Wish everyone
Merry Christmas and Happy new year.
According to Hong Kong news, Andy Xie said Asia market would still do well in 2008. It is possible for HK market to fall up to 20% in coming few weeks and Asia market might start to rebound from Mar onwards. The consensus from analyst is Asia stock would rise in the coming year.
During the holiday season, market activity should be minimum and expect low volatility. On the first trading day of the new year, I would expect general market to go up baring unforeseen bad news.
Today, I read The Edge article on the Jim Roger's new book "A Bull In China: Investing Profitably in the World's Greatest Market". Just as he is a commodity bull, he is also bullish on the future of China in 21st century. >>Source
Me too, since I started investing. I own China unit trust and stock listed on SGX. It is a long term play, but please be mindful of the risk involved. A good way to diversify is just simply buying a China unit trust!
Tuesday, 25 December 2007
Saturday, 22 December 2007
The haunted town
The most talked about and wondered share this week got to be China New Town. Somehow it is coming down, regardless of market sentiment. It finished the week with all time low, even though, other china shares rebounded.
Does market know something that we don't know? Yes or no. From my experience, sometime market does know. Sometime, it is just speculation or false alarm.
Does big boy(house trader/rich guy) really have big control over the share price? I am not sure. I am not exposed to how those people work. However, judging from the huge volume and many outstanding shares. It is not easy to "manipulate" it.
Is the hedge fund selling? Possible. Some source claims that hedge fund is selling. To close position for the year? Or to benefit from the short selling? Not sure either.
Could the following news trigger it? Possible, but I failed to see the direct relation. Because the core business is in developing town, compare to selling house.
- "The growth of apartment prices in China is set to fall in 2008 because of an expected increase in supply and a drop in speculative activities," said Chen Sheng, deputy director of the CIA, which tracks property prices." Source
Although I am impressed with the business prospect, but beware of the short term "perceived" risk.
Does market know something that we don't know? Yes or no. From my experience, sometime market does know. Sometime, it is just speculation or false alarm.
Does big boy(house trader/rich guy) really have big control over the share price? I am not sure. I am not exposed to how those people work. However, judging from the huge volume and many outstanding shares. It is not easy to "manipulate" it.
Is the hedge fund selling? Possible. Some source claims that hedge fund is selling. To close position for the year? Or to benefit from the short selling? Not sure either.
Could the following news trigger it? Possible, but I failed to see the direct relation. Because the core business is in developing town, compare to selling house.
- "The growth of apartment prices in China is set to fall in 2008 because of an expected increase in supply and a drop in speculative activities," said Chen Sheng, deputy director of the CIA, which tracks property prices." Source
Although I am impressed with the business prospect, but beware of the short term "perceived" risk.
- Avoid catching the falling knife. This is really an old wisdom already. Since down trend is coupled with high volume. It is best to avoid now.
- No formal valuation has been established. In the prospectus, they have already mentioned this. Since there is no suitable comparison, it might be hard to value the company. I suspect analyst report is on the way, just watch out for it. Of course, as you might have guessed, analyst would say buy. Target price? Who knows.
- Fund manager is on holiday. I think the fund manager who support this counter and think it is well worth the money might be on vacation right now. Support could come in when the holiday season ends.
- A positive 4th quarter is essential to show everyone that it is good.
- Consider taking the risk, when the volume die down. No volume means no interest. That also means it could be at the bottom already. This is on the assumption that no further bad news would be revealed.
Wednesday, 19 December 2007
Happy Hari Raya
Wish all, have a very Happy Hari Raya. Don't be stress out by stocks. Spend more valuable time with family and friends.
What goes down would come up. Accidentally, I bought the China Hongxing today. After watching from the sideline for so long, after it has multiply 10 times, I finally decided to take the plunge. It is expensive in PE terms, but not relative to growth forecast aspect.
I am willing to ride out the volatility, limit on my exposure and wish it could really grow up as a dominant China sport player. Sometime we just need to pay a little bit for the good business economic/model. Pray and embrace for the unknown.
