnnexThe key features of ES contracts are:- Each contract will be for 35 days, starting from the 25th of each month until the last trading day (LTD) of the contract month, i.e. the 31st of the following month. - If the 25th and/or 31st are non-trading days, the contract will start from and end on the last trading days before those dates. For example, an ES contract that starts trading on 23 January 2009 will have its LTD on 27 February 2009.- Settlement will take place by way of delivery of the underlying securities on LTD plus three days (LTD+3). If bought on the first day of the ES contract, this gives investors up to 38 days to settle the contracts with the actual securities – 35 days longer than for normal securities investments.- Margins, which are a fraction of the full trade value, are required to be paid to trade ES contracts. The margins range from 5% to 20% of the cost of one lot of the underlying stock. The full amount of the trade is payable on settlement day, which is LTD+3.
AnnexThe key features of ES contracts are:- Each contract will be for 35 days, starting from the 25th of each month until the last trading day (LTD) of the contract month, i.e. the 31st of the following month. - If the 25th and/or 31st are non-trading days, the contract will start from and end on the last trading days before those dates. For example, an ES contract that starts trading on 23 January 2009 will have its LTD on 27 February 2009.- Settlement will take place by way of delivery of the underlying securities on LTD plus three days (LTD+3). If bought on the first day of the ES contract, this gives investors up to 38 days to settle the contracts with the actual securities – 35 days longer than for normal securities investments.- Margins, which are a fraction of the full trade value, are required to be paid to trade ES contracts. The margins range from 5% to 20% of the cost of one lot of the underlying stock. The full amount of the trade is payable on settlement day, which is LTD+3.
Friday, November 7, 2008
DBS to lay off staff
This is not a good sign.
Singapore's DBS Group, Southeast Asia's biggest bank by assets, said Friday it was cutting 900 staff to trim costs amid the global credit crisis, and reported a slump in third quarter net profit. Chief executive Richard Stanley said most of the cuts, to be carried out at the end of the month, will come from its offices in Singapore and Hong Kong and will account for six per cent of the workforce. He added that this was the largest job cut ever. The job cut will be across all businesses and all levels. Laid off staff will be paid the equivalent of one month's salary for every year of service as per market practice. DBS said it has no plans to cut beyond this and also clarified that there are no plans for salary cuts.
Back in 2001, DBS laid off 200 staff in Singapore and implemented pay cuts. “To be a streamlined organisation, I believe we must run a tighter ship," he told reporters." We have been vigilant on costs but as the economy enters a more difficult and uncertain phase, many financial institutions around the world and in Asia have made headcount reductions," he added. "To be more productive and efficient, we will restructure and streamline the organisation. Regrettably, this has resulted in the need to reduce our workforce by six percent or about 900 people, primarily (in) Singapore and Hong Kong, by the end of the month."
Earlier Friday DBS said net profit in the three months to September fell 38 per cent as market-related income took a hit from the global financial crisis and bigger provisions. Third quarter net profit totalled S$379 million (US$256 million), down from S$610 million in the same period last year, it said in a statement. Analysts polled by Dow Jones Newswires had predicted an average S$572 million net profit. "The operating environment is increasingly challenging for financial institutions the world over," Stanley said. "We took upfront prudential levels of allowances to strengthen our balance sheet and with strong capital and liquidity, I believe we are well positioned to ride out the uncertainties ahead." Net interest income in the September quarter grew two per cent to S$1.07 billion from last year but net fee and commission revenues dropped 22 per cent to S$316 million. Other non-interest income plunged 87 per cent on the year to S$11 million. The bank said it set aside S$129 million in provisions, compared with just S$10 million a year ago, partly to cover its collateralised debt obligations (CDOs) portfolio. CDOs are securities backed by a range of assets including bonds, loans and their derivatives, including corporate loans, high-grade mortgages, subprime mortgages, car loans and credit card debt.
DBS was the last of three local banks to report earnings for the September quarter. Oversea-Chinese Banking Corp (OCBC) said earlier this week third quarter net profit fell 13 per cent while United Overseas Bank reported last week a 5.1 per cent drop in profit for the same period. -
Singapore's DBS Group, Southeast Asia's biggest bank by assets, said Friday it was cutting 900 staff to trim costs amid the global credit crisis, and reported a slump in third quarter net profit. Chief executive Richard Stanley said most of the cuts, to be carried out at the end of the month, will come from its offices in Singapore and Hong Kong and will account for six per cent of the workforce. He added that this was the largest job cut ever. The job cut will be across all businesses and all levels. Laid off staff will be paid the equivalent of one month's salary for every year of service as per market practice. DBS said it has no plans to cut beyond this and also clarified that there are no plans for salary cuts.
