Change of Blog Site

Hi

My new Blog site is www.trnicholastan.spaces.live.com.

Notice

No post for the next couple of days, moving house next week. Will keep you informed.

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.

July 21 (Bloomberg) -- U.S. stock futures tumbled after the close of U.S. exchanges, dragged down by lower-than-estimated earnings at American Express Co. and disappointing forecasts at Apple Inc. Treasury yields and the dollar also dropped.

American Express, the biggest U.S. credit card company by purchases, fell 11 percent from its 4 p.m. close after second- quarter profit trailed analysts' estimates by 32 percent. American Express Co. said profit dropped because more consumers defaulted on loans, raising concern the U.S. economic slowdown will deepen.

Apple, maker of the iPod music player, lost 6.5 percent after saying sales and earnings will fall short of projections. SandDisk Corp. tumbled 12 percent after reporting a loss.

``This whole earnings season will be somewhat choppy,'' said Eric Marshall, who helps oversee $1.4 billion at Hodges Capital Management Inc. in Dallas. ``The technology companies that are more tied to making components or semiconductors or cell phones, those are more likely to be impacted by weakness in consumer spending.''

STI +2.5%; 2945 Cap; Bias Toward Downside - DBSV

Singapore blue chips sharply higher, drawing strength from rally in Hong Kong market (HSI last +3.2%), propelling STI past 2900 for 1st time since July 14. Index +2.5% at 2917.69 midday, with 28 out of 30 components up, Thai Beverage (Y92.SG) unchanged at S$0.225, Starhub (CC3.SG) down 1.1% at S$2.80. STI's resistance expected at 2945, based on 38.2% Fibonacci retracement of rise to May high of 3269 from 2008 low of 2745. Despite gains, DBS Vickers says STI still biased down; "while the pullback in oil and commodities prices bode well for equities, uncertainties surrounding the earnings season and concerns about a slowdown in economic growth continue to weigh down on stocks." FTSE ST All Share Index +2.1% at 729.79. Overall volume slightly more than half of Friday's total of 1.05 billion shares.

Asian Palm Oil Fundamentals Still Bullish - CS

Last week's Massive sell down in Asian palm oil stocks occurred despite any real change in still bullish fundamentals, says Credit Suisse. "This is a reflection of investors unwinding a crowded trade, and the fact that the plantation stocks have been very resilient amidst a global equity sell down," broker says in note. Adds, "but its bullish fundamentals have not changed. Our view is that palm oil stocks will outperform over a 12-month view because there is a real shortage of edible oils and palm oil is one of the few inflation hedges." Says upside catalysts for palm oil price include fact soy oil at big premium, vegetable oil inventories still low, geopolitical risks could send crude oil price higher. Reiterates Overweight call on Asian palm oil sector, says Indofood Agri remains favored palm play. Rates Indofood Agri (5JS.SG) Outperform with S$3.28 target price; Wilmar (F34.SG) Neutral with S$5.40 target price. Latest prices; Indofood Agri down 0.5% at S$1.84, Wilmar +1.0% at S$4.14.

Straits Asia +3.2%; Value Emerging - DBS Vickers

Straits Asia Resources (AJ1.SG) +3.2% at S$2.58, riding market uptick (STI last +2.1%) but struggles to recover Friday's 10.1% fall as investors remain concerned retreating oil prices may signal reduced demand for alternative fuel sources like coal. "We believe the recent price correction is unjustified, which has resulted in value emergence for SAR," says DBS Vickers, which has Buy call with S$4.77 target, based on 20.2X FY08 P/E. While stock remains oversold on RSI, Stochastic Oscillator, Money Flow Index, chance of near-term technical rebound low given subdued volume. Resistance expected at 10-day moving average of around S$2.83.

Right Time To Consider Singapore Value Plays-CIMB

Time is right to look at Singapore value plays, says CIMB; names top value picks as Ascott Residence Trust (A68U.SG), Broadway Industrial (B69.SG), DBS (D05.SG), FerroChina (F33.SG), Ho Bee (H13.SG). "As stocks get pummeled, value is starting to emerge," adds, "after focus in the last few weeks on the attractiveness of dividend yielding stocks in the current environment of EPS uncertainty and negative real interest rates, we now divert our attention to another investing style." Broker uses price/book value as bargain hunting strategy; says its top picks cheap relative to their historical price/book values; also have sustainable, lower risk returns on equity.

CIMB Cuts S'pore Plantations To Underweight

CIMB Downgrades Indofood Agri To Underperform.

CIMB Downgrades Wilmar To Neutral; S$5.20 Target

CIMB Cuts Golden Agri To Neutral; S$0.94 Target

CIMB downgrades Singapore plantation sector to Underweight from Overweight to reflect worries on regulatory environment. Says, "given rising regulatory risks and a slowing earnings momentum, we can no longer justify the large P/E premium accorded to the sector." Latest prices; Wilmar (F34.SG) +0.5% at S$4.33; Indofood Agri (5JS.SG) down 1.4% at S$2.04; Golden Agri (E5H.SG) down 0.6% at S$0.765; First Resources (EB5.SG) down 1.9% at S$1.03.

SPC- Kim Eng's View

Beneficiary of current high oil price environment Singapore Petroleum Company (SPC) has seen its earnings grow by leaps and bounds in the current high oil price environment, from loss-making in FY01 to a net profit of S$508.4m in FY07. While earnings may continue to be highly variable because of volatile refining margins, this will be progressively augmented by its upstream earnings.
Attractive dividend yield of 9.0% SPC has been rewarding shareholders during in its current purple patch, having paid out over 60% of earnings in the last two financial years. We expect SPC to stick to this payout level, which would result in a DPS of 63 cts per share in FY08. Dividend yield is a very attractive 9%.