A Selling Market Offers Opportunities - Genting SP, Biosensors

As the old adage goes - "Buy when people are fearful, Sell when people are overly optimistic" - has a certain truth if you really look at it in perspective. What is more salient about this concept is the fact the market may not be totally efficient at any point in time. 

Our job as an acute investor is hence to identify market opportunities and make an intelligent 'bet' with all available information. In more obvious words, we always seek the cheapest buy with the highest potential for returns. That is by definition the meaning of a trader. 

Genting SP had been badly sold down since its early year highs due to its rumored take-over bid for Echo, an Australian casino player. The bidding war against Packer for Echo has not really materialized after much concern about Genting's strategy. Its prices had taken another nose dive on China growth concerns and poor tourism numbers from high-roller countries. However, in the last 2 weeks, its prices have recovered some 10% from Aug lows.

Outlook - Watch and Buy; cyclical accumulation. Tourism traditionally peaks towards the year end given the school holidays in Singapore as well as in neighbouring countries. Festive period in Christmas and New Year will definitely help to pump up some numbers both in tourist receipts around Genting assets as well as its casino. The cyclical nature of Genting's business is notoriously well known and observed in its stock prices over the last 3 years.

Technically, the stock has taken a beating and is recovering. While selling pressure day on day is still present, it is of the opinion that it will wane over the next 1-2 weeks with the broader market performing much more poorly. Weekly charts show good upwards momentum still.

• MACD(weekly) - About to cross its signal line and headed upwards
• RSI (25w) - Still below 50%, offering cheap opportunity to accumulate. Off RSI lows in late July.
• Bollinger Bands - Prices just rebounded off the lower bollinger bands in late Jul when the stock was badly oversold in light of poor China economy figures and slowdown in Asia as well as Singapore tourism.
• 20w MA - Prices are still headed to 20w MA.
• 200w MA - Prices are still a good 30% away from 200w MA.
• Volume - Thin volumes were observed over the last 5 trading days with the stock prices in decline. Fear factor is very high and perhaps it gives a good time to explore a cheap opportunistic bet.

Biosensors is a medical stent research company with global operations. A review of its latest operations has been provided in an earlier blog article - Stable Growth Intact - Biosensors . In summary, 

• Strong revenue growth
• Maintained operating income
• Operating cashflow has improved (US$36.3m inflow)
• Attractive valuations given the recent fall in stock price.
• Been meeting analyst expectations as a very solid company.
• Operating cashflow has been on a steady rise over the last 4 quarters.
• Cash pile has increased steadily over the last 4 quarters.
• Medical sector will continue to improve in SEA/Asia region given the improving incomes especially form neighbouring countries that are fast developing and attracting investments. A recent OCBC research report offers more insights.

Outlook - Buy. Selling pressure seems finally subsiding given a stabilisation in recent prices. While the broader market had been in decline, its prices have relatively stayed constant together with declining volumes. More importantly, bollinger bands have narrowed significantly that points to a soon sharp move highly possibly in the upwards direction barring any unfortunate news events. Kim Eng recently reiterated a buy call on the stock with TP at $1.42.

• MACD - Divergence turning up again with MACD line showing some form of a minimum. Still some nominal positive momentum as MACD is above 0.
• RSI (25d) - Hovering well around 50% for the last 3-4 weeks.
• Bollinger Bands - have narrowed tremendously. Volatility in prices have reduced with some anticipation for a future big move coming.
• 20d MA - Prices are moving in tandem with the 20d MA.
• 200d MA - Prices are a good 11% below the 200d MA line, offering good upside potential.
• Volume - Thin volumes were observed over the last 5 trading days. Buy when people fear excessively.

Far East Hospitality Debut - Above Expectations

Far East Hospitality Trust listed on SGX mainboard on 27th Aug, 1 day ago, to a end day closing price of S$0.95. That represented a jump of 2cents from its IPO offer price. The 'pop' was also quite considerable considering that it reached a high of 0.98 before closing at 0.95. Today, the stock saw further buying pressure to close at $0.975 with a high of $0.98. That represents a 4.83% gain from IPO offer price of $0.93. 

