Friday, October 11, 2013

6 Week Temporary Debt Limit Increase

[Previous post: Tough Business Conditions - NOL, Vard Holdings]

Debt-Ceiling Increased Temporarily
As of 1am Singapore time, the Dow and S&P 500 had rallied more than 1.5% to pare some of the heavy losses sustained over the past 2 weeks. Republicans agree to increase the debt ceiling for 6 weeks in an attempt to come to a compromise with Obama's administration.

The optimistic
  • Equities will rally to pare losses over the last 2 weeks temporarily
  • A debt deal is still plausible so there is a chance market will trend even higher after these 6 weeks
  • Bond-buying program from Fed will even less likely be removed in this period
  • Amid all the news, Janet Yellen has been nominated to take over Fed chairperson role. Hurray to stimulus.
The pessimistic
  • Yet another 6 weeks of volatility in addition to Fed's inconclusive Sept meeting
  • Economic data will start coming in after 2 weeks of delay
  • Still a good chance of yet another shutdown


-->



STI
Expect the STI to rally back to 3260 level where it should face strong resistance. It represents a rise of 2.9% on current day's close. Thereafter, the realisation of the increased volatility and uncertainty over the next 6 weeks should set in and revert markets lower.


  • MACD - is postive and trending upwards. Crossing signal line soon.
  • RSI (25d) - rebounding off 50% towards 70%
  • Cross 20 and 50DMA. Yet another slightly bullish sign, value of STI is seen overcoming the 50DMA and trending to the 20DMA.



  • -->

Tuesday, May 14, 2013

Tough Business Conditions - NOL, Vard Holdings

[Previous post: Twice Lucky in a Month? - Asian Pay Television Trust IPO]

NOL (Shipping & Logistics Chain)
NOL reported a US$76 million profit on the back of the sale of its NOL headquarters building. Without the gains from the sale, it would still be in the red with EBIT at -US$85 million. The company has been having a very tough 2-3 years due to supply glut of liner vessels putting pressure on shipping rates but it seems that with a new CEO and leadership team, the cost cutting measures have become more aligned and aggressive to unlock value for shareholders in these tough times. For both liner and logistics, core EBIT losses have been narrowed and it is now in a stronger cash position after tapping new loans and increasing investment in PPE with cash from its sale of the building. Having said these, its performance is still highly correlated with shipping rates where there still seems no end to the oversupply of vessels. Europe and US are still in the doldrums and economic trade has not improved much compared to 2012.

  • Black candlesticks for the last 5 weeks of trading. Share price has been plunging since the start of 2013 until a strong resistance at $1.10.
  • MACD - seems to be turning upwards weakly.
  • RSI (25w) - still downtrended
  • Chance of technical break on narrowing losses - $1.18 (8% from current levels) Chances are traders will take this chance to buy at a low/major resistance and attempt a short term trade on NOL. Given that prices have been sliding since the start of the year, this announcement today may give some relief to the selling pressure. 



-->


VARD (Shipbuilder,Offshore Services Company)
Previously known as STXOSV, Vard has had its share prices fall since Oct 2012 after poor quarterly results in Nov and a price offer for shares by Fincantieri at $1.22/share. Vard had secured new contracts for 3 OSCVs worth some 3 NOK million in the first quarter, one of the slowest start since 2009. Delivering only 5 out of its 24 vessels scheduled for delivery this year, EBITDA has fallen some 23% in 1Q2013. Cash position has also dipped to 2 NOK billion from 3 NOK billion in March 2012.
  • Share price slide since Oct 2012 with little indication that there will be a reversal in trend. 
  • MACD - is negative but with some chance of turning upwards.
  • RSI (25w) - trending downwards towards 30%. 
  • Bad news and bad technical chart - $0.90 (-15% from current levels). It does seem that investor interest in this stock has been waning since 2011 when its prices were on a one way trajectory. Oct 2012 has marked the start of its share decline and so far there is still no good news to send its prices up. Bad news, bad technicals. Go short.


-->

Monday, May 13, 2013

Twice Lucky in a Month? - Asian Pay Television Trust IPO

Previous post: [Upcoming IPOs - Croesus Retail Trust & Asian Pay Television Trust]

Introduction to Asian Pay Television Trust IPO
Asian Pay Television Trust will list in the shadows of Croesus Retail Trust that went live on 10 May to a tremendous investor appetite for the high-yielding IPO. So, will it be a repeat of the stellar performance of Croesus Retail Trust?

Key figures
  1. S$0.92 to S$1.00 per share indicative price range
  2. 7.29 to 8.25% dividend yield (2013-2014) on a semi-annual basis (30 June and 31 Dec) based on the highest offer price of S$1.00
  3. S$1.4 billion expected to be raised
  4. 9 cornerstone investors including Quantum Vehicle, the investing fund controlled by the legendary George Soros
[Link to lodged prospectus @ MAS here.]

If you are a new IPO investor, do check out my blog page on Guide to IPO Investing.
Even if you are a seasoned IPO investor, you may wish to check out 2012 and 2013 IPO listing performance at SG IPO Statistics for more insights to optimise your balloting chances!

Timetable
Prepare to start applications on 17 May till 27 May. Listing date targeted 29 May 2pm.