Back in 2001, DBS laid off 200 staff in Singapore and implemented pay cuts. “To be a streamlined organisation, I believe we must run a tighter ship," he told reporters." We have been vigilant on costs but as the economy enters a more difficult and uncertain phase, many financial institutions around the world and in Asia have made headcount reductions," he added. "To be more productive and efficient, we will restructure and streamline the organisation. Regrettably, this has resulted in the need to reduce our workforce by six percent or about 900 people, primarily (in) Singapore and Hong Kong, by the end of the month."
Earlier Friday DBS said net profit in the three months to September fell 38 per cent as market-related income took a hit from the global financial crisis and bigger provisions. Third quarter net profit totalled S$379 million (US$256 million), down from S$610 million in the same period last year, it said in a statement. Analysts polled by Dow Jones Newswires had predicted an average S$572 million net profit. "The operating environment is increasingly challenging for financial institutions the world over," Stanley said. "We took upfront prudential levels of allowances to strengthen our balance sheet and with strong capital and liquidity, I believe we are well positioned to ride out the uncertainties ahead." Net interest income in the September quarter grew two per cent to S$1.07 billion from last year but net fee and commission revenues dropped 22 per cent to S$316 million. Other non-interest income plunged 87 per cent on the year to S$11 million. The bank said it set aside S$129 million in provisions, compared with just S$10 million a year ago, partly to cover its collateralised debt obligations (CDOs) portfolio. CDOs are securities backed by a range of assets including bonds, loans and their derivatives, including corporate loans, high-grade mortgages, subprime mortgages, car loans and credit card debt.
DBS was the last of three local banks to report earnings for the September quarter. Oversea-Chinese Banking Corp (OCBC) said earlier this week third quarter net profit fell 13 per cent while United Overseas Bank reported last week a 5.1 per cent drop in profit for the same period. -
Thursday, November 6, 2008
European Markets Down Despite Interest Rate Cut- Not a very good sign for the stock market
Thursday November 6, 8:44 am ET By Pan Pylas, AP Business Writer
LONDON (AP) -- European stock markets traded down Thursday after heavy sell-offs on Wall Street and Asia despite interest rate cuts across the continent, including a much bigger than anticipated reduction from the Bank of England.
The FTSE 100 index of leading British shares was down 167.72 points, or 3.7 percent, at 4,363.01, while Germany's DAX was 211.66, or 4.1 percent, lower at 4,955.21. France's CAC-40 was down 127.33 points, or 3.5 percent, at 3,490.78.
Except for some volatility after the interest rate cuts from the Bank of England and the European Central Bank and an unscheduled reduction by the Swiss Central Bank, Europe's stock indexes were still more or less at the level they were before the decisions.
While the Bank of England slashed its benchmark rate by 1.5 percentage points to 3.00 percent, its biggest cut since March 1981, the European Central Bank and the Swiss National Bank opted for more modest half-point reductions. The Czech Republic's central bank cut by three-quarters of a point.
The Bank of England's bigger than anticipated rate cut stoked expectations that the European Central Bank would be more aggressive than expected. Its decision to cut by only a half-percent disappointed investors looking for more aggressive action.
"The ECB rate cut came as a disappointment in the end after far more aggressive action from the Bank of England," said Jennifer McKeown, European economist at Capital Economics.
The failure of the FTSE to rally strongly in the wake of the Bank of England's aggressive interest rate cut indicated that the bank may have further reinforced fears about the length and depth of the recession in Britain.
"Traders are thinking, if we've really got to cut rates to 3 percent, then how bad is it out there," said Mic Mills, senior trader at ETX Capital.
"Recessionary fears were bad before; they just got a whole lot worse," he added.
LONDON (AP) -- European stock markets traded down Thursday after heavy sell-offs on Wall Street and Asia despite interest rate cuts across the continent, including a much bigger than anticipated reduction from the Bank of England.
The FTSE 100 index of leading British shares was down 167.72 points, or 3.7 percent, at 4,363.01, while Germany's DAX was 211.66, or 4.1 percent, lower at 4,955.21. France's CAC-40 was down 127.33 points, or 3.5 percent, at 3,490.78.
Except for some volatility after the interest rate cuts from the Bank of England and the European Central Bank and an unscheduled reduction by the Swiss Central Bank, Europe's stock indexes were still more or less at the level they were before the decisions.
While the Bank of England slashed its benchmark rate by 1.5 percentage points to 3.00 percent, its biggest cut since March 1981, the European Central Bank and the Swiss National Bank opted for more modest half-point reductions. The Czech Republic's central bank cut by three-quarters of a point.