What goes down would come up. Accidentally, I bought the China Hongxing today. After watching from the sideline for so long, after it has multiply 10 times, I finally decided to take the plunge. It is expensive in PE terms, but not relative to growth forecast aspect.
I am willing to ride out the volatility, limit on my exposure and wish it could really grow up as a dominant China sport player. Sometime we just need to pay a little bit for the good business economic/model. Pray and embrace for the unknown.
Monday, 17 December 2007
All is not well
Yesterday, I just watched the movie Golden Compass. It talked about the ice bear. Coincidentally, today the bear is roaring. Thanks to Mr Market mood swing on last Friday, today we have the severe fall across Asia market. By the time, I am writing this, US is already down by 80 points. I think we are approaching the golden mark of 3200 or even 3100. I am looking forward to accumulate a little bit at that level. I suspect it might go lower than that. But we don't know, really.
Looking at selective counter now. Maybe
China Hongxing @ 0.88
Guanzhao IFB @ 0.285
Swiber @ 3.10
China New Town @ 0.52
Olam @ 2.40
Synear @ 1.5
MIDAS @ 1.42
We have to see how severe is the fall.
The only positive news is Enviro Hub is setting up a plastic to fuel plant by using licensed technology. Sounds impressive, but it is hard to just the financial impact. Recycling industry is always showing great promise but fall short on the number front. So, I am not interested in putting capital into it. Only my friend who is tempted everytime by the allure of technology, fall in love with this kind of stock. Let's hope thing turns out great for who ever invested.
Looking at selective counter now. Maybe
China Hongxing @ 0.88
Guanzhao IFB @ 0.285
Swiber @ 3.10
China New Town @ 0.52
Olam @ 2.40
Synear @ 1.5
MIDAS @ 1.42
We have to see how severe is the fall.
The only positive news is Enviro Hub is setting up a plastic to fuel plant by using licensed technology. Sounds impressive, but it is hard to just the financial impact. Recycling industry is always showing great promise but fall short on the number front. So, I am not interested in putting capital into it. Only my friend who is tempted everytime by the allure of technology, fall in love with this kind of stock. Let's hope thing turns out great for who ever invested.
Sunday, 16 December 2007
China New Town 3Q loss
Luckily I didn't buy into the company while it was 68 cts. Only a few days after, they announced the 3Q loss which cause the price to go into violent downward swing. Before the announcement, I was expecting them to show some good result. Especially that is the 1st result announcement after listing. I guess the price would drift down for quite a while. However, I suspect the fund manager would keep buying the company's share. This could provide some support to the price.
In year 2007, two of the most interesting China company listed on SGX should be China New Town and China Oilfield Technology. Valuation aside, both of them offer a good growth story to investor. However, listing timing is also important sometime. If they listed before subprime rout, the valuation should be much higher.
China Oilfield commands a high margin and have an unique niche in its own area. Valuation is at a compelling level now, but it could go cheaper if overall market remain weak. Company risk is higher than other China company, because the business is harder to understand and they rely on one big customer.
China New Town offers a good story on the urbanization which is a big and strong theme. The business is a little bit harder to understand, because it is different from your usual property developer and they have short operating history. Valuation has come down to a more manageable level, although I won't say it is cheap. Nevertheless, I think fund managers would think otherwise. Key risks are execution, getting more new projects and financing as the initial development requires huge capital. Having said that, I think key risk are mitigated by having strong connection and strong parent/shareholder. For short term, I don't expect it to fly. It is for long term holder.
Peril of penny
Before the subprime crisis erupted, all punters were busy chasing penny stocks. Stock that was previously few cents became 10cts of more over few weeks. The market was filled with all sort of speculation. Obviously, that was the sign of the end of bull market (although I don’t believe the bull has died now).
In a typical market cycle, blue chips would lead the first wave of appreciation. Once the blue chip became pricey, the second and third liner would follow. Eventually, the penny/junk stock is the last in the party. Once we see the penny shoots like a star, we can gauge the top is near. When the correction comes, penny falls the most and might never recover.