-->


Analysis of the IPO
Details are still tentative and dependent on the decided indicative price as the book building process is still underway so here are snippets of what I have read/heard/seen and my initial thoughts. More to follow when the figures are finally decided.
  1. High yield of 7-8% for 2013 and 2014
    1. [The good] This yield, similar to Croesus Retail Trust's yield range, is going to appeal to yield hunters. The performance of the Croesus Retail Trust IPO serves to remind many of us, purported contrarians, that the yield-hunt is yet to be over and there is still much more yield compression that we will see. The next high-yield equity IPO that listed before Croesus Retail Trust, Mapletree Greater China Commercial REIT, listed in March this year has already appreciated by 20% from its listing price and 8% from its first day close. More statistics here.
    2. [The good] A clear distribution policy where the trust will distribute 100% of its distributable free cash flows on a semi-annual basis.
    3. [The bad] that seems slightly more risky than initially thought (as with the Singaporean mentality, we favour questioning items that seem too good to be true; being critical is a trait though)
    1. High cornerstone and institutional take-up S$451 million of the IPO, almost 32%.
      1. [The good] There will be adequate price level support for the listing period
        1. <1% of total units (25 million units) offered in the Public Offer. 
        2. 66% placement tranche
        3. ~32% of total units will be held by cornerstone investors
      2. [The bad] If you had complained about your Croesus Retail Trust IPO balloting results, this public offer would have an even smaller chance of a successful ballot.
    2. Business trust concept
      1. [The good] Business trusts on the SGX tend to operate with a slightly higher forward-looking yield so it can be said that there is still further upside to their prices in this chase for yields. 
      2. [The bad] Truth is, business trusts listed in Singapore tend to be less favoured by investors as compared to REITs basically of their operating structure. In short, business trusts are more complicated in their value proposition. REITs also pay less taxes on their income in Singapore.
      3. [The good] Asian Pay Television Trust yield of ~7-8% (based on S$1 offer price) puts it as the 2nd highest forward-looking yield business trust on the SGX, where the next closest is Croesus Retail Trust (6.5% at S$1.145), K-Green trust and Hutchinson Port Holdings. It is only surpassed by Religare Health Trust of 8.4%.
    3. Taiwan infrastructure play that is also the only one listed on the SGX
      1. [The good] Ideal for retail investors seeking exposure to Taiwan and cable television market. The cable television market in Taiwan is the 5th largest in Asia by revenue.
      2. [The good] It has good comparative advantage in the pay-TV business as it is one of the 3 largest operators in Taiwan. 
    Market Outlook
    Just a quick highlight, Croesus Retail Trust closed with a first day gain of 23% above offer price. This just served to highlight the tremendous liquidity that the Singapore financial market has been enjoying and that high-yielding equity are still hot in demand despite the yields reflecting their relative risk. Contrary to some belief that the yield-chase is over in 2013 and beyond, the economic story has yet to brighten and we can see that yield compression is still taking place actively in the markets of today.
    More IPO statistics here.


    Conclusion of the IPO
    In essence, I am sensing a repeat of the stellar performance of the Croesus Retail Trust IPO. Maybe slightly more muted given that Croesus Retail Trust has already satisfied some demand but definitely not too far off. In fact, there are huge similarities to be drawn between these IPOs of 2 business trusts. They are similarly operated overseas, so Singapore will not be able to see their assets being put to work first hand. Like Croesus Retail Trust, which had a poor gearing ratio above many other concerns, this trust is not without them. But as it seems, the market is intent on ignoring these risks in search of high-yielding equities. This trust has a huge offering, surpassing the Mapletree Greater China Commercial Trust of S$1.3 billion, which will be a truer test of the capital market in Singapore and the clamor for yield even in 2013. For now, let's wait for the price to be finalised before making a decision based on the institutional demand.

    All quoted figures in Point 3 are derived from the OCBC Investment Research S-REITs Tracker Compilation dated 13 April 2013. As it is an uncirculated copy, I did not upload it; I am sure you can get it from your broker or more updated data from Bloomberg terminals.


    -->

    Thursday, May 9, 2013

    Croesus Retail Trust IPO Ballot Results

    Previous post: [Update to Croesus Retail Trust IPO]

    Ballot Results of the Croesus Retail Trust IPO are out as of 9 May 2013 and can summarised as follow
    • 229 million shares for placement and public tranche
      • 207.6 million shares for placement tranche
      • 21.5 million shares for public tranche
    • 22.4x oversubcribed in total
      • 48.8x subscribed for placement tranche shares
      • 19.7x over subscribed for the public tranche shares
    • Shares at S$0.93 each
    • Expect 8% yield for the first year; Expect 8.1% yield for the next.
    Shares will commence trading on a "ready" basis at 2pm on Friday, 10 May 2013!



    -->


    The big question is how will it fair on debut and thereafter?

    My Commentary on Croesus Retail Trust IPO dated 5 May 2013
    Blog post here - Wrong Gears for the Wrong Crowd? - Croesus Retail Trust

    Current IPO market conditions
    Here's a quick review of the recently listed IPOs and their performances. More data for the full 2012 to 2013 here at SG IPO Statistics page.



    In fact, only Logistics Holdings IPO has taken a beating, closing below IPO offer and first day last done prices (-9% and -21% respectively). The other notable counter is Geo Energy Group that is a +32% from IPO offer price but -1% from first day last done price.

    Statistically, it means that out of the last 12 IPOs, even if you bought at first day close (the irrational exuberance phase, or in layman 'the pop') you would have made a profit of at least 2% (GDS Global IPO)! If you had obtained the IPO on offer price, you could have made up to 70% by just holding the stock from offer price to date (Gaylin Holdings). In addition, the figures quoted here are unadjusted for dividends that had been paid out by these counters along the year.

    Current REITs/Trusts IPO market conditions
    If you refer to the table above, the yellow highlighted text pretty much sums up the whole IPO + REITs/Trusts story. Any of these 4 REITs/Trusts would have yielded a good +10% on capital whichever way you look at it, plus more from the dividends that they have been paying out. 

    Year 2012/13 IPO Demand Statistics
    For the more demanding investor, to have a greater feel of the local demand for IPOs, do check out my compiled "IPO SG Statistics" page for more details!



    Also, do bookmark this page // add Healthytrading blog to Twitter // subscribe to RSS feed // subscribe to email feeds to receive latest market news that will move your money


    -->

    Wednesday, May 8, 2013

    Update to Croesus Retail Trust IPO

    Previous post: [Wrong Gears for the Wrong Crowd? - Croesus Retail Trust]

    Applications for Croesus Retail Trust IPO will close by Noon 8 May. If you have yet to apply, do so ASAP.

    For the undecided, you may wish to check out my review of the IPO here - Wrong Gears for the Wrong Crowd? - Croesus Retail Trust

    For the decided who has yet to execute, SG IPO Statistics page will help you make the decision to how many lots to apply for to maximise your cash and not over extend yourself during this application-before-funds-return phase. Of course, it is heartening to know that by 10 May results will be out and excess money will be returned.

    My view is that applying units worth ~$10,000 is typically the most cash-effective for a small retail investor with other cash commitments to handle. In other words, I am advocating applying for 11 lots as an optimised decision for this IPO (please still base your decision to apply on your investment/trading strategy and not on my advice).