The Bank of England's bigger than anticipated rate cut stoked expectations that the European Central Bank would be more aggressive than expected. Its decision to cut by only a half-percent disappointed investors looking for more aggressive action.
"The ECB rate cut came as a disappointment in the end after far more aggressive action from the Bank of England," said Jennifer McKeown, European economist at Capital Economics.
The failure of the FTSE to rally strongly in the wake of the Bank of England's aggressive interest rate cut indicated that the bank may have further reinforced fears about the length and depth of the recession in Britain.
"Traders are thinking, if we've really got to cut rates to 3 percent, then how bad is it out there," said Mic Mills, senior trader at ETX Capital.
"Recessionary fears were bad before; they just got a whole lot worse," he added.
Tuesday, November 4, 2008
Company result and news
FibreChem Technologies Ltd. (FBCM SP): The manufacturer andseller of chemical fiber products said third-quarter net incomefell 19 percent from a year earlier to HK$120.6 million ($16million) because of higher raw material costs and other expenses.FibreChem was unchanged at 27.5 Singapore cents.
Frasers Centrepoint Trust (FCT SP): The owner of shoppingmalls in Singapore said it will distribute S$8.1 million ($5.5million) to shareholders for the third quarter, 27 percent lessthan a year earlier. Frasers Centrepoint retreated 1.5 Singaporecents, or 2.2 percent, to 66.5 cents.
Great Eastern Holdings Ltd. (GE SP): The biggest lifeinsurer by assets in Singapore and Malaysia said third-quarterprofit rose 9 percent from a year earlier to S$135.2 million.Shares of the company were upgraded to ``buy'' from ``sell'' atCitigroup Inc. following the earnings. Great Eastern climbed 3 cents, or 0.3 percent, to S$9.18.Oversea-Chinese Banking Corp. (OCBC SP), the largest shareholderin the insurer, gained 29 cents, or 5.9 percent, to S$5.19.
Olam International Ltd. (OLAM SP): The Singapore-basedcommodities supplier had its share-price forecast cut to 69Singapore cents from 94 cents at ABN Amro Holdings NV, which saidthat the credit crunch could restrict trade and hamper thecompany's volume growth. The brokerage has a ``neutral'' ratingon the stock. Olam added 4 cents, or 3.2 percent, to S$1.30.
Singapore Airport Terminal Services Ltd. (SATS SP): Thecatering and ground-handling unit of Singapore Airlines Ltd. (SIASP) said second-quarter net income fell 33 percent from a yearearlier to S$32.4 million because of a decline in contributionsfrom its units and higher expenses. The stock rallied 6 cents, or4.1 percent to S$1.53.
Singapore Exchange Ltd. (SGX SP): The operator of the city-state's securities and derivatives markets said it entered into apreliminary agreement with the Fujian government to encouragecompanies in the Chinese province to list their shares inSingapore. Singapore Exchange rose 25 cents, or 4.9 percent, toS$5.35.
Singapore Telecommunications Ltd. (ST SP): Southeast Asia'slargest phone company said currency movements hurt fiscal second-quarter earnings because of contributions from overseasoperations. Singapore Telecom advanced 8 cents, or 3.3 percent,to S$2.51.
Frasers Centrepoint Trust (FCT SP): The owner of shoppingmalls in Singapore said it will distribute S$8.1 million ($5.5million) to shareholders for the third quarter, 27 percent lessthan a year earlier. Frasers Centrepoint retreated 1.5 Singaporecents, or 2.2 percent, to 66.5 cents.
Great Eastern Holdings Ltd. (GE SP): The biggest lifeinsurer by assets in Singapore and Malaysia said third-quarterprofit rose 9 percent from a year earlier to S$135.2 million.Shares of the company were upgraded to ``buy'' from ``sell'' atCitigroup Inc. following the earnings. Great Eastern climbed 3 cents, or 0.3 percent, to S$9.18.Oversea-Chinese Banking Corp. (OCBC SP), the largest shareholderin the insurer, gained 29 cents, or 5.9 percent, to S$5.19.
Olam International Ltd. (OLAM SP): The Singapore-basedcommodities supplier had its share-price forecast cut to 69Singapore cents from 94 cents at ABN Amro Holdings NV, which saidthat the credit crunch could restrict trade and hamper thecompany's volume growth. The brokerage has a ``neutral'' ratingon the stock. Olam added 4 cents, or 3.2 percent, to S$1.30.
