Today, Singapore government announced measures to cool the property market.
*****
SINGAPORE, Oct 29 (Reuters) - Property counters such as City Developments fell after the government said real estate developers could no longer let home buyers delay payments on the bulk of their property purchases.
City Developments fell 3.1 percent, Wing Tai Holdings was down 4.4 percent and Allgreen Properties lost 3.9 percent.
"We may see annual double-digit residential price increases come to a halt, or grow at a more gradual pace," said Morgan Stanley analyst Melissa Bon in a note.
*****
It is a good thing. We have seen both the property price and property stock price going through the roof recently. This is a timely measure to cool the things down, to ensure we have a sustainable upturn. Recent HDB price is too unrealistic. It is all hype.
Monday, 29 October 2007
Sunday, 28 October 2007
Service excellence : Johnny the bagger
Last week, I attended the company service excellence briefing. The purpose of the event is to make sure everybody in the company aware that he/she has a part to play on the service excellence. During the briefing, a video was shared with all of us - Johnny the bagger. It inspired me. I believe this is a famous true story which many companies used in the service training.
Service quality in Singapore is poor. You might not