Pretty impressive debut for a REIT-styled counter factoring into consideration that its IPO was priced on the top of the indicative range offered to the institutional tranche of $0.93, citing strong institutional and then, later, retail demand. Clearly, its Singapore-based hotel assets are a plus in gaining popularity with local investors.

Of course, the question is how did FEHT compare with the Ascendas Hospitality Trust? Both were marketed and packaged as stapled business trust and reit securities and the IPO response should give us a good picture to their future prospects and more importantly, as I always mention, market validation of their future earnings. On a side note, this comparison also value-adds to itself given the proximity of listing dates (exactly 1 month from each other) and almost similar market conditions (declining uptrend). 

The results of the comparison speaks for itself in the table below.

Of course, this is not the end to the comparisons of all IPOs in this year. Head over to "IPO SG Statistics" for a complete story of all IPO listings on the SGX this year.

Apple Triumphs over Samsung

And so, the news for world's most valuable company by market capitalisation just keep getting better! Good news after good news despite a small blip in its last quarter earnings has been continuing on and on for the last decade. Today, Apple has been awarded US$1 billion in lawsuit damages by the Federal court in Califonia state in a landmark suit against Samsung for breach of propietary rights. (Link here: http://www.bbc.com/news/technology-19377261)

What does this mean to investors like you and me in Singapore?

In short, for us investors, this bodes well for Apple on the short run and on the long run. Buy Apple.

• Validation of competitive advantage + product differentiation
• Both are key valuation metrics to top IBs to evaluate company proposition and investment potential over competitors
• More black and white reason for price target upgrades.
• More reasons for overweighting in portfolio
• Gives its R&D department another 1-2 years of time to really deliver more innovation for new products in an otherwise saturated environment where smartphones are all pretty much similar.
• Financial power increases yet again
• Again the cash kitty swells, enough said.
• More chances of another special dividend

And for us you and I as general phone users, it just means even wider range of products to choose from rather than the similar looking phones that have been populating the market. Cheers!

Far East Hospitality Trust IPO Balloting Results

Far East Hospitality Trust IPO balloting results are finally out as of 9:08 PM SG time. A snapshot of the Public tranche offer balloting result is available below. For more information, the full balloting announcement is available via SGX website here.

Some key points summarizing this IPO exercise

1. 14.6 times subscribed
• 732,338,000 stapled securities was bid for
• 50,000,000 only available (an additional 1,800,000 shares on top of the 50,000,000 is also in the public tranche but only available for subscription by directors etc.)
2. 267,566,000 stapled securities offered to institutional and other investors via placement tranche.
• Approximately 30 times subscribed
3. DBS Bank is acting as the stabilising manager with over-allotment of 65,873,000 shares from the placement tranche.

Note that shares for FEHT will start trading on the SGX mainboard on 27th Aug 2012, Monday.

Compiled Table of IPO Statistics

Owing to the IPO scene heating up due to the biggest IPO this year by Far East Hospitality Trust, I have compiled a table of IPO statistics for investors to have a snapshot of current 2012 data, and hopefully formulate a good and optimal strategy for use during IPO applications. The table can be found via the navigation bar above under "IPO SG Statistics" or you may also click here for a redirect to that tab.

On a side note, the Far East Hospitality Trust prospectus and information can be found here through SGX. Do note that the deadline for application is 23 August 12 noon, Thursday.

HealthyTrading!

Attention on IPO Scene Again with Far East HT

The Far East Hospitality Trust is the latest IPO to heat up the local IPO scene and the 2nd hospitality trust to be seeking a listing in this year. In fact, Far East Hospitality Trust (FEHT) will be listing almost exactly 1 month after another hospitality trust, Ascendas  Hospitality Trust (AHT) got officially welcome to the SGX Mainboard. 

I have compiled a table of IPO statistics relating to all Mainboard and Catalist-listed counters for 2012. It can be found in the "IPO SG Statistics" section of this blog for reference. It also details the varying amounts of cash used for balloting and the percentage success rate and expected profits for the initial listing day 'pop'. Do check it out here.

Back to FEHT listing, certainly investors will be wary of the potential 'pop' with this IPO given the lacklustre performance of AHT a month ago. Well, lacklustre seems slightly too unforgiving given the fact that trusts and REITs often get pretty unceremonious welcomes into the listing fray. Indeed, AHT closed on offer price ($0.88) and has gone below listing price only to close at $0.875 last friday ostensibly due investors betting on its earnings report come Thursday in this week. 