    Statistically, for REITs/Trusts priced at 80-90c, one can apply 10-15 lots with $10,000. And in that range, you usually get 3-4 lots if successful. Examples are Mapletree Greater China Commercial Trust (3 lots with 11 lots applied), Religare (4 with 11), Far East Hospitality Trust (3 with 11) and Ascendas Hospitality Trust (3 with 11), all calculated with $10,000 cash for application. This uses about 25% of the $10,000. The number hardly changes with $15,000 used, and only varies after $20,000 cash and more. Of course, if you are cash-rich and these 2 days of not seeing your cash is of no sweat, then it does not matter that you are using say $100,000 to stag on obtaining like 10 lots (10% of cash utilised).

    For the decided who does not know how to apply, do check out Guide to IPO Investing. The deadline is Noon 8 May! Hurry.

    Lastly, do follow HealthyTrading on Twitter! We are live on Twitter! Follow to get updated financial news with a Singapore perspective for your investment and trading ideas.



    -->

    Sunday, May 5, 2013

    Wrong Gears for the Wrong Crowd? - Croesus Retail Trust

    Previous post: [Upcoming IPOs - Croesus Retail Trust & Asian Pay Television Trust]

    So, all the hype of the Croesus Retail Trust IPO has started on the online sphere with several blogs catching up on this big IPO that will be the 2nd largest after Mapletree Greater China Commercial Trust in March this year. For a start, the timeline for this IPO seems quite tight and listing day is on 10 May.
    If you are a new IPO investor, do check out my blog page on Guide to IPO Investing.
    Even if you are a seasoned IPO investor, you may wish to check out 2012 and 2013 IPO listing performance at SG IPO Statistics.




    -->


    Anyway, so here is a comprehensive summary that I hope to have compiled from reading all the various online literature (that you will already have come to realise hinge on the same old points) and some additional points from my analysis of this IPO.

    1. High yield of 8-8.1%
      1. [The good] is very good given the risk adverse outlook still persisting in the course of the year plus yield hunting has already driven many REITs and business trusts to yield compressions (~5-6% annual yield down from 10% in height of 2008). Mapletree Greater China Commercial REIT that listed in March this year has already appreciated by 20% from its listing price and 8% from its first day close. More statistics here.
      2. [The good] that Japan had unleashed a torrent of cash from its stimulus that should flow down to the individual retail customers and promote retail shopping in the coming years.
      3. [The bad] that seems slightly distasteful (as with the Singaporean mentality, we favour questioning items that seem too good to be true; being critical is a trait though)
        • that this yield does not seem sustainable given the outlook for yen and that the trust has to pay out in SGD. That means that there could be a possibility of digging into cash stockpile to pay their promised dividends on top of the distributable income.
    2. Gearing ratio of 47.5%
      1. [The bad] Well, nobody likes a trust with a high debt to assets ratio. Period. 
      2. [The good] Funny thing is, Mapletree Greater China Commercal REIT has a debt/asset ratio of 43%. Same with Keppel REIT.
    3. High cornerstone and institutional take-up out of the total 390 million units.
      1. [The good] There will be adequate price level support for the listing period
        1. Only 5% of total underwrited units (21.5 million units) offered in the Public Offer. 
        2. 38.5% of total units (163 million) are held by cornerstone investors
    4. Business trust concept
      1. [The good] Business trusts on the SGX tend to operate with a slightly higher forward-looking yield so it can be said that there is still further upside to their prices in this chase for yields. 
      2. [The bad] Truth is, business trusts listed in Singapore tend to be less favoured by investors as compared to REITs basically of their operating structure. In short, business trusts are more complicated in their value proposition. REITs also pay less taxes on their income in Singapore.
      3. [The good] Croesus yield of ~8% puts it as the 2nd highest forward-looking yield business trust on the SGX, where the next closest is K-Green trust and Hutchinson Port Holdings. It is only surpassed by Religare Health Trust of 8.4%.
    5. Pure Japan retail property play that is also the only one listed on the SGX
      1. [The good] Ideal for retail investors seeking exposure to Japan and its recent stimulus package.
      2. [The bad] Saizen REIT, a Japan focused REIT, debuted in 2007 at S$1.00 and it has since depreciated until S$0.20 on Friday's close. Perhaps, some of its decline was due to the deflationary pressures in Japan since 2007 while some of which may just simply be due to lack of investors interest in Singapore.
    Well, so my conclusion? Basically, I see this IPO trust as a good investment for the aggressive investor seeking to make a good bet on Japan while taking on the risks pertaining to business trusts in general. This is a good opportunity for an such minded investor to also play on yield compression in time to come as a result of yield hunting. It could also be a good stock for a quick buck on listing.
    However, I would gravely advise against keeping the stock for longer periods of time - the signs of an uptick in interest rates is getting ever closer from the US. Once stimulus ends and interest rates tick up, there goes the yield hunting story and we may see a collapse in the inflated REITs/Trusts regime.
    For the conservative investor, I would suggest that your money is better placed elsewhere in this already-inflated sector. Croesus Retail Trust is another business trust seeking to ride this bandwagon a little too late.

    All quoted figures in Point 2 and 4 are derived from the OCBC Investment Research S-REITs Tracker Compilation dated 13 April 2013. As it is an uncirculated copy, I did not upload it; I am sure you can get it from your broker or more updated data from Bloomberg terminals.


    -->

    Thursday, May 2, 2013

    Upcoming IPOs - Croesus Retail Trust & Asian Pay Television Trust

    2 new trusts look set to be listed in Singapore in the coming weeks - Croesus Retail Trust and Asian Pay Television Trust. These IPOs come on the back of a very successful Mapletree Greater China Commercial Trust that was listed on 7 March on the SGX Mainboard. They will become the 3rd and 4th Mainboard new members for 2013. Asian Pay Television will become the 2nd largest IPO of the year following MGCCT and is seeking to raise S$1.4billion in this huge equity offering.

    Here's a fast and quick breakdown to what you need to know to catch onto the IPO bandwagon in the coming weeks.

