Singapore Stock Market Blog 30 november 2009
The biggest news that has happened over the past few days would have to be that of Dubai World (Dubai government controlled holding company), which is something like Khazanah in Malaysia or Temasek and GIC in Singapore, requesting for delay in loan payment amounting to USD59 billion dollars. On a broader scale it is estimated that the Dubai government may have debts of up to USD80 billion.
Global financial markets reacted swiftly as there were some uncertainties initially as to the potential ramification. Asian stock markets fell between 3-5% last Friday while Singapore, Malaysia and Indonesia markets were closed for public holiday so they will have to play "catch up" today when market resume trading.
The million or billion dollar question is whether this incident may trigger another round of financial melt down similar to those caused by US financial giants not so long ago. So far, most market commentators believe the Dubai incident will most likely be a more contained incident since Dubai has the wealthy cousins of Abu Dhabi sitting on USD500 billion of sovereign wealth funds. It is also more likely that rather than a default occurring, the loans will eventually be re-structured and perhaps with a hair-cut as well. And finally, Dubai does have assets estimated worth USD90 billion.
I recall when the potential loan bubble first surfaced in US, market commentators keep saying everything have been revealed and the worst over....and it took about 18 months for the worst to be over. Hopefully we will not have to go through another round of 18 months market correction.
Showing posts with label singapore stock market blog. Show all posts
Showing posts with label singapore stock market blog. Show all posts
Monday, November 30, 2009
Monday, January 19, 2009
Stock Market News :
Morgan Stanley revised down China GDP forecast from 7.5% to 5.5% in 2009 :
The Chinese economy was hit hard in 4Q08 by massive de-stocking and a serious disruption in trade finance. The economy landed hard in the quarter,
with industrial production and CPI inflation likely having plunged to 6%YoY and 2%YoY from 16%YoY and 8%YoY, respectively, in 2Q08. We estimate China’s
GDP growth may have registered negative QoQ growth of -1.7% in 4Q08 after a flat quarter in 3Q08 (on a seasonally adjusted, annualized basis).
We are downgrading our GDP growth forecast for China from 7.5% to 5.5% for 2009.
Morgan Stanley revised down China GDP forecast from 7.5% to 5.5% in 2009 :
The Chinese economy was hit hard in 4Q08 by massive de-stocking and a serious disruption in trade finance. The economy landed hard in the quarter,
with industrial production and CPI inflation likely having plunged to 6%YoY and 2%YoY from 16%YoY and 8%YoY, respectively, in 2Q08. We estimate China’s
GDP growth may have registered negative QoQ growth of -1.7% in 4Q08 after a flat quarter in 3Q08 (on a seasonally adjusted, annualized basis).
We are downgrading our GDP growth forecast for China from 7.5% to 5.5% for 2009.
Singapore stock market news :
Tat Hong issues profit warning, DBS downgrades call, CIMB and CSFB maintains Outperform calls :
DBS downgrades to fully-valued with target price S$0.62 :
Tat Hong alerts investors that its 3QFY09 earnings would be lower yoy, blames on forex losses and lower equipment sales. We have already imputed the weak earnings in our FY09-10 forecast, which are 16%-32% below consensus. Our TP is revised down to S$0.62, based on lower multiple of 0.8x P/NTA. This implies a 10% downside from current share price. The stock has appreciated 20% since our upgrade in November. We advise investors to take profit now. Downgrade to FULLY VALUED.
CIMB maintains Outperform with lower target price of $0.90 :
To account for the adverse currency impact as well as slower demand,
we have cut our forecasts by 14-22% for FY09-11, mainly for its trading business,
which includes spare parts. We also reduce our forecasts for its rental segment by about 7%, to be conservative. Despite the above, we believe TAT’s longer-term fundamentals remain good, as management has been proactive in increasing its business resilience by developing its rental business, while taking measures to reduce trading inventory during this downturn. Management and the Ng family have also been purchasing TAT shares in past months, underscoring their confidence in the business. We maintain Outperform, albeit with a reduced target price of S$0.90 (previously S$0.93) following our earnings reductions. Our target is still based on 0.8x CY09 P/BV.
