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.

Singapore listed Chinese Companies - S Chips

Some of my friends asked me what i think of Singapore listed Chinese Stocks know as S chips, I shall do a brief writeup about my personal views :

Many of the S chips listed in Singapore are now trading at low PE (share price to EPS ratio) or near cash per share because :
1. Despite some signs that the global financial crisis may be over, recent reported financial results remain weak (eg profit continue to decline or margins have not recovered)

2. Confidence were badly shaken due to the accounting scandals or corporate governance issues affecting some S chips

Let’s look at the above 2 points separately.

Point 1 - this is a more general reason which can affect all companies, not just S-chips, so all we have to do is do more homework and analyze the financial results of the companies, and look for signs of recovery. One of the early signals which I use sometimes is look for “sequential” earnings recovery, rather than year-on-year recovery. Sequential means comparing the latest net profit (eg 3Q09) to that 3 months ago (eg 2Q09) and if you see the company profit improving due to better operating performance (rather than forex gains or unusual items like writebacks) than this is the first thing that will get my attention.

Point 2 - i personally think that the entire S-chips sector have been “over-punished” by the actions of a few bad apples. Bear in mind that be it accounting scandals or frauds or corporate governance issues, all these happen to all stock markets, even in Hong Kong and US stock markets. But the interesting part is how the people “react” to it when it happens.

In Hong Kong, when you see certain negative news about the market, the press will just report it (usually in smaller column) and move on. Hong Kong press seldom devote a large section of the newspaper to play up the issue. In Singapore, I saw the press devoting half a page to highlight certain things and continue to highlight these issues for many days. Doing it and over-doing it is a fine line…….. to me hong kong press just do it but singapore press may have over-done it.

If the press over-report certain negative aspects, then it will hit the core of investor confidence, that they will think ALL S-chips are bad and this will bring down the valuations of ALL S-chips.

In Hong Kong and even US, we have seen the press reporting certain fraud cases but they do not over-report it and quickly move on to other matters. Investors take these incidence as part and parcel of the stock market, fraud are things that have happened and will continue to happen in the financial markets. One should not react as though it is incomprehensible that fraud can happen to listed companies in Singapore. This is one of the possible reasons why the PE of china companies in hong kong has recovered much “faster” compared to those China companies PE in Singapore. I use the word “faster” because HK listed china companies PE are usually higher than S-chips.

What’s done is done, so what to expect next for Singapore S-chips…..

If you look at the PE S-chips are at now ie trading 3 to 5x pe, these valuations to me are pre-ipo valuations and we know that pre-ipo valuations means High risk High returns.

These means “some” of the s-chips may yet blow up due to the high risk associated with but “some” who survive will give high returns later from the low valuation they are at now. One good example would be an S-chip called Sinotel. The lowest price was around 7c (when EPS was about 10c) this means the stock was trading below 1x PE haha, we can laugh now in hind-sight. But when smart money realize the rediculous under-valuation, the stock price start to recover and recently went to as high as 70c (10 bagger is the high return some pre-ipo projects may give).

So when we look at S-chips now, we should adopt they way PE (private equity) fund invest in pre-ipo project…..they expect high risks and high returns, so they DIVERSIFY.

PE fund usually try to go in at 2-4x pe before ipo and wait to make few baggers when the ipo goes through.

But if the ipo is stucked or failed, their money may go up in smoke.

So they usually try to spread their money evenly in a few projects such that as long as some make it, they will still make money at the end of the day.

In summary, look at s-chips as pre-ipo projects (high risk high return), and learn to diversify when you put money in s-chips with the expectation that some may still blow up in your face ;)

Before I sign off, let’s not forget the quietly growing number of I-chips (Singapore listed Indonesia Owned) listed in Singapore share market and the “thrill” that they are giving us now………hmm sounds familiar eh

Happy Trading

Rooney

Singapore stock market update

24th Sept 2009 China Animal proposed placement of new shares

Singapore listed company China Animal Healthcare just announced that the Company has entered into a placement agreement dated 24 September 2009 ("Placement Agreement") with DBS Bank Ltd. as placement agent ("Placement Agent").

Pursuant to the Placement Agreement, the Company proposes to issue up to 100,000,000 New Shares and (in the event the Upsize Option is exercised in full) up to 20,000,000 Additional New Shares (together with the New Shares, the "Placement Shares") for purposes of a private placement at an indicative issue price of S$0.215 per Placement Share (to be finalised). No prospectus or offer information statement will be lodged by the Company with the Monetary Authority of Singapore in connection with the Placement.