    1. Croesus Retail Trust
      • S$372 million capital to be raised
      • 200 million to 250 million share units to be offered
      • Indicative price of S$0.93/unit
      • 8% yield in first year ending June 2013, 8.1% in subsequent
      • 4 x Japanese retail malls in portfolio
      • 11 cornerstone investors to subscribe to 164 million units (at least 65% of offered equity)
      • Backed by Marubeni and Daiwa House Industry
      • Expected public offer 3 May
    2. Asian Pay Television Trust
      • S$1.4 billion capital to be raised
      • 8.25 - 9% yield for 2014
      • It is an investment vehicle for Taiwan Broadband Communication, a pay-TV operator
      • 8 cornerstone investors secured
      • Expected public offer by end May
    On the sidelines, it is also definitely an exciting period to come with the rumour that OUE is planning to spin-off its hospitality assets in Singapore for US$800million. That's a total of 3 pretty decent-sized listing up for grabs on the Singapore capital markets in a short period of time. Definitely looking forward to this period with excitement!


    Anyway for newcomers to this IPO scene in Singapore, I suggest you take a look at the how this IPO application process works here. It is a short write-up that I compiled to ease the IPO process and clarify doubts. 
    Even if you are a seasoned-pro, there is another page on "SG IPO Statistics" that you may want to check out. It details 2012 to 2013 IPOs and their performance on first day launch as well as up to date. 


    -->

    Thursday, March 7, 2013

    Mapletree Greater China Commercial Trust IPO Ballot Results



    Balloting Results of the Mapletree Greater China Commerical Trust (MGCCT) IPO are out as of 6 March 2013 and can summarised as follow
    • 2,662 billion shares underwritten for listing
    • 776.6 million shares for public and placement tranche
      • 511.3 million shares for placement tranche
      • 215 + 50(reserved units that will be released) million shares for public tranche
    • 29.5x oversubcribed in total
      • 38.1x subscribed for placement tranche shares
      • 8.9x over subscribed for the public tranche shares
    • Shares at S$0.93 each
    • Expected 5.6% yield for the year ending March 2014; Expected 6.1% yield for the year ending March 2015.
    Shares will commence trading on a "ready" basis at 2pm on Thursday, 7 March 2013. Total of 2.66 billion shares listing tomorrow. Official SGX announcement here.

    Official announcement document of the MGCCT IPO is available on the company website here.






    -->



    Tomorrow is listing day for this mammoth trust that has really ignited the IPO demand in the SGX. The biggest question that we wish to know is how will it fair?

    Current REIT market conditions
    REITs are clearly the outright winning category of 2012 as investors flocked to yield havens, resulting in a yield compression that we see today. Even so, REITs have still enjoyed considerable upside to the start of 2013. Mapletree brand name REITs have also done well in the current market conditions, surging even further in the last 2 days upon the announcement of listing of this REIT.
    • Mapletree Commercial (listed 2011) - $1.445 15 Feb closing price compared to IPO offer of $0.88
    • Mapletree Industrial (listed 2010) - $1.390 15 Feb closing price compared to IPO offer of $0.93
    • Mapletree Logistics (listed 2005) - $1.240 15 Feb closing price compared to IPO offer of $0.68

    Healthytrading Commentary on MGCCT IPO dated 27 Feb 2013
    Blog post here - "Largest IPO in 2 Years Goes Live on 7 March - Mapletree Greater China Commercial Trust"

    Year 2012 IPO Demand Statistics
    To have a feel of the local demand for IPOs, do check out my compiled "IPO SG Statistics" page for a good detailed but yet bite-sized organisation of the statistics.



    Also, do bookmark this page // add Healthytrading blog to Twitter // subscribe to RSS feed // subscribe to email feeds to receive latest market news that will move your money


    -->

    Wednesday, February 27, 2013

    Largest IPO in 2 Years Goes Live on 7 March - Mapletree Greater China Commercial Trust

    Previous post: [Gloomy Days Ahead for Gold and SPDR Gold Shares]

    Largest IPO in 2 Years Goes Live on 7 March

    And so, just a quick update about the Mapletree Greater China Commercial Trust that has reignited the attention onto the SG IPO scene.

    • S$1.68 billion to be raised in largest REIT IPO
      • Last year SGX raised a total of S$4.5 billion which was somewhat a dampener compared to the $9.4 billion raised in 2011. 
    • Offer is confirmed to be S$0.93/share
      • Highest price of the previously indicated indicative price range of S$0.88 to S$0.93
    • Retail offer shares ballot application start on Feb 28
      • (for green investors/IPO-applicants, do check out the "Guide to IPO Investing" on this blog regarding the SG IPO application procedures)
      • (do also check out "SG IPO Statistics" on this blog for a statistical breakdown of IPOs since 2012)
    • Listing date March 7
    • Cornerstone investors
      • Temasek Holdings
      • Morgan Stanley
      • Norges Bank Investment Management
      • AIA Group subsidiaries
      • CBRE Group
      • Henderson Global Investors

    -->

    Quick Conclusion
    As mentioned before, the upper pricing of this IPO is vastly within expectations given the wide search for yield even in this period. With such a brand name and big boys backing this IPO, it is also not surprising that the institutional demand ensured that the IPO be priced at the higher end of the spectrum. 
    What this means for us investors is 
    • the general assurance of a good fundamentally strong stock. take general with a pinch of salt after what ratings agencies did to our financial system leading to the sub-prime meltdown.
    • while knowing that we, as retail investors, are getting it at a much higher premium than did the first cornerstone investors and even the institutions at the placement tranche
    All in all, it should impress that if you are fine with the extra premium through the IPO, then this IPO has few fundamental reasons to be avoided. If not, you may want to observe its market equilibrium first before deciding to buy in. My feel is that it is not too late.
    I am also skeptically wondering why the IPO is still going ahead at such a suddenly volatile period for the markets. Just my thoughts.

    Anyway, I have previously written a more elaborate analysis of the MCGCT IPO that you can find here. Do read it before you make your decision!
    Happy and healthy trading people.