CSFB maintains Outperfom with target price S$0.95 :
These events were anticipated, and have in aggregate, driven our recent earnings downgrade. We have factored in a weaker 2H09, both on a HoH and YoY basis, as we expect equipment sales, contributing an estimated 30% of total revenue in 2H09, and 24% of total profit, would fall 54% YoY and 57% HoH. This suggests that downside risks to our FY09E forecasts, as well as that of consensus, are limited. We therefore believe that management has been conservative in issuing the profit guidance announcement, and also note the fervent insider buying activities since Aug. 2008. Near term, however, we believe that Tat Hong’s shares could see weakness from profit-taking, given the strong 73% rally since Oct. 2008. We continue to view Tat Hong as well-leveraged into construction sector demand across Asia, which is expected to remain strong over the medium term, given its operational scale, a clear growth strategy, and strong balance sheet. Tat Hong currently trades on 0.8x P/B, at a-fifth of its historical high of S$3.42 in Nov. 2007, about 35% to its historical lows (of 0.5x P/B), and with a 10.5% dividend yield support.
rooney
Tat Hong issues profit warning, DBS downgrades call, CIMB and CSFB maintains Outperform calls :
DBS downgrades to fully-valued with target price S$0.62 :
Tat Hong alerts investors that its 3QFY09 earnings would be lower yoy, blames on forex losses and lower equipment sales. We have already imputed the weak earnings in our FY09-10 forecast, which are 16%-32% below consensus. Our TP is revised down to S$0.62, based on lower multiple of 0.8x P/NTA. This implies a 10% downside from current share price. The stock has appreciated 20% since our upgrade in November. We advise investors to take profit now. Downgrade to FULLY VALUED.
CIMB maintains Outperform with lower target price of $0.90 :
To account for the adverse currency impact as well as slower demand,
we have cut our forecasts by 14-22% for FY09-11, mainly for its trading business,
which includes spare parts. We also reduce our forecasts for its rental segment by about 7%, to be conservative. Despite the above, we believe TAT’s longer-term fundamentals remain good, as management has been proactive in increasing its business resilience by developing its rental business, while taking measures to reduce trading inventory during this downturn. Management and the Ng family have also been purchasing TAT shares in past months, underscoring their confidence in the business. We maintain Outperform, albeit with a reduced target price of S$0.90 (previously S$0.93) following our earnings reductions. Our target is still based on 0.8x CY09 P/BV.
CSFB maintains Outperfom with target price S$0.95 :
These events were anticipated, and have in aggregate, driven our recent earnings downgrade. We have factored in a weaker 2H09, both on a HoH and YoY basis, as we expect equipment sales, contributing an estimated 30% of total revenue in 2H09, and 24% of total profit, would fall 54% YoY and 57% HoH. This suggests that downside risks to our FY09E forecasts, as well as that of consensus, are limited. We therefore believe that management has been conservative in issuing the profit guidance announcement, and also note the fervent insider buying activities since Aug. 2008. Near term, however, we believe that Tat Hong’s shares could see weakness from profit-taking, given the strong 73% rally since Oct. 2008. We continue to view Tat Hong as well-leveraged into construction sector demand across Asia, which is expected to remain strong over the medium term, given its operational scale, a clear growth strategy, and strong balance sheet. Tat Hong currently trades on 0.8x P/B, at a-fifth of its historical high of S$3.42 in Nov. 2007, about 35% to its historical lows (of 0.5x P/B), and with a 10.5% dividend yield support.
rooney
Friday, January 09, 2009
Singapore stock market update
Macquarie remains Bearish on Singapore listed Cosco :
Event
Order cancellation and deferrals over the past month will result in delayed
profit recognition, affecting COSCO’s DCF-derived valuation. We are also
concerned about the possibility of balance sheet write-downs, which we
suspect is behind the company’s profit warning. We therefore lower our target
price from S$0.69 to S$0.65, while retaining our Underperform rating.
Impact
Order cancellations and deferrals have begun: Two orders have been
cancelled and a further ten have been deferred; incidentally this is equivalent
to the sum-total of all shipbuilding orders won by COSCO in 2008. That the
affected orders were all won in mid-2007 is all the more alarming given that
orders placed in 2008 would be less expensive to cancel for COSCO’s clients.
We expect further cancellations and/or deferrals through the remainder of
2009.