Singapore Airport Terminal Services Ltd. (SATS SP): Thecatering and ground-handling unit of Singapore Airlines Ltd. (SIASP) said second-quarter net income fell 33 percent from a yearearlier to S$32.4 million because of a decline in contributionsfrom its units and higher expenses. The stock rallied 6 cents, or4.1 percent to S$1.53.
Singapore Exchange Ltd. (SGX SP): The operator of the city-state's securities and derivatives markets said it entered into apreliminary agreement with the Fujian government to encouragecompanies in the Chinese province to list their shares inSingapore. Singapore Exchange rose 25 cents, or 4.9 percent, toS$5.35.
Singapore Telecommunications Ltd. (ST SP): Southeast Asia'slargest phone company said currency movements hurt fiscal second-quarter earnings because of contributions from overseasoperations. Singapore Telecom advanced 8 cents, or 3.3 percent,to S$2.51.
Monday, November 3, 2008
STI : Good Volume; Election Boost - CIMB
Dow Jones] Singapore shares holding onto good gains in decent volume as imminent U.S. election eyed as potential catalyst; STI +4.8% at 1880.88 at midday with resistance tipped at Oct. 22 intraday high of 1895. "Expectations that the new government will have to get down to the job of turning around the U.S. economy may continue to support optimism that the worst is over for holders of equities," says CIMB. Gains widely based with all sub-sector indexes higher; biggest blue chip risers include Golden Agri (E5H.SG) +15.8% at S$0.22, Keppel Corp. (BN4.SG) +9.8% at S$4.92. Broad market volume markedly higher than in recent weeks; gainers outnumber losers 4 to 1.
Thursday, October 30, 2008
Is the worst over?
The credit crunch may be over, but I dont think the worse is over. Wall Street's problems may be over but Main Street's problems may just be starting.
Problems over the past 2 months have affected the overall economy. In US, we will see more companies reporting lower profit as business slowed. There will be more layoff. Unemployment will increase, spending will be lower. This will affect business all over the world.
We are hearing reports of China getting less orders from the US for manufacturing products. This will result in China's companies reporting poorer results. When companies report poorer result, EPS will be lowered and hence price of those companies will be re rated lower.
Singapore listed companies will not be spared this problems. Over the next 2 weeks, we will be going into 3Q reporting season. You can expect many companies to report lower earning. When that happens, expect sentiment to be dampened and share prices to be lower.
It may take a few more months before business and economy pick up steam again. That will be the time when the worse is over.
Problems over the past 2 months have affected the overall economy. In US, we will see more companies reporting lower profit as business slowed. There will be more layoff. Unemployment will increase, spending will be lower. This will affect business all over the world.
We are hearing reports of China getting less orders from the US for manufacturing products. This will result in China's companies reporting poorer results. When companies report poorer result, EPS will be lowered and hence price of those companies will be re rated lower.
Singapore listed companies will not be spared this problems. Over the next 2 weeks, we will be going into 3Q reporting season. You can expect many companies to report lower earning. When that happens, expect sentiment to be dampened and share prices to be lower.
It may take a few more months before business and economy pick up steam again. That will be the time when the worse is over.
Friday, October 24, 2008
Keppel Land 3Q results – Cautious outlook
CLSA take on Keppel Land
We have yet to officially cover this stock. Dhruv has gone through the results and management commentary is rather cautious on all segments, with Singapore office related comments getting more conservative now. Earlier they commented on balanced demand and supply for the next few years, now they only talk about supply being low till 2009. Also no estimate has been given on office supply demand. Outlook on Singapore and China residential has also tapered down.
We also see a slowdown in launches. As of June 30 08, 777 Singaporean units were planned to be launched in 2H08. Only 498 units have actually been launched. Marina Bay Suites and The Promont launch has been delayed to 2009 now. Within the Chinese market, the earlier target of 3,705 new units getting launched in 2009, has now been lowered to 2,796 units.
MBFC pre-let progress looks weak. As of 3Q08 end, 61% of the space at the MBFC has been pre-leased, up only 1% from 2Q08. Phase I is now 66% committed (up from 64% in 2Q08), while Phase 2 has been 55% pre-leased (flat QoQ). This means that only 32k of new space was pre-leased in the quarter, against news flow of over 230k. We need to check.
On the results: 3Q08 revenue arrived at S$185.7m, down 51% YoY and flat QoQ. Sequential revenue from residential property sales dropped 3%QoQ, but that from hotels/resort/property management business grew 40%QoQ.