If you check back on the penny that was hot just few months ago, you would notice that the price has come down a lot. More than 50%? Possible. Sometime, when the stock just gotten too hot, broker would impose a trading curb to manage their outstanding position. Penny is the most hardest hit. Recall the Uni Asia case?
Lesson learnt here is don’t chase the penny blindly base on the volume and speculation. Fundamental is still important in stock picking/trading. I think everyone got the urge to earn quick money, there is nothing wrong with it. However, just make sure when the tide turns, run faster than others.
In a typical market cycle, blue chips would lead the first wave of appreciation. Once the blue chip became pricey, the second and third liner would follow. Eventually, the penny/junk stock is the last in the party. Once we see the penny shoots like a star, we can gauge the top is near. When the correction comes, penny falls the most and might never recover.
If you check back on the penny that was hot just few months ago, you would notice that the price has come down a lot. More than 50%? Possible. Sometime, when the stock just gotten too hot, broker would impose a trading curb to manage their outstanding position. Penny is the most hardest hit. Recall the Uni Asia case?
Lesson learnt here is don’t chase the penny blindly base on the volume and speculation. Fundamental is still important in stock picking/trading. I think everyone got the urge to earn quick money, there is nothing wrong with it. However, just make sure when the tide turns, run faster than others.
Saturday, 15 December 2007
CPF changes for investor 2008
In year 2008, new changes would affect the Singapore CPF scheme. There are a few important points to remember for investor using the CPF money.
Existing rule:
Under CPF OA
100% investible in FD, Singapore Government Bond, Unit trust, ETF, Fund management account
35% investible in Stock, REIT, Corporate Bond
10% investible in Gold, Gold ETF
Under CPF SA
100% investible in FD, Singapore Government Bond, Selected Unit trust & ETF
*Note: It doesn't make sense to invest in FD, because the FD interest is lower than CPF.
From 1 Jan 2008:
>> There is nothing much we could do with the new rule, except to live with it. I believe if invest prudently, the unit trust portfolio should be able to deliver return more than 10% a year. The extra locked in amount actually do no good to the savvy investor.
Existing rule:
Under CPF OA
100% investible in FD, Singapore Government Bond, Unit trust, ETF, Fund management account
35% investible in Stock, REIT, Corporate Bond
10% investible in Gold, Gold ETF
Under CPF SA
100% investible in FD, Singapore Government Bond, Selected Unit trust & ETF
*Note: It doesn't make sense to invest in FD, because the FD interest is lower than CPF.
From 1 Jan 2008:
- SA interest would be pegged to 12-month average yield of the 10-year Singapore Government Security (10YSGS) plus 1%
- Additional 1% interest paid on first 60k of combined balance, with up to 20k from OA. The interest would go into SA
- Unit trust which under CPFIS scheme, expense ratio cap
- Higher risk – 1.95
- Medium to High – 1.75
- Low to Medium – 1.15
- Lower risk - 0.65
- First 20k in OA and first 20k in SA cannot be used for investment
- CPFIS agent bank fee can still be drawn from account even though OA balance is below 20k
- Existing OA and SA investment holding is not affected
>> There is nothing much we could do with the new rule, except to live with it. I believe if invest prudently, the unit trust portfolio should be able to deliver return more than 10% a year. The extra locked in amount actually do no good to the savvy investor.
A christmas gift that never come
Obviously, market is expecting a Christmas present from Fed by cutting 50 basis point of interest rate. The situation is like a child write down the wish on Christmas tree, when the thing does not turn out as wished, he start to throw things around.
Fed has other consideration on the interest cutting. Not everyone would get their wish. Initially, I thought 25 points is what being expected, and market should stagnant/correct slightly. However, it was a violent movement for US market. Nevertheless, the damage has been done already. We should move on from here.