    -->

    Thursday, February 21, 2013

    Gloomy Days Ahead for Gold and SPDR Gold Shares

    [Previous post: Earnings Report Trade - Kreuz]


    Gloomy Days Ahead for Gold and SPDR Gold Shares

    Gold has been correcting sharply this week owing to two main reasons: first, the economic situation seems to have lifted tremendously from days of yesteryear. Europe is pretty much well contained, at least for now while USA is growing albeit slightly and China has rebounded strongly from its slump towards the end of last year. Political uncertainty worldwide has also decreased. Secondly, comments from the Fed yesterday indicated that the current unlimited stimulus could be withdrawn soon given how the outlook has improved again. What is still uncertain is that the Fed committee is still at odds with when is the appropriate time to remove it. Nonetheless, with lesser stimulus, expect commodity prices to fall on a whole and hence gold will not be spared too.
    • Large back solid candlestick this week bringing prices down to a major support level at US$150.
    • MACD - has turned negative and diverging downwards.
    • RSI (25w) - has turned below 50% sharply
    • Short TP - $140 (8% from current levels) expected in 3-5 weeks. With the current outlook, it seems like gold prices should break support and head further south on the jittery Fed minutes that was recently disclosed. With more market opportunities elsewhere, it is easy to understand why this out flow of money has just begun.


    -->

    Earnings Report Trade - Kreuz


    [Previous post: Back in Focus - STXOSV]

    Earnings Report Trade - Kreuz

    1. Kreuz (Offshore services)
    Kreuz had recently announced contract wins totally US$15.5 million in January resulting in a considerable surge in its share prices. Prices have already risen a whopping 100% since its 2 year low in May 2012. Traders have turned considerably bullish lately again on the nearing of its earnings report tomorrow 21 Feb 2013.
    • Large white candlestick last week that has broken a 2 year major resistance line on some trading volume.
    • MACD - is high in the positive with some wavering though.
    • RSI (25w) - is recapturing 70% high since Oct 2012.
    • Short term trade TP - $0.54 (11% from current levels) expected in 1-2 weeks. On the back of anticipated strong earnings, if reported tomorrow, will give the bulls more reason for higher prices. Of course, the risk here is that the company reports lower than expected earnings and prices fall through the support. If nothing drastic, prices could still be supported by $0.47 support levels and it does seem like a decent risk-reward trade.


    -->

    Monday, February 18, 2013

    Back in Focus - STXOSV

    [Previous post: Largest IPO in 2 Years - Mapletree Greater China Commercial Trust]

    Back in Focus - STXOSV

    1. STX OSV (Offshore support vehicles)
    STXOSV shares slid in Nov after reporting dismal quarterly results. Share prices were then hit again by news of a buyout by Fincantieri mopping up their shares at $1.22/pc and will be making a cash offer for the rest of the shares. However, last week STXOSV reported securing 3 new contracts for OSCVs illustrating a  positive outlook for the OSV market in Europe.
    • Large white candlestick last week that erased a 2 week-loss. Trade volumes was almost twice higher than the average for the last 3 weeks of trading.
    • MACD - is recovering with decreasing negative divergence.
    • RSI (25w) - is rebounding off ~45% and heading towards 50%. Note that the RSI is at a 1 year low.
    • Long with TP - $1.50 (16% from current levels) expected in 4-5 weeks. Buying pressure seems to be coming back with the stock scheduled to also report their quarterly results on the 26 Feb. Seems like traders have been repositioning and accumulating for the last 2-3 weeks, stemming the stock price decline. On the back of good contract win news, this buying momentum should be good for this coming week and possibly after the next on good earnings.

    -->

    Saturday, February 16, 2013

    Largest IPO in 2 Years - Mapletree Greater China Commercial Trust

    First of many IPOs this year we hope. After a couple of months without a large IPO, the IPO market in Singapore looks set to heat up again with the proposed listing of Mapletree Investment's Mapletree Greater China Commercial Trust. In fact, it is the largest IPO in 2 years.


    Summary of offering

    • IPO to raise up to S$1.68 billion to purchase 2 China-based commercial property assets from Mapletree Investments
    • Strong brand name in Singapore with experience in office, logistics, industrial, residential and retail properties
      • 45 assets in Singapore
      • 20 assets in China
      • 9 assets in Hong Kong
      • 32 assets in Japan, India, South Korea, Malaysia and Vietnam
      • 23 commercial-linked properties
    • Figures and numerics
      • raising up to S$1.68 billion 
      • indicative price range of S$0.88-S$0.93
      • Use of proceeds
        • No exact break-down so far but cash raised will be used to buy the 2 properties from Mapletree Investments.
      • Dividend policy
        • Semi-annual
        • 5.6-6% for the first year
        • 6.1-6.5% for the second year
        • 100% of distributable income until March 2015. At least 90% of disctributable income thereafter.
    • Cornerstone shareholders
      • Temasek Holdings - 851.7-931.6 million shares
      • 953.5 million shares to be shared among
        • Morgan Stanley
        • Norges Bank Investment Management
        • AIA Group
        • CBRE Group
        • Henderson Global Investors
      • 776.6 million shares for institutional and retail investors
    • Timeline for offering
      • 18 Feb - Offer to institutional buyers
      • 28 Feb - Offer to public
      • 7 Mar - list on SGX

    -->


    Commentary

    Brand name
    Mapletree is pretty much a big brand name in Singapore akin to Ascendas, both of which are government-linked. It is noteworthy to realise that Mapletree Investments manages a portfolio valued at S$19.9 billion. They have ample management experience in office, logistics, industrial, residential and retail.

    China + Commercial Experience
    The current IPO is a divestment of 2 China-based commercial assets into a REIT. China is not a new destination for Mapletree as they already easily manage 20 assets in China such as the Mapletree AIP in Guangzhou under Mapletree Logistics Trust. Out of these assets, 6 are commercial-related properties - Beijing Gateway PlazaHong Kong Festival Walk, Shanghai Silver Court, Nanhai South Station Enterprise City, Minhang Development Project and Nanhai Business City. The rest are mostly logistics and industrial with some residential properties. Having said that, Mapletree also has considerable commercial property experience outside of China with 7 other assets spread over Japan, Vietnam, Malaysia.

    Quality of assets
    Both are Grade-A offices in the heart of China and Hong Kong with size more than 100,000 sqm. They also consist of some retail space located at the base of the assets. Festival Walk was purchased by Mapletree Investments in 2011 for $2.4 billion.

    Current REIT market conditions
    REITs are clearly the outright winning category of 2012 as investors flocked to yield havens, resulting in a yield compression that we see today. Even so, REITs have still enjoyed considerable upside to the start of 2013. Mapletree brand name REITs have also done well in the current market conditions, surging even further in the last 2 days upon the announcement of listing of this REIT.