Balance sheet write-downs expected: As steel plate and ship engine prices
have come off over the past two quarters, COSCO will be forced to mark to
market its inventory. Given prices have dropped 30–40%, we estimate a writedown
of S$118m, which would lead to a 27% drop in net profits vs. 2007. We
suspect this is the main reason behind COSCO’s profit warning on 30
December 2008.
Valuation not compelling yet: Assuming the write-down, the stock is trading
at 8.6x FY08, with marginal growth in FY09; this suggests the stock is still
expensive. Even without any write-down, the stock is trading at 6.7x FY08,
with negative earnings growth likely over the next year, not to mention a
significant drop in newbuilding order wins.
Earnings revision
FY08E and FY09E EPS have been reduced by 18.7% and 8.2%, respectively,
while FY10 EPS has been raised by 29.9% to reflect deferred profit
recognition.
12-month price target: S$0.65 based on a DCF methodology.
Macquarie remains Bearish on Singapore listed Cosco :
Event
Order cancellation and deferrals over the past month will result in delayed
profit recognition, affecting COSCO’s DCF-derived valuation. We are also
concerned about the possibility of balance sheet write-downs, which we
suspect is behind the company’s profit warning. We therefore lower our target
price from S$0.69 to S$0.65, while retaining our Underperform rating.
Impact
Order cancellations and deferrals have begun: Two orders have been
cancelled and a further ten have been deferred; incidentally this is equivalent
to the sum-total of all shipbuilding orders won by COSCO in 2008. That the
affected orders were all won in mid-2007 is all the more alarming given that
orders placed in 2008 would be less expensive to cancel for COSCO’s clients.
We expect further cancellations and/or deferrals through the remainder of
2009.
Balance sheet write-downs expected: As steel plate and ship engine prices
have come off over the past two quarters, COSCO will be forced to mark to
market its inventory. Given prices have dropped 30–40%, we estimate a writedown
of S$118m, which would lead to a 27% drop in net profits vs. 2007. We
suspect this is the main reason behind COSCO’s profit warning on 30
December 2008.
Valuation not compelling yet: Assuming the write-down, the stock is trading
at 8.6x FY08, with marginal growth in FY09; this suggests the stock is still
expensive. Even without any write-down, the stock is trading at 6.7x FY08,
with negative earnings growth likely over the next year, not to mention a
significant drop in newbuilding order wins.
Earnings revision
FY08E and FY09E EPS have been reduced by 18.7% and 8.2%, respectively,
while FY10 EPS has been raised by 29.9% to reflect deferred profit
recognition.
12-month price target: S$0.65 based on a DCF methodology.
Singapore stock market update
DBS comments on Raffles Education :
Post our conference, we are more confident that management will be able to convert part of the upcoming installment for OUC (Oriental University City) to interest bearing loan. This should re-instill confidence on the counter and boost share price. Student enrollment remains firm. Reiterate Buy, TP: S$0.80.
Scrip Dividend Scheme should be approved. Raffles Ed’s management representative appears confident that the proposed SDS to be put before shareholders’ approval on 12 Jan 09 will be approved. The SDS provides alternative to shareholders to opt for cash or scrip. Investment banks
and/or strategic investors will underwrite un-subscribed scrips.
Operations stable. Management shared that they have not witnessed any significant impact to operations and student enrollment continues to trend well. While they have seen some rise in private students asking for payment
of fees in installment, management indicates that the proportion is insignificant to total student population. 1H09 results will be released on 5 Feb.
DBS comments on Raffles Education :
Post our conference, we are more confident that management will be able to convert part of the upcoming installment for OUC (Oriental University City) to interest bearing loan. This should re-instill confidence on the counter and boost share price. Student enrollment remains firm. Reiterate Buy, TP: S$0.80.
Scrip Dividend Scheme should be approved. Raffles Ed’s management representative appears confident that the proposed SDS to be put before shareholders’ approval on 12 Jan 09 will be approved. The SDS provides alternative to shareholders to opt for cash or scrip. Investment banks
and/or strategic investors will underwrite un-subscribed scrips.
Operations stable. Management shared that they have not witnessed any significant impact to operations and student enrollment continues to trend well. While they have seen some rise in private students asking for payment
of fees in installment, management indicates that the proportion is insignificant to total student population. 1H09 results will be released on 5 Feb.
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