Reported 3Q08 PATMI arrived at S$46.2, down 44% YoY and 12% QoQ. Excluding the on-off gains in 2Q08, 3Q08 PATMI was actually up 2%QoQ. Sequential earnings from residential property sales grew 44%, while profits from hotel operation turned negative (3Q08 registered a loss of S$10.5m, against a S$2.5m profit seen in 2Q08).
Earnings are largely below consensus as 3Q09 PATMI of S$159.1m, is about 62% for consensus full year 2009 estimates.
New residential units sales in the quarter were limited. 14 new units were sold at Reflections (S$2000psf), while 28 were sold at Park Infinia and Tresor (S$1500-1600psf).
Net debt to equity remains at 54%, no change. Only 7% of the debt is coming for refinancing in a year. Funding costs are at 2.5%, but only 15% of the company's borrowings are at fixed rates.
We have yet to officially cover this stock. Dhruv has gone through the results and management commentary is rather cautious on all segments, with Singapore office related comments getting more conservative now. Earlier they commented on balanced demand and supply for the next few years, now they only talk about supply being low till 2009. Also no estimate has been given on office supply demand. Outlook on Singapore and China residential has also tapered down.
We also see a slowdown in launches. As of June 30 08, 777 Singaporean units were planned to be launched in 2H08. Only 498 units have actually been launched. Marina Bay Suites and The Promont launch has been delayed to 2009 now. Within the Chinese market, the earlier target of 3,705 new units getting launched in 2009, has now been lowered to 2,796 units.
MBFC pre-let progress looks weak. As of 3Q08 end, 61% of the space at the MBFC has been pre-leased, up only 1% from 2Q08. Phase I is now 66% committed (up from 64% in 2Q08), while Phase 2 has been 55% pre-leased (flat QoQ). This means that only 32k of new space was pre-leased in the quarter, against news flow of over 230k. We need to check.
On the results: 3Q08 revenue arrived at S$185.7m, down 51% YoY and flat QoQ. Sequential revenue from residential property sales dropped 3%QoQ, but that from hotels/resort/property management business grew 40%QoQ.
Reported 3Q08 PATMI arrived at S$46.2, down 44% YoY and 12% QoQ. Excluding the on-off gains in 2Q08, 3Q08 PATMI was actually up 2%QoQ. Sequential earnings from residential property sales grew 44%, while profits from hotel operation turned negative (3Q08 registered a loss of S$10.5m, against a S$2.5m profit seen in 2Q08).
Earnings are largely below consensus as 3Q09 PATMI of S$159.1m, is about 62% for consensus full year 2009 estimates.
New residential units sales in the quarter were limited. 14 new units were sold at Reflections (S$2000psf), while 28 were sold at Park Infinia and Tresor (S$1500-1600psf).
Net debt to equity remains at 54%, no change. Only 7% of the debt is coming for refinancing in a year. Funding costs are at 2.5%, but only 15% of the company's borrowings are at fixed rates.
Thursday, October 23, 2008
Market yet to reach its bottom!
The market continued to search for a bottom Wednesday, as a fresh round of disappointment over corporate earnings offered further proof that a turning point has not yet arrived.
Market analysts have been racing to call a market bottom in recent weeks as stocks have shed more than 30 percent of their value from the highs of a year ago this month.
But the emerging consensus is that a true bottom—and a subsequent turning point—won't happen until at least the early part of 2009.
Market analysts have been racing to call a market bottom in recent weeks as stocks have shed more than 30 percent of their value from the highs of a year ago this month.
But the emerging consensus is that a true bottom—and a subsequent turning point—won't happen until at least the early part of 2009.
Credit Crisis Hits Global Shipping-Moody's Economy
[Dow Jones] STOCK CALL: Asia's export-oriented economies facing "double-whammy" from falling consumer demand and crisis of confidence in funding, with reports of banks refusing to honor letters of credit, "the lifeblood of international trade flows," says Moody's Economy.com's Matt Robinson. Says letters of credit, essentially an I.O.U. between importer and exporter, allow exporters to load cargo for shipment with assurance of being paid; at the other end they demonstrate security of supply, enabling importers to negotiate distribution, promotion with retailers. "In short, the whole global trade production line relies on letters of credit. No letters of credit, no transactions - and no transactions mean no international trade." Robinson reckons price distortions will follow if demand, albeit slowed, outstrips supply as vessels remain stuck in home ports. Adds, consumers could also face shortages, "as shipments of foodstuffs and grain lay stranded overseas."
Wednesday, October 22, 2008
DBS and it wealth management products
http://swissyen.blogspot.com/2008/10/lehman-minibond-impact-on-banks.html
Among the banks, DBS price came down more than the other 2 banks. There can be 2 reasons for this sharper fall compared to the other 2 banks.