    • Mapletree Commercial (listed 2011) - $1.445 15 Feb closing price compared to IPO offer of $0.88
    • Mapletree Industrial (listed 2010) - $1.390 15 Feb closing price compared to IPO offer of $0.93
    • Mapletree Logistics (listed 2005) - $1.240 15 Feb closing price compared to IPO offer of $0.68


    And, for a tabulation of all SG-listed IPOs' performance since 2012, do visit "SG IPO Statistics" on this HealthyTrading blog. It presents an easy snapshot of all the IPOs at a glance for your analysis and comparisons.


    For those of you gunning for this Mapletree Greater China Commercial Trust IPOs, check out my blog page on "Guide to IPO Investing" to help you navigate around especially if you are a new investor or new to the IPO bidding system of SGX. Do not waste time; time is ticking away to those offer deadlines!

    Also, do bookmark this page // add Healthytrading blog to Twitter // subscribe to RSS feed // subscribe to email feeds to receive the LATEST IPO/market news that will move your money. Links are available all on the right of the page (at the navigation bar).


    -->

    Sunday, January 27, 2013

    Gaining Steam - Biosensors

    [Previous post: Large Caps Gain Steam - SGX, Semb Corp]

    Biosensors Gaining Steam

    1. Biosensors (Medical equipment)
    Biosensors has been posting very steady results for the past 3 years but had fallen out of favour with the investment community in 2012 when its share prices took a tumble to a 2011 low at $1.08. Sell-side research houses still kept their strong rating calls on the stock despite the broader market failing to heed them. Nonetheless, in the start of 2013, Biosensors seem to have gained steam again and could possibly spark the revival of its fortunes to finally match its historical performance and a barometer of the future to come.
    • Large white candlestick this week with almost twice the moving average's volume. Prices almost rallied $0.10, representing a 7% gain. The white candlestick has also overcome key moving averages.
    • MACD - is trending into the positive region with increased positive divergence.
    • RSI (25w) - heading towards 70% levels while just crossing 50%.
    • Long with TP - $1.56 (19% from current levels) expected in 6-7 weeks. If buying pressure still persists in the coming week, expect the stock to breakout to the next level above $1.36. With current bullish indications with room for the stock price to come, it will not come as a surprise if stock price ignores $1.36 and heads for $1.55 region. However, do be warned that the coming week is critical for confidence in the stock breaking through a key resistance level at $1.36.




    Wednesday, January 23, 2013

    Large Caps Gain Steam - SGX, Semb Corp

    [Previous post: Mixed Fortunes of Oil & Gas - Ezra, Swissco]

    Large Caps Gain Steam

    1. SGX (financial services)
    SGX 2Q profit grew to $76 million on the back of increased daily average traded volume. This 16.7% increase in quarter profit reflects the resilience and rebound of Singapore's key market place and the work SGX has been putting into attracting more securities and derivatives trades.
    • Price broke out last week above $7.20. Even stronger buying pressure ensued in the first half of this week with yet another big white candlestick with an open at the same levels as last week's close. Very bullish situation.
    • MACD - is trending upwards is increased positive divergence.
    • RSI (25w) - heading towards 70% levels with some leeway to go before overbought status.
    • Long with TP - $$7.80 (-2% from current levels) in the near term (1-2weeks). If buying pressure still persists, expect the stock to breakout to the next support level at $8.60 which translates to almost a 10% gain from Wednesday close price. Prepare to provide 6-8 weeks for $7.80 resistance to be broken as that is roughly the same time period between May to Aug 2011 where the stock tumbled through the price region.




    2. SembCorp (Oil & Gas; Utilities; Env Management)
    • Prices appear steadily appreciating towards $5.70. In a stealth rally, Semb Corp has almost risen $0.60 since Nov 2012. Volumes are still thin but that is the surprise of the move since 2 months ago. Large white bullish candlestick currently formed this week.
    • MACD - MACD crossed into the positive territory this week. Positive divergence showing good pace.
    • RSI (25w) -RSI climbing steadily but slowly and managed to ease past 50% already.
    • Long with TP - $$5.70 (~5% from current levels) over 2-3 weeks. No reason for prices to remain resisted at current levels. Expect trend to continue upwards in the absence of company/industry news.

    Tuesday, January 22, 2013

    Mixed Fortunes of Oil & Gas - Ezra, Swissco

    [Previous post: Weekly Update - STI to Charge Further?]

    Mixed Fortunes of Oil & Gas

    1. Ezra (Oil & Gas)
    Ezra's year-start rally had its wings clipped severely after the company reported a 49% drop in 1Q net profit of US$6.8 million on 14 Jan. That resulted in a week tumble and the share price reduction continued this week with strong selling pressure. Despite all the enthusiasm regarding oil & gas counters, it is clear that cherry picking in this time of intense competition will still help the investor weed out stocks that are potential pit-falls. 
    • Selling continued this week seeing the stock tumble a further $0.04 from last week's close. In these 2 weeks, share prices have plummeted almost 14 cents. On the fundamental front, stock prices have been hit by poor profits, in canny resemblance to the situation Rotary engineering was in in 2012. Bad news at a fragile time.
    • MACD - declining positive divergence with MACD failing to challenge the Sept 2012 peak. Possible turnaround/volatility to ensue. 
    • RSI (25w) - perched along the 50% levels
    • Short with TP - $$1.09 (-6.5% from current levels) in the near term. If selling pressure still persists, expect the stock to continue down to the next support level at $0.97 which translates to almost a 2012 low.




    2. Swissco (Oil & Gas)
    Another of my long-tracked counter that only recently staged a spectacular increase in its share prices. Had all along felt a mismatch in fundamentals of the company with the its stock price (almost constant in 2012 after the year-start rally). Nonetheless, it is always an intriguing question to when such an inefficiency will eventually realised in the market - sometimes perhaps never. So happen, the time for this stock seem to have arrived on the back of very thin news. 
    • Prices challenged the key support levels at $0.27 last week to close above. This week, prices have shot above $0.30 for the first time though late selling today in the SGX caused prices to fall back to $0.295.
    • MACD - MACD has been on the rise for the past 5-6 weeks and does not seem to be waning any time this week.
    • RSI (25w) - RSI, though, has hit 70% on the back of a very strong run.
    • Long with fast TP - $$0.32 (8.5% from current levels) over 2-3 weeks. Prices are straddling between $0.33 and support by $0.27 with little in between. Still some room more for the rally to run unless selling pressure takes over and prices go back to $0.27 support again.