I think there is high chance that they prepare to cut another 25 points in the next meeting. Given the current sentiment is so bearish, I reckon that it is a good time to selectively buying. Depends on one's risk appetite. It is really a good time to pick up some bargain. Go for stock with strong outlook. The strong would grow stronger. Avoid the cyclical stock - tech, shipping etc
I read in one of the forum - very often the market bottom is when all the people is pessimistic. I would say how true it is!
Fed has other consideration on the interest cutting. Not everyone would get their wish. Initially, I thought 25 points is what being expected, and market should stagnant/correct slightly. However, it was a violent movement for US market. Nevertheless, the damage has been done already. We should move on from here.
I think there is high chance that they prepare to cut another 25 points in the next meeting. Given the current sentiment is so bearish, I reckon that it is a good time to selectively buying. Depends on one's risk appetite. It is really a good time to pick up some bargain. Go for stock with strong outlook. The strong would grow stronger. Avoid the cyclical stock - tech, shipping etc
I read in one of the forum - very often the market bottom is when all the people is pessimistic. I would say how true it is!
Tuesday, 11 December 2007
2008 stock market prediction
Everyone loves prediction. We like feng shui, horoscope and fortune teller. Yet in investment world, no guru really can forecast what would happen one year down the road, not even a week. Having said that, as we are going into 2008 pretty soon, I would like to “predict” what the next year would be.
2007 was a good year, if not for the sub prime problem to spoil the party. Everyone was earning big bucks, when the financial tsunami came. Going into 2008, I still think that stock would be up. Be it US or Singapore. Following are the drivers.
US president election year
During the election year, they would try very hard to prevent the market sinking. Thus, for a very high chance, stock could be up. Although it is unlikely to be another super bull market.
Sub prime crisis ends
After the recent big write off by banks and more confession coming up, I think the sky is clearer now. Market has also priced in more bad news. So, once most of the bad news were over, we can see stock recovering.
Oil price trend lower
It is close to $100 now, I know. It might reach 110 or 120. But, after that, what next? The growth would slow next year. The demand is likely to come down. Saudi or OPEC won't want the super high price to dampen demand and would react if it is too high.
Global growth still healthy
US is slowing down, but the whole world still growing nicely. China keep booming and they would help in absorb some demand.
I hope 2008 would be another positive return year for stock. May all the investor find wealth and happiness. HUAT ah...
GIC invest in UBS
This is another high profile capital injection exercise. GIC is invited to take a stake in UBS. Eventually, GIC could own up to 9% of the swiss lender. This news came after the citi group capital injection. Generally, the financial industry is well supported. There are deep pocket players willing to invest in the institution in trouble. Thus, there would be stronger confidence on the sector.
This is also a classic case of crisis means opportunity. When something is down and out, it is easier to make the buy decision. Once the tide turn and good time return, I think it would be quite rewarding.
May all the investor shake off the confidence crisis and pick some real bargain.
This is also a classic case of crisis means opportunity. When something is down and out, it is easier to make the buy decision. Once the tide turn and good time return, I think it would be quite rewarding.
May all the investor shake off the confidence crisis and pick some real bargain.
Sunday, 9 December 2007
Stock investment key learning point in 2008 part II
Stock investment needs a cool head. One often get carried away by bull and being swayed by bear. Let me reflect on some of my stock transactions this year.
China Sky and China Lifestyle
I sold off the stocks after 2-3 months of holding early of the year. China lifestyle still struggle to perform. Time is needed for the expansion to bear fruits and then it is poised for re-rating. It is a mistake to let go China Sky which hit as high as 2.3 from my initial buy price of 1.38. Patient is needed for stock to shine.
LC Development
Earn quick money has been every investor/speculator’s dream. I started my position at 0.30 after increased volume and speculation news in the forum. Lucky enough, it went up within a short time. I cashed out at 0.48. Play smart, if you aim for quick profit, get out when you hit the target.
Guthrie GTS
I bought at the peak and still holding. I am more wary of undervalued stock nowdays. Because the undervalued could remain so for a long period of time and I should avoid entering into such situation. Nevertheless, the damage is already done. Pray and hope for the best.