DBS High Notes, Lehman Mini Bond.
1. Recent statement by the government is having a bad impact.
2. DBS HK office may suffer from having to buy back Lehman Mini Bond from investors.
There is a JP Morgan research report on this matter, which is sent to you email. Do take a look at it.
Among the banks, DBS price came down more than the other 2 banks. There can be 2 reasons for this sharper fall compared to the other 2 banks.
DBS High Notes, Lehman Mini Bond.
1. Recent statement by the government is having a bad impact.
2. DBS HK office may suffer from having to buy back Lehman Mini Bond from investors.
There is a JP Morgan research report on this matter, which is sent to you email. Do take a look at it.
Ezra
Many downgrades despite the good result, which was below analyst's expectation.
Alarming to see CIMB and OCBC Sec lowering their price target despite recommending buying the stock. CIMB cuts it price target for Ezra from 3.08 to 1.05, while OCBC's fair value is now 1.20 down from 3.30 previously. DMG cuts its target price from 2.30 to 0.67.
Alarming to see CIMB and OCBC Sec lowering their price target despite recommending buying the stock. CIMB cuts it price target for Ezra from 3.08 to 1.05, while OCBC's fair value is now 1.20 down from 3.30 previously. DMG cuts its target price from 2.30 to 0.67.
Tuesday, October 21, 2008
Another company in cash flow problem- Sun East
(Dow Jones)--Sun East Group Ltd. (Y35.SG) Tuesday said that it has breached certain financial covenants of a $15 million floating rate note due in 2009, making the outstanding amount immediately payable.
The Hong Kong-based beauty and cosmetics firm is currently in discussions with Deutsche Bank AG on how to settle the debt, it said in a filing with the Singapore Exchange.
The company said it hasn't been able to obtain any alternative source of financing.
The Hong Kong-based beauty and cosmetics firm is currently in discussions with Deutsche Bank AG on how to settle the debt, it said in a filing with the Singapore Exchange.
The company said it hasn't been able to obtain any alternative source of financing.
Saturday, October 18, 2008
What the Pros say
CNBC.com
17 Oct 2008 08:44 AM ET
Stock markets rose across the world Friday, rebounding from two days of losses. Investors have shifted their attention from the volatile financial crisis to the prospect of a global recession.
CNBC's experts weigh in on the worst case scenario and where to find safety in the yo-yoing markets.
Worst Case Scenario
If the world slips into a severe recession, global GDP could fall as much as 10% over a number of years, says Christoffer Moltke-Leth, head of sales trading, Asia Pacific at Saxo Capital Markets.
Volatility to Continue
Volatility is going continue for the rest of the year, believes Michael Yoshikami, founder, president & chief investment strategist at YCMNet Advisors.
Recession: How Long, How Deep?
We're going to definitely shrink about 2% in the current quarter, if not possibly at twice that pace. Stocks could possibly bottom sometime in the next couple of months, depending on the economy not being much weaker past the first quarter of next year, Joseph LaVorgna from Deutsch Bank predicts of the economy.
Commodities to Slump Further
The recent selloff in commodities is set to intensify and could cut another 30% to 40% from the Goldman Sachs Commodity Index, Phil Roberts from Barclays Capital told CNBC, adding oil could slump toward $50 a barrel.
History Says Don't Give In
We are in a recession and historically, when you find yourself in a recession, getting out of stocks is really a bad idea, Ernie Ankrim from Russell Investments told CNBC, although he warns investors to stay away from oil.
Treasurys don't offer too much to the upside, Ankrim added.
What Will Withstand the Turmoil?
With such wild swings seen on Wall Street almost a daily affair, how does one invest? Michael Yoshikami, founder, president & chief investment strategist at YCMNet Advisors thinks there can be good opportunities when fear and panic reign in the markets, like heavyweights Johnson & Johnson and McDonalds.
Buying into Bonds
Billionaire and investor Warren Buffett says he is getting back into American stocks, but is it the right time? Laurent Fransolet, head of European interest rates strategy at Barclays Capital still sees opportunities in the European bond market.
Still Stay on the Sidelines
The S&P 500 index is still in a downtrend for the short term, however, the Nikkei 225 Average is close to a recovery, Royce Tostrams, technical analyst at Tostrams Groep said Friday, adding that both markets are far away from buying levels.
Look for Big Names
The world's on sale right now and investors should invest in the companies with big bank accounts and big cash, like tech giants Microsoft, Oracle, Google, Dave Maney from Headwaters MB said.
Look for big names, Stefan Abrams from Bryden-Abrams Investment Management, added.