Now the question is will FEHT outperform that flat result seen with AHT? 

From news responses and institutional subscription, FEHT does indeed look like a stronger proposition backed up with much better local presence and management leading up to this IPO. There was a slight blotch on the AHT scoresheet even before listing due to the pull of a considerable asset - its Korean hotel - from its portfolio.It seems smooth sailing with the FEHT so far. Of course, the drawback must be its premium that an investor must now pay for a visibly 'better' trust and management where it has been priced at the top of its indicative range at $0.93. Investors must also stomach the slightly lower dividend yield of 6% promised for this financial year as compared to that of AHT at 7-8%. 

I have honestly not immersed myself in the documents of the Far East HT yet and will be doing so tomorrow or the day after next. For now, I am not keen on taking this stock for a 'pop' given the history of AHT and its similarities. The premium further reduces the possibility of a 'pop' on first day. 

For those of you yet to subscribe for the Far East Hospitality Trust IPO, the deadline for application is 23 August 12 noon, Thursday.

Check out HealthyTrading on Twitter and FeedBurner

In order to bring readers blog post updates timely, do subscribe to the HealthyTradingBlog feed or follow this blog on Twitter today!

PS. You can also access/bookmark the RSS feed  Subscribe in a reader or via the navigation bar on the right to receive updates to your browser or news reader. Alternatively, subscribe to the RSS email feed to receive updates in your email inbox. Totally free!
PS. Follow this blog on twitter to receive almost-immediate blog updates today! 

PS. Bookmark the historical stock calls section of my blog to stay updated on the latest stock calls and decisions I make on these active/in interest calls. Do not miss out!

A Good Stock Remains A Good Buy - Ezion Holdings, Semb Corp

A good stock always remains a good buy. 

The fast growing phase of the business Ezion has been operating is indeed a very compelling investment story. Since last year, its management has shown good urgency and quality in making decisions to steer the company forward after a sharp decline in its stock prices between Aug - Oct. And it seems that this has been well executed over into the new year.

Outlook - Buy. OCBC research too has a good coverage report on Ezion following its 2Q earnings report. Fair value estimate is $1.20 which represents some further 16% upside from current prices. Technically, Ezion holdings has broken the $1.025 resistance with high volumes traded on Friday following OCBC research maintaining a Buy call and its favourable earnings report.

• MACD (weekly) - MACD trending upwards with increasing positive divergence.
• RSI (25w) - RSI trending towards 70% but not at extremely overbought regions yet.
• Bollinger Bands - Bollinger bands are widening and prices are headed towards the upper bollinger band with room to maneuver. 
• Volume - High volume on 10 Aug with a large white candlestick bodes well technically for further demand increase.

SembCorp is a government-linked company with strong utilities and marine expertise. It recently announced a good performance in its 2Q earnings report with an increase net profit of S$190million compared to 175 a year ago. Order book stands at $6.6billion where half of which has been procured in this year. Its share prices were given a further adrenaline boost, crossing a critical resistance level, after its Marine subsidiary Sembcorp Marine announced that it secured contracts worth US$4billion from Brazil.

Outlook - Buy. Knocking on the door of $5.40 and overcoming it presents a great psychological triumph for the demand and supply forces in the stock market. Technically, this break gives good upside to Sembcorp stock prices and further good news coming out of the Oil & Gas sector lately just bodes well for this GLC to reach new heights.

• MACD - MACD trending upwards with positive divergence.
• RSI (25d) - RSI trending towards 70% with room to go.
• Bollinger Bands - Bollinger bands are widening and prices are riding the upper bollinger band already. Possible further volatility to ensue.
• Volume - No presence of any spectacular change in volumes traded but some slight increase in average volumes traded over the last 14 days. 

Weekly Update - Golden Agri, Swiber

Golden Agri is the world's second-largest palm oil company by plantation area. It recently announced its 2Q earnings on Friday where profit fell 39.9% y-o-y. The operating environment has clearly seen continued effect from the European demise as well as slowing growth in US and China, impacting revenues and palm oil prices. Nonetheless with recent droughts also causing crop shortages such as soybean, sunflower, it seems like there may be a bottoming out of palm oil prices. There has been a recent run in stock prices of many commodity counters such as Olam and Noble Group and there was a blog post on them on Friday. Check out the post here.