Hotel Grand Central
It might be a good company. But I think I joined the party too late and also leave too late. Buy only if you have genuine interest and you believe the company would do very well.
Hiap Seng
It has good engineering capability and strong alliance. That’s the main reason I bought the stock. However, project always get delayed and over run. I should remind myself not to buy too many project base company.
>> Part 1
China Sky and China Lifestyle
I sold off the stocks after 2-3 months of holding early of the year. China lifestyle still struggle to perform. Time is needed for the expansion to bear fruits and then it is poised for re-rating. It is a mistake to let go China Sky which hit as high as 2.3 from my initial buy price of 1.38. Patient is needed for stock to shine.
LC Development
Earn quick money has been every investor/speculator’s dream. I started my position at 0.30 after increased volume and speculation news in the forum. Lucky enough, it went up within a short time. I cashed out at 0.48. Play smart, if you aim for quick profit, get out when you hit the target.
Guthrie GTS
I bought at the peak and still holding. I am more wary of undervalued stock nowdays. Because the undervalued could remain so for a long period of time and I should avoid entering into such situation. Nevertheless, the damage is already done. Pray and hope for the best.
Hotel Grand Central
It might be a good company. But I think I joined the party too late and also leave too late. Buy only if you have genuine interest and you believe the company would do very well.
Hiap Seng
It has good engineering capability and strong alliance. That’s the main reason I bought the stock. However, project always get delayed and over run. I should remind myself not to buy too many project base company.
>> Part 1
Sembcorp Marine forex loss part II
Follow the initial announcement of the forex loss, the story is unfolding now. More banks/financial institutions start to lay claim and they are preparing for some court action. As predicted initially, the level of damage is unknown. Would the reputation being hurt? Would the legal proceeding charges eat into the bottom line? I think all is too complicated to predict and calculate. Broker has flip flopped with their recommendation also. One moment is buy, another moment is neutral What ever it is, I dislike uncertainty and not intend to risk my capital.
Part 1
Tuesday, 4 December 2007
Hungry for energy
Energy seems to be the buzzword in this high oil price era. Every few months we hear some big news regarding the energy sector. Just last month, we hear the discover of biggest oil field in Brazil.
Last week, one of the big news is Finnish refiner Neste Oil would spend 550 million euros ($814 million) to build the world's largest biodiesel plant in Singapore to meet growing demand for biofuels. Neste said the plant would have a design capacity of about 20,000 barrels per day, and use mostly palm oil as its raw material, though it can use also soy oil or animal fats.
This is a major win for Singapore as it gear up to become the regional petro chemical centre. I guess the Singapore economy with multiple of growth engine should keep doing well in the coming years.
The bio fuel plants which new/existing players are building up is not without risk. The continuous increase of the oil price prompts player to look for alternative energy like bio fuel. However, keep in mind that, CPO also increase along with the oil price. Because people expect that bio fuel which need the palm oil as feed stock would increase its demand. So, at the end, I doubt the bio fuel can be significant cheaper than oil. Worst case is we have the oil price collapse and CPO keep remaining at high level. That would be a big trouble for these bio fuel players. The situation remain unclear on the bio fuel industry, and punters who bet on it would have to be careful.
Today in CIMB report, China Energy has announced the expansion of its methanol production capacity by three-fold to 750,000 tonnes p.a. Forecasts raised; higher target price of S$2.12 from S$1.73. Our FY07 EPS forecast has been lifted by 6% to factor in higher DME ASPs. Our FY08-09 EPS estimates have been raised by 62-63% on higher gross margin assumptions (+12-18% pts), which more than offset delays in DME expansion. Accordingly, our
target price climbs to S$2.12 from S$1.73, still based on a 30% discount to our new DCF valuation (WACC 13%, LTG 2%) of S$3.03 (previously S$2.48). At our new target, China Energy is valued at 7.5x CY09 earnings, which we believe is undemanding against a 3-year EPS CAGR of 79% for FY07-09.