Asian Stocks Seen Rebounding Soon
The Asian stocks have already hit their bottom, thinks Daniel McCormack, equity strategist at Macquarie Securities. He tells CNBC that in the next six weeks, Asian stocks could do reasonably well.
Chinese Stocks Have Bottomed
Craig Russell, chief market strategist, China at Saxo Bank believes the Chinese stock markets have bottomed. He tells CNBC that the Shanghai Composite could trade as high as 2,500 by year-end.
Top Picks in Asia Pacific
In the Asia Pacific region, Mark Matthews, chief Asia strategist at Merrill Lynch is heavily overweight on Australia, Hong Kong and China.
Aussie Dollar to Weaken Further
The Aussie dollar could weaken against the greenback over the medium-term, predicts Richard Grace, chief currency strategist at Commonwealth Bank of Australia.
Source : http://www.cnbc.com/
17 Oct 2008 08:44 AM ET
Stock markets rose across the world Friday, rebounding from two days of losses. Investors have shifted their attention from the volatile financial crisis to the prospect of a global recession.
CNBC's experts weigh in on the worst case scenario and where to find safety in the yo-yoing markets.
Worst Case Scenario
If the world slips into a severe recession, global GDP could fall as much as 10% over a number of years, says Christoffer Moltke-Leth, head of sales trading, Asia Pacific at Saxo Capital Markets.
Volatility to Continue
Volatility is going continue for the rest of the year, believes Michael Yoshikami, founder, president & chief investment strategist at YCMNet Advisors.
Recession: How Long, How Deep?
We're going to definitely shrink about 2% in the current quarter, if not possibly at twice that pace. Stocks could possibly bottom sometime in the next couple of months, depending on the economy not being much weaker past the first quarter of next year, Joseph LaVorgna from Deutsch Bank predicts of the economy.
Commodities to Slump Further
The recent selloff in commodities is set to intensify and could cut another 30% to 40% from the Goldman Sachs Commodity Index, Phil Roberts from Barclays Capital told CNBC, adding oil could slump toward $50 a barrel.
History Says Don't Give In
We are in a recession and historically, when you find yourself in a recession, getting out of stocks is really a bad idea, Ernie Ankrim from Russell Investments told CNBC, although he warns investors to stay away from oil.
Treasurys don't offer too much to the upside, Ankrim added.
What Will Withstand the Turmoil?
With such wild swings seen on Wall Street almost a daily affair, how does one invest? Michael Yoshikami, founder, president & chief investment strategist at YCMNet Advisors thinks there can be good opportunities when fear and panic reign in the markets, like heavyweights Johnson & Johnson and McDonalds.
Buying into Bonds
Billionaire and investor Warren Buffett says he is getting back into American stocks, but is it the right time? Laurent Fransolet, head of European interest rates strategy at Barclays Capital still sees opportunities in the European bond market.
Still Stay on the Sidelines
The S&P 500 index is still in a downtrend for the short term, however, the Nikkei 225 Average is close to a recovery, Royce Tostrams, technical analyst at Tostrams Groep said Friday, adding that both markets are far away from buying levels.
Look for Big Names
The world's on sale right now and investors should invest in the companies with big bank accounts and big cash, like tech giants Microsoft, Oracle, Google, Dave Maney from Headwaters MB said.
Look for big names, Stefan Abrams from Bryden-Abrams Investment Management, added.
Asian Stocks Seen Rebounding Soon
The Asian stocks have already hit their bottom, thinks Daniel McCormack, equity strategist at Macquarie Securities. He tells CNBC that in the next six weeks, Asian stocks could do reasonably well.
Chinese Stocks Have Bottomed
Craig Russell, chief market strategist, China at Saxo Bank believes the Chinese stock markets have bottomed. He tells CNBC that the Shanghai Composite could trade as high as 2,500 by year-end.
Top Picks in Asia Pacific
In the Asia Pacific region, Mark Matthews, chief Asia strategist at Merrill Lynch is heavily overweight on Australia, Hong Kong and China.
Aussie Dollar to Weaken Further
The Aussie dollar could weaken against the greenback over the medium-term, predicts Richard Grace, chief currency strategist at Commonwealth Bank of Australia.
Source : http://www.cnbc.com/
Lehman Minibond impact on Banks
There will be impact on banks, if banks were to compensate buyers of Minibond. Do take this consideration into account when bargain hunting for banks........Nicholas Tan
"The Monetary Authority of Singapore (MAS) said on Friday it is probing allegations of misconduct in the sale of financial products linked to collapsed US investment bank Lehman Brothers and other institutions. The country's central bank will focus on cases of mis-selling products to "vulnerable" customers, meaning the elderly and those who are not well-educated, MAS managing director Heng Swee Keat told a news conference.