    Monday, January 21, 2013

    Weekly Update - STI to Charge Further?

    Current Weekly Market Theme:
    Market euphoria over partial resolution of the fiscal cliff is on the wane and the market has been looking for new catalysts to spur another round of rally. 
    The debt ceiling is looming around the corner and due for another round of political 'negotiations' by end Feb - expect more market volatility and jittery. Nonetheless, the debt ceiling has been raised countless times before and going by the remarkable standards US politicians set for themselves (and their political paths), we should see yet another kick-the-can-down-the-road situation unfold. Nothing new.
    Anything related to China's growth is still hot and up-and-coming. China's GDP was a tad above analyst estimates with the census department announcing an official 7.8%. While still higher than expectations, the dampener is the reluctant acceptance that China's growth will not be returning to the stunning levels we have seen in the last decade any time soon. 

    -->



    STI Index goes from strength to strength; to Charge Further?
    The STI has always been a huge beneficiary when China recovers given the large Chinese market links that the 30 component stocks have such as Capitaland, CapitaMalls Asia, Wilmar and Genting. The STI is also Oil & Gas heavy owing to Keppel Corp, Semb Corp, Semb Marine and Noble Group. These two sectors have been winners in the recent rally given a better-than-expected China and emerging markets recovery, bringing the STI to almost a 3 year high.
    Taking a break this week, and owing to jittery fears about the looming debt ceiling, the unresolved debt crisis still ongoing in Europe, the STI took a breather with much profit-taking occuring this week. The big question is if the STI will continue to charge up further or see a near-term decline to even lower levels.
    • Challenged 3190 key support levels in this week to close at 3211 on Friday. 
    • MACD - positive divergence albeit declining. MACD still upwards trending but may seem to peak given the current run.
    • RSI (25w) - exhibiting a seeming turning point.
    • Level to watch - 3190 key support line. The STI is well perched on 3190 having tested the support this week by rallying to close on the support line despite dipping to 3160 in mid-week. Continue resting here will provide traders with confidence with the STI's rally strength and future upside may be more likely. If this support level is breached, the STI may seek a tumble down to 3080 levels.


    -->

    Saturday, January 19, 2013

    Breakout of the Laggards? - Wilmar, Midas, Tiger

    Current Weekly Market Theme:
    Market euphoria over partial resolution of the fiscal cliff is on the wane, with laggard and penny stocks in focus this week. 
    Anything related to China's growth is still hot and up-and-coming. China's GDP was a tad above analyst estimates with the census department announcing an official 7.8%. While still higher than expectations, the dampener is the reluctant acceptance that China's growth will not be returning to the stunning levels we have seen in the last decade any time soon. 


    1. Wilmar (China play; Palm Oil)
    • Strong resistance in this week with increasing volume at ~$3.67. 2nd time in 9 months that prices have attempted to cross this level, with the first being unsuccessful in June.
    • MACD - high positive divergence and trending into the positive
    • RSI (25w) - crossing 50% on a steady upward trend
    • Price to watch - $3.67 resistance line. Break out into the huge gap down region in Apr 2012 provides good buying reason that the worst could be finally over for this badly battered palm oil counter. With a successful break, expect TP $4.75 (~28% from breakout level) over the next 3-4 weeks.


    -->


    2. Midas (China proxy; rail; aluminium)
    • Strong upward trend from 15 weeks ago that resulted in a breakout 3 weeks back. Straddling between the gap down region in Jul 2011, stock prices seem destined for the upper resistance region.
    • MACD - increasing positive divergence and trending in the positive
    • RSI (25w) - above 50% and seems headed for 70%
    • Price Target - $0.61 (~19% from current levels) over the next 5 weeks. Expect the counter to take a short break next week for more accumulation opportunities given how much the stock price has already risen. On the long term (5-6weeks) outlook, the uptrend looks strong and there's no reason for news to drive the stock down given the resumption of railway investment in China.


    -->


    3. Tiger Airways (SEA growth; aviation)
    • Breakout strongly this week with increased volume and trading attention.
    • MACD - small positive divergence and trending into the positive.
    • RSI (25w) - crossed 50%.
    • Price Target - $0.81 (~5% from current levels) over the next 2-3 weeks. 
    • The good thing about Tiger seems to be its slow and steady rise back into prominence after a terrible 2011-12 period that threatened its profits. New CEO with new marketing company does bode well to set the records straight to continue to overhaul the Tiger brand and put it back into the limelight again.


    Tuesday, January 15, 2013

    Singapore Property Cooling Measures - Buy on Dip?

    Current Market Theme:
    Mass market residential property to be worst hit given the additional measures aimed to further curb speculation in this category by hot money flowing through the financial system. Measures seem most drastic in the 7th round of property cooling but as with all past measures, it has shown that the government's steps have been well balanced and aimed to prevent a sudden collapse in prices in the near future should monetary easing start to reduce worldwide.
    Going by history, as long as hot money is kept circulating in the global financial system (highly likely given the tepid growth experienced in US and Europe), property counters will still enjoy upside albeit less pronounced in the near future. Effects of measures present a buying opportunity to accumulate property counters.


    1. Capitaland
    • Gap down on Monday, first day of the week, declining to a day low of  $3.61 before returning to $3.73.
    • MACD - positive divergence declining and MACD turned downwards for the first time in 6 months.
    • RSI (25w) - hit 70% to face resistance.
    • Would be buyers at ~$3.45 after testing $3.42 key support to catch the property momentum.


    -->


    2. Keppeland
    • Faced key resistance at $4.38 last week. Gaped down opening today at $3.97 to close at same price.
    • MACD - MACD turning downwards after peaking at highest levels in 2 years.
    • RSI (25w) - hit 70% to face resistance.
    • Prices are currently sandwiched in the middle of nowhere between key support and resistances. Would be buyers at ~$3.6 when prices cool down further as that coincides with the 20w average.