The Company is undertaking the Placement as a strategic initiative to further enhance its financial flexibility and competitive position. In particular, the Placement will provide the Company with additional financial strength and capacity to pursue suitable acquisitions and opportunities arising in its key markets.

Singapore stock market update :

We are entering the hot season for earnings release now for singapore listed companies and here are some of the dates to watch out for :

30.04.09 CapitaCommercial Trust FY1Q09
30.04.09 CDL Hospitality Trusts FY1Q09
30.04.09 Singapore Post FY09
04.05.09 UOI FY1Q09
05.05.09 Noble FY1Q09
05.05.09 Great Eastern FY1Q09
05.05.09 ST Engrg FY1Q09
06.05.09 OCBC ** FY1Q09
06.05.09 UOB FY1Q09
06.05.09 LMA FY1Q09
06.05.09 Fortune REIT FY1Q09
07.05.09 Armstrong Industrial FY1Q09
07.05.09 Starhub FY1Q09
07.05.09 ParkwayLife REIT FY1Q09
07.05.09 Cosco FY1Q09
08.05.09 Hiap Hoe FY1Q09
08.05.09 HTL Int'l FY1Q09
08.05.09 DBS * FY1Q09
08.05.09 Sembcorp Marine FY1Q09
08.05.09 Otto Marine FY1Q09
09.05.09 China Sunsine FY1Q09
11.05.09 Lee Kim Tah FY1Q09
11.05.09 City Devt FY1Q09
11.05.09 Eastern Asia Tech FY1Q09
11.05.09 MFS Technology FY2Q09
11.05.09 SIA Engrg FY09
11.05.09 SATS * FY09
11.05.09 Synear Food FY1Q09
12.05.09 China Sports FY1Q09
12.05.09 SP Ausnet FY09
12.05.09 Superbowl FY1Q09
12.05.09 Hotel Royal FY1Q09
12.05.09 WBL Corp FY2Q09
12.05.09 Sembcorp Ind FY1Q09
13.05.09 Macquarie Int'l Infr Fund FY1Q09
13.05.09 IFS Capital FY1Q09
13.05.09 Ellipsiz FY3Q09
13.05.09 Kian Ann Engrg FY3Q09
13.05.09 Straits Trading FY1Q09
13.05.09 Vicom FY1Q09
13.05.09 Wilmar Int'l FY1Q09
13.05.09 SBS Transit FY1Q09
14.05.09 Ho Bee FY1Q09
14.05.09 Petra Foods FY1Q09
14.05.09 Saizen REIT FY1Q09
14.05.09 Singtel * FY09
14.05.09 SIA FY09
14.05.09 ComfortDelgro FY1Q09
14.05.09 CSE Global FY1Q09
15.05.09 China Aviation Oil FY1Q09

Singapore stock market update : Recent Profit Guidance List

The following is a list of singapore listed companies which recently issued profit warning or profit guidance, i have not confirmed the accuracy of the list but i believe the source is from SGX announcements by the respective companies.

Here is the list :
Westech electronics
Asia water
PCI
Giant wireless
Hosen
Sitra
AA Group
Liheng
Pacific Healthcare
China Dairy
Kinergy
Magnus
Chuan Hup
Yeo Hiap Seng
Engro
GK Goh
Lottvision
Jurongtech
Sino-Environment
Ramba (Richland)
Enviro-hub
Samko
Abterra
Novena
Yongxin
SM Summit
Luzhou
Tai Sin
Huan Hsin
Guangzhou Industrial
ChungHong
Sinobest
Oriental Food
Multistar
TPV
HLN Tech
New Lakeside
China Sun
A Sonic Aerospace
Jiutian
Adventus
KXD
Tat Hong
Uni-Asia
Inno-Pacific
Gates Elec
Tuan Sin
Superbowl
C&G
FDS Networks
Memtech
AEI
Sky China Petroleum
TTL
Japan Land
Asia Silk
Delong
Multichem
Sunshine
Cosco
Cortina
Unionmet
Asia-Pacific Strategic Investments
China Great Land
Nobel Design
Junma Tyre
Tan Chong International

Singapore Stock Market Update :

What is STI ETF ?

STI ETF is short for Straits Times Index Exchange Traded Fund and it is managed by State Street Global Advisors (SSgA). It has been listed on SGX since 17 April 2002. The benchmark for STI ETF is Singapore’s Straits Times Index (STI). The Fund's investment objective is to replicate as closely as possible, before expenses, the performance of the STI.