MAS does not normally comment on dealings with individual institutions, he said in a statement issued at the news conference. "However, given public interest in this matter, MAS confirms that we have been conducting formal inquiries into allegation of breaches of law, inadequate internal controls by the FIs (financial institutions) or poor sales practices by their representatives." MAS would not elaborate on its probe but said it will announce "any actions" when inquiries are complete. Heng said MAS, the de facto central bank, has told financial institutions to give priority to cases involving vulnerable investors and not to take an "overly legalistic approach to mis-selling in dealing" with them. In cases where there is sufficient evidence that the product was mis-sold, the financial institution should take responsibility, Heng said.
MAS has said that about 10,000 people in Singapore invested in products linked to Lehman Brothers and other institutions hit by a crisis in the US financial heartland of Wall Street.
Many of the Singapore investors, a large portion of them retirees who stand to lose their life savings, have said they were told they were buying into a product with low risk. A 62-year-old businessman who could lose S$200,000 in Lehman Brothers-linked minibonds, told AFP he was offered the product even though he said he was not a risk-taker. "I even signed a survey form on my profile which said very clearly that I am not a high-risk gambler, but still they offered me the product," he said.
Hong Kong banks on Friday agreed to buy back minibonds linked to Lehman Brothers at market value, an industry spokesman said. The extraordinary move came as regulators in the southern Chinese financial hub said they had referred 24 cases of possible mis-selling of the investment products to the Securities and Futures Commission."
Sources of info : http://www.channelnewsasia.com/stories/singaporebusinessnews/print/383557/1/.html
"The Monetary Authority of Singapore (MAS) said on Friday it is probing allegations of misconduct in the sale of financial products linked to collapsed US investment bank Lehman Brothers and other institutions. The country's central bank will focus on cases of mis-selling products to "vulnerable" customers, meaning the elderly and those who are not well-educated, MAS managing director Heng Swee Keat told a news conference.
MAS does not normally comment on dealings with individual institutions, he said in a statement issued at the news conference. "However, given public interest in this matter, MAS confirms that we have been conducting formal inquiries into allegation of breaches of law, inadequate internal controls by the FIs (financial institutions) or poor sales practices by their representatives." MAS would not elaborate on its probe but said it will announce "any actions" when inquiries are complete. Heng said MAS, the de facto central bank, has told financial institutions to give priority to cases involving vulnerable investors and not to take an "overly legalistic approach to mis-selling in dealing" with them. In cases where there is sufficient evidence that the product was mis-sold, the financial institution should take responsibility, Heng said.
MAS has said that about 10,000 people in Singapore invested in products linked to Lehman Brothers and other institutions hit by a crisis in the US financial heartland of Wall Street.
Many of the Singapore investors, a large portion of them retirees who stand to lose their life savings, have said they were told they were buying into a product with low risk. A 62-year-old businessman who could lose S$200,000 in Lehman Brothers-linked minibonds, told AFP he was offered the product even though he said he was not a risk-taker. "I even signed a survey form on my profile which said very clearly that I am not a high-risk gambler, but still they offered me the product," he said.
Hong Kong banks on Friday agreed to buy back minibonds linked to Lehman Brothers at market value, an industry spokesman said. The extraordinary move came as regulators in the southern Chinese financial hub said they had referred 24 cases of possible mis-selling of the investment products to the Securities and Futures Commission."
Sources of info : http://www.channelnewsasia.com/stories/singaporebusinessnews/print/383557/1/.html
Back to Blogspot
I am moving back to this Blog due to technical problems at www.trnicholas.spaces.lives.com.
Monday, July 28, 2008
Thursday, July 24, 2008
Wednesday, July 23, 2008
Delong - CIMB call
Delong Holdings (DLNG SP, $3.10, SELL): Time’s nearly up. Just under one month is left before the call/put option between Evraz and Delong's major shareholder, Best Decade expires on 18 Aug 08. We believe the Chinese government is unlikely to approve Evraz's proposed takeover of Best Decade's stake in Delong. We recommend selling Delong given expensive CY09 P/E of 27x against peers' 7.5-10x. Our target price is S$2.09, based on 2.3x CY08 P/BV.
Price is holding up in the hope of a successful takeover. With the expiry of the option, price is likely to drop due to Delong expensive valuation compared to its peers. Do take care.
Price is holding up in the hope of a successful takeover. With the expiry of the option, price is likely to drop due to Delong expensive valuation compared to its peers. Do take care.
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