    3. Ho Bee
    • Big dip on first day of the week, erasing almost 6.5% off its share prices. Prices seem firmly support at $1.8 levels.
    • MACD - MACD turning downwards with 3 weeks of declining positive divergence.
    • RSI (25w) - Overbought RSI finally heading down for some cooling.
    • Expect to buy at ~$1.8. Possible to wait for $1.8 resistance to be tested before entering. 


    -->


    4. Wing Tai
    • Big dip on first day of the week, erasing almost 10% off its share prices.
    • MACD - MACD turning downwards after weeks of low positive divergence.
    • RSI (25w) - Overbought RSI finally heading down for some cooling.
    • Expect to buy at ~$1.7. Possible to wait for $1.7 resistance to be tested before entering. 

    Sunday, January 13, 2013

    Weekly Update - NOL, Yangzijiang, Swiber

    Current Market Theme:
    Favour oil & gas counters with solid order books for the current market recovery. Expect more new deals in the pipeline given the lifting outlook with emerging economies such as Latin America where oil exploration has always been key.
    Also favour shipping companies given recent China's recovery and improved export data. Reports suggest that China may overtake US in economic leadership by 2014 so good news in China is good news for world trade. Europe and US are in a period of trade stagnation but no major shocks to be expected.

    [Previous post: Olam Bonds plus Warrants Offer - To take or not to take for Retail Investors?]


    1. Neptune Orient Lines (Shipping)
    • Breakout in this week with high volume sending stock to a price of $1.31.
    • MACD - positive divergence and trending into the positive
    • RSI (25w) - crossed 50% and headed for 70%
    • Price Target - $1.44 (~11% from current levels) over the next 3-4 weeks.

    -->

    2. Yangzijiang (Shipping and Oil & Gas)
    The market has been viewing company's decision to enter into the Oil & Gas competition favourably. Bagging its first deal at a much lower revenue (and possibly profit margin) than a similar rig done by Keppel Corp, this is a significant milestone for the company and yet it speaks volumes about the intense competition and journey ahead. Kudos nonetheless to the management for diverting underutilised resources away from ship building to rig building.

    • Breakout in this week with high volume sending stock to a price of $1.115.
    • MACD - positive divergence and trending into the positive
    • RSI (25w) - crossed 50% and headed for 70%
    • Price Target - $1.32 (~19% from current levels) over the next 4 weeks.

    -->

    3. Swiber (Oil & Gas)

    • Continuation of upward trend with increased trading volume this week.
    • MACD - positive divergence and trending in the positive
    • RSI (25w) - crossed 50% and headed for 70%
    • Price Target - $0.71 (~8% from current levels) over the next 2 weeks.


    Saturday, January 12, 2013

    Olam Bonds plus Warrants Offer - To take or not to take for Retail Investors?

    I was on annual leave travelling Europe for the last couple of weeks and was too busy since being back earlier this week to make any decent postings. Oh my, how much has the stock market rallied in my absence and how Olam made tremendous amount of headlines during the Nov-Dec period.

    Being a  retail shareholder of Olam (vested), I received the thick bond and warrant offer booklet outlining all the details of this terribly complicated offering. 

    1. 5 year bonds +
    2. 3 year European warrants and then 2 years of American style warrants +
    3. USD denominated exchange rate risk (USD down, bond coupon and maturity payment when converted to SGD down // USD down, warrants cost down, capital gain increase)
    4. Trade-ability of bonds and warrants only in 1,000 units boardlot on SGX which makes odd lots difficult to dispose of.
    5. (And in addition) Newspaper reports of people suggesting that the offer is really good and hence likelihood that the offer might be fully subscribed leaving little odd lot conversion possible.
    Anyway, that's the simple qualitative analysis. 


    Below is another simple quantitative analysis that I have came up with to aid my decision making process
    Assumptions to calculations are
    1. Based on purchasing 1932 bonds + 1,000 warrants (162:313)
    2. Hold bonds to maturity (5 years lock-up)
    3. Sell warrants immediately after 3 years lock-up
    4. USD/SGD stays at 1.2273 level throughout 5 years
    5. Calculations include ~S$28 brokerage fee to sell exercised warrants
    6. Calculations factor in dilution factor in Olam share prices right after this offering assuming that ALL warrants are exercised and the company adjusts the warrant strike price accordingly in future dilution exercises to maintain the same spread.
    7. Total annualised returns = (1 + Gain from 5 year bond coupons + US$0.05 bond discount after maturity + Gain from Warrants sale)^(1/5years) - 1

    I think that to be putting in ~S$2,300 (for 1932 bonds) and taking the risk for 5 years, the minimum annualised returns that I expect from this investment be at least 6%. This is based on my own risk and target investment profile. In order to achieve this, the table simply tells me that I would require Olam stock price to appreciate by at least 30% in 3 years. So now, if you believe such is possible, then this subscription does make some appetizing sense.

    -->


    I also repeated the same analysis above to find out the sensitivity of USD/SGD exchange to this investment gain. The additional assumption is fixing analysis based on 
    1. 20% gain in Olam share price (changing to 50% gain on Olam share price does not make the exchange rate sensitivity any greater)


    As shown, the obvious fact is that exchange rate does little to impact total annualised returns. For the nitpickers, the weaker the USD, the better the gain becomes. And for analysis sake, the USD has been on a downward slide against SGD in the last 5 years due to weaker economic fundamentals and huge monetary stimulus (devaluation). However, in end 2013 the Fed has suggested an easing of the monetary stimulus with growth recovery in sight so expect some support at near current USD/SGD levels for the next 2-3 years.

    In a nutshell, this offering ties Olam to the shareholders of the company for the long-term (at least for retail investors who may find it difficult to unlock value of bonds/warrants in the bond/warrants market). If you believe in the stock fundamentals that there is nothing wrong with being overaggressive in capital investment of late, that the company will return to positive cashflows in 2013-2014 after investments start to realise potential, that Olam has the liquidity in place to ride out any more storms, that the commodities market will make a timely rebound to push its stock prices up, then I would say this investment makes sense.
    -->


    PS: if you enjoyed reading my analysis, do bookmark this page // add Healthytrading blog to Twitter // subscribe to RSS feed // subscribe to email feeds to receive market news/analysis that will move your money. Links are available all on the right of the page (at the navigation bar).
    Related Posts Plugin for WordPress, Blogger...