Outlook - Watch then Buy. Golden Agri share prices have already taken a beating on 8th Aug before National Day seemingly in preparation for its slightly dismal earnings report released on Friday. Prices have touched the lower bollinger even before the earnings report. Expect some more selling pressure to around $0.675 levels before expected support. Would be buyers at that level or if it breaks down into the 0.60-0.67 region as palm oil prices are still expected to show some support into the 2nd half of the year. 

• MACD - MACD trending downwards with negative divergence increasing.
• RSI (25d) - RSI just crossed below 50%.
• Bollinger Bands - Bollinger bands are widening and prices are riding the lower bollinger band already.
• 200d MA - Prices have just crossed below the 200d MA.
• Volume - High volume on 8 Aug in anticipation of earnings report. Clear winner for the selling side given a large black candlestick with unusually high volume traded.

Swiber is a Singapore-based Offshore Oil & Gas player providing construction, marine and subsea services.  With an order book of more than $1.8 billion in waiting, it is definitely a company with secure earnings up to 2013 at least. Most recently in June, it clinched contracts worth US$830 million for work in Asia Pacific region with work that has already began. Nonetheless, it faces strong headwinds from the economic downturn as well as strong competition from local and global oil & gas players in this very competitive landscape.

Outlook - Buy. Its stock prices have stabilised around the $0.5-0.7 region that represents an attractive valuation of the company at 6x PE (taking 1Q 2012 earnings of US$12million and projecting it for the year as US$48million) current price of S$0.59. Note that its historical PE stands at around 8.5x (as obtained from its website/share investor).

• MACD - is trending upwards slightly over the last week and has crossed over its signal line for positive divergence.
• RSI (25d) - RSI just crossed below 50%.
• Bollinger Bands - Bollinger bands are constricted very narrowly at the moment. Prices are on the upper bollinger region with a possible break coming up.
• 200d MA - Prices are still slightly below the 200d MA and resisted by it.
• Volume - is increasing slightly over the last 3 days.

A Great Commodity Run? - Olam, Noble, Sakari, Wilmar

Corn prices are hitting record highs; China's industrial production has been rocky lately fueling more chances of a stimulus that can restart the commodities consumption phase that led the 2008 rebound. We are seeing these bets on the badly battered commodities counters on the SGX that the next phase of the 2nd half of 2012 will be focused on stimulus measures which will lift the gloom on our current state of things. Counters such as Olam, Noble and Sakari have been leading a 1 week-old rally into strength, with some overcoming their highs set in late June/July. Wilmar has still been seeing strong selling pressure at close on Wednesday, 8 Aug despite the happenings around it.

The question looms - how to ride on this expectations-led rally? Let's take a look at the stock charts of the 4 mentioned stocks - Olam, Noble, Sakari and Wilmar.

  

Overall outlook

• It is clear that Olam seems somewhat a stronger stock with good buying pressure (albeit, possibly, artificially created from its recently announced share buy-back programme). 
• This can be seen from a higher July local low than its low in June. 
• An uptrend seems to be intact since it was so badly sold down in May.
• Both Noble and Sakari shown a W rebound to retake their early July highs. 
• Both Olam and Sakari are showing signs of a break above their July highs and have closed at around those prices.
• Noble still has some small room to go before hitting its July high.
• All three stocks Olam, Noble, Sakari are showing healthy RSI (25d) cross above 50% and MACD trending up with positive divergence.
• Wilmar still has some unrelieved selling pressure that has keep its prices firmly at $3.23 albeit with lower volumes of trading activity.
• RSI (25d) is around 30% levels which still make Wilmar an attractive proposition for bargain hunters. 
• MACD seems to be reaching a minimum point and turning upwards. Divergence turning positive soon (MACD cross signal line).
• In summary
• Olam
• Good uptrend observed but helped on by internal share buy-back.
• Challenging the 100d MA on friday (10 Aug).
• Noble group
• has not hit June/July high
• only 9.7% away from 200d MA.
• smaller market beta compared to other stocks = lesser volatility and profit.
• Sakari
• good upside potential of 25% towards its 200d MA
• has had a terribly good run so far with good increased volumes.
• Wilmar
• good bargain somewhat compared to the other few commodity counters
• +41.6% upside towards its 200d MA which is the highest among all 4 stocks. Even if its profit variance this time (the last announced quarter) was way off, it should have some risk management and smoothing in place to ensure that at least the 200d (and more) MA gives a good gauge to its future profit levels.
• note that selling pressure is not over so there is somewhat high risks involved in betting for a rebound