I was almost sucked into buying China Energy while it was around 1.8 level. Lucky enough, sometime I made good decision, sometime I made bad decision, I didn't purchase it. Since the disappointing result, share price has corrected a lot. Looking at the forecast growth, it is indeed impressive. The risk with company is the aggressive expansion, as they aimed to be the largest DME player in China. If you buy, you are buying for the future. Don't expect it would suddenly go up in the near term. History has told us, some of the greatest story does not turn out well. Monitor the risk and set a cut loss point, if thing turns out otherwise. Beside that, of course, study the company really well and make sure you understand their growth driver and risk.
Last week, one of the big news is Finnish refiner Neste Oil would spend 550 million euros ($814 million) to build the world's largest biodiesel plant in Singapore to meet growing demand for biofuels. Neste said the plant would have a design capacity of about 20,000 barrels per day, and use mostly palm oil as its raw material, though it can use also soy oil or animal fats.
This is a major win for Singapore as it gear up to become the regional petro chemical centre. I guess the Singapore economy with multiple of growth engine should keep doing well in the coming years.
The bio fuel plants which new/existing players are building up is not without risk. The continuous increase of the oil price prompts player to look for alternative energy like bio fuel. However, keep in mind that, CPO also increase along with the oil price. Because people expect that bio fuel which need the palm oil as feed stock would increase its demand. So, at the end, I doubt the bio fuel can be significant cheaper than oil. Worst case is we have the oil price collapse and CPO keep remaining at high level. That would be a big trouble for these bio fuel players. The situation remain unclear on the bio fuel industry, and punters who bet on it would have to be careful.
Today in CIMB report, China Energy has announced the expansion of its methanol production capacity by three-fold to 750,000 tonnes p.a. Forecasts raised; higher target price of S$2.12 from S$1.73. Our FY07 EPS forecast has been lifted by 6% to factor in higher DME ASPs. Our FY08-09 EPS estimates have been raised by 62-63% on higher gross margin assumptions (+12-18% pts), which more than offset delays in DME expansion. Accordingly, our
target price climbs to S$2.12 from S$1.73, still based on a 30% discount to our new DCF valuation (WACC 13%, LTG 2%) of S$3.03 (previously S$2.48). At our new target, China Energy is valued at 7.5x CY09 earnings, which we believe is undemanding against a 3-year EPS CAGR of 79% for FY07-09.
I was almost sucked into buying China Energy while it was around 1.8 level. Lucky enough, sometime I made good decision, sometime I made bad decision, I didn't purchase it. Since the disappointing result, share price has corrected a lot. Looking at the forecast growth, it is indeed impressive. The risk with company is the aggressive expansion, as they aimed to be the largest DME player in China. If you buy, you are buying for the future. Don't expect it would suddenly go up in the near term. History has told us, some of the greatest story does not turn out well. Monitor the risk and set a cut loss point, if thing turns out otherwise. Beside that, of course, study the company really well and make sure you understand their growth driver and risk.
Monday, 3 December 2007
Market direction week Dec 03
Market is recovering some what. But I think the investors were still sidelined. They are waiting for clear signal, waiting for the bull to come back. Pending the expected Fed rate cut, market would rise a little bit. After that, depends on the news flow which could be good or bad, the market would react accordingly. As the outlook is still uncertain, I am reluctant to put in any capital.
According to zaobao news, Andy Xie said although China market is overvalued, but from past market cycle experience, bubble is unlikely to burst before the Olympics. There is enough liquidity in the system which would support the market.
Well, it is yet to see. Because history has proven itself over and over again. Most the prediction is inaccurate.
According to zaobao news, Andy Xie said although China market is overvalued, but from past market cycle experience, bubble is unlikely to burst before the Olympics. There is enough liquidity in the system which would support the market.
Well, it is yet to see. Because history has proven itself over and over again. Most the prediction is inaccurate.
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