The price of each share for STI ETF is approximately 1/1000th of the STI. If the STI is at 1700 points, then STI ETF will be 1700/1000 = S$1.70. Usually the price of STI ETF will not match STI exactly since the portfolio does not match STI component stocks 100% but it is close enough to mirror STI overall performance.

STI ETF can be traded like a stock.on the Singapore Stock Exchange and it also pays out dividend, usually twice a year. The following are some of the recent corporate actions related to dividend and stock split for STI ETF (source : SGX):

DIVIDEND 22 Jan 2009 28 Jan 2009 6 Feb 2009 SGD 0.04 ONE-TIER TAX

DIVIDEND 22 Jan 2009 28 Jan 2009 6 Feb 2009 SGD 0.01 TAX EXEMPT

DIVIDEND 22 Jul 2008 24 Jul 2008 4 Aug 2008 SGD 0.0176 NET OF TAX

DIVIDEND 22 Jul 2008 24 Jul 2008 4 Aug 2008 SGD 0.0424 ONE-TIER TAX

DIVIDEND 24 Jan 2008 28 Jan 2008 6 Feb 2008 SGD 0.0547 ONE-TIER TAX

DIVIDEND 24 Jan 2008 28 Jan 2008 6 Feb 2008 SGD 0.0053 NET OF TAX

ENTITL. 10 Jan 2008 14 Jan 2008 STOCK SPLIT OFFER OF 10 FOR 1

DIVIDEND 20 Jul 2007 24 Jul 2007 2 Aug 2007 SGD 0.2 NET OF TAX

DIVIDEND 20 Jul 2007 24 Jul 2007 2 Aug 2007 SGD 0.25 TAX EXEMPT

DIVIDEND 20 Jul 2007 24 Jul 2007 2 Aug 2007 SGD 0.05

DIVIDEND 18 Jan 2007 22 Jan 2007 1 Feb 2007 SGD 0.28

DIVIDEND 18 Jan 2007 22 Jan 2007 1 Feb 2007 SGD 0.22 NET OF TAX

For 1H09, STI ETF will pay out 5 cents dividend, which works out to be about 5.78% dividend yield assuming the stock price is about S$1.73 and it also pays 5 cents in 2H09. In 2008, STI ETF paid 12 cents dividend for the full year.

The following are component stocks of STI ETF in January 2009 (source : www.streettracks.com.sg)

Kepcorp, Jard C&C, City, Capland, Capmall, SIA, Starhub, DBS, Golden Agri, Wilmar, Cosco, F&N, Genting, HKLand, JMH US$, JSH US$, Keplan, NOL, Noble, Olam, OCBC, SembMarine, SIE, ST Engg, SGx, SPH, UOB, Sembcorp, YLLG

The following is the fund profile for STI ETF as at 23 January 2009 :

NAV per share : S$1.70

Investment Objective :
streetTRACKS STI's investment objective is to provide investment results that closely correspond to the performance of the Straits Times Index.

Trading :
You can buy or sell shares of streetTRACKS STI just like any other share listed on SGX-ST any time during the trading day through your broker or any online dealing facility.

Use of CPF Funds :
streetTRACKS STI is included in CPF Investment Scheme - Ordinary Account. CPF members are allowed to invest up to 100% of their CPF savings in streetTRACKS STI, compared to only 35% for other Singaporean stocks listed on SGX-ST.

Manager :
The Manager of streetTRACKS STI is State Street Global Advisors Singapore Limited, part of the State Street Global Advisors (SSgA) group, one of the largest investment managers in the world with over US$2.0 trillion under management (30 September 2008).

Trustee :
The Trustee of streetTRACKS STI is DBS Trustee Limited, a wholly-owned subsidary of the Development Bank of Singapore (DBS).

Benchmark :
The Straits Times Index.

Board Lots :
A board lot is 1000 units.

Price of each share :
Approximately 1/1000th of the Straits Times Index.

Total Annual Costs (Expense Ratio)* :
0.3% per annum.

Dividends :
Investors can expect to receive dividends twice a year.

*: the annual cost of the fund comprises the management fee, the trustee fee, and other fund expenses. Investors will also pay the standard costs associated with buying and selling shares on SGX-ST.

Source : http://www.streettracks.com.sg/ssga/jsp/en/FundInvestment.jsp

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.