Midweek Stocks in Focus - NOL, Cosco, Rotary

It's been a really volatile week with the US, HK and UK markets surging to local highs while the STI maintained steady at 3020. Alas, it broke 3020 today with good strength exhibited throughout the day to close at 3051. This is the highest level since 1 year back and it seems like the 3020 psychological barrier is finally broken. Expect more upside to come (and also some retest of the 3020 resistance-turned support).

In the meantime, the usual market rally components are my favourite picks - Oil & Gas, Commodities and Shipping. In this first part of the article, I will focus on NOL, Cosco and Rotary while the 2nd part of my article will focus on Wilmar, Noble Group and Sakari.

NOL is a Government-linked-Company (GLC) with a strong presence in the shipping industry through its APL shipping and logistics networks. It has been in malaise for the last year with its stock price firmly in the ~$1 region. 

Outlook - Watch for break above $1.17 then buy for high stock beta in preparation for more market upside. Stock has seen 3 consecutive days of white candlesticks with accompanying good volume. Over the last 2-3 months stock prices have stabilised at a possible low suggesting that the worst is over and this is really the bottom of its malaise. Perhaps time for better fortune with easing European outlook and that prices are overdone on the downside.

• MACD - MACD crossed over signal line today and in the positive momentum region. First good sign.
• RSI (25d) - Crossed 50% and heading up.
• Bollinger Bands - Price is surging towards the upper bollinger band with some uncertainty to increased volatility/upwards price movement surge beyond $1.17.
• 20d MA - Prices have crossed the 20d MA yesterday
• 200d MA - Prices are still below the 200d MA with some more room to conquer.
• $1.17 resistance - An important note is the $1.17 resistance line that acted as a strong resistance in the short rally NOL experienced between May and June. Prices are now close to it and challenging it in the next few days. 
• Volume - Steady volume.

Cosco is one of the biggest companies in the world dealing with the shipping industry. It operates liner services, ship repair, building and offshore marine engineering. 

Outlook - Buy. With recently reported quarter earnings dipping 13.3% largely due to continued capacity surplus and weak demand in the shipping sector but a stabilisation in stock price, there seems to be a consensus in the market this is really the worst shipping can get. 

• MACD - MACD is about to cross over its signal line in the next few days.
• RSI (25d) - Still facing some resistance at 50% and possibly challenging it over the next few days with more upward movement.
• Bollinger Bands - Bands seem to be widening somewhat and prices have just rebounded off the lower bollinger band.
• 20d MA - Prices are still under the 20d MA with some intention of crossing it soon.
• 200d MA - Prices are still below the 200d MA with some room to conquer.
• Support diagonal - Most importantly, the risk-to-reward ratio is fairly tempting for this counter right now. Prices are close to the major support diagonal.
• Volume - Steady volume.

Rotary engineering is an Oil & Gas company involved mainly in Asia and Australia. 

Outlook - Buy. After a huge selldown since its peak in March, its prices have already risen by 5% from June lows. Though less attractive apparently compared to its counterparts in the Oil & Gas business, Rotary has a strong history of good management and that this selldown presents a good valuation to grab this stock on a cheap. Technically, there was a gap up on open today from the previous day in a rare situation. Good buying pressure is coming back together with the STI breaking through 3020. 

• MACD - MACD is about to cross over its signal line in the next few days.
• RSI (25d) - Challenging the 50% level tomorrow and headed upwards.
• Bollinger Bands - Bands are wide and can still accomodate a 5.2% upside on current prices to the upper bollinger band.
• 20d MA - Prices are justl under the 20d MA with intention of crossing it soon.
• 200d MA - Prices are still below the 200d MA with good room to conquer.
• Volume - Small volume today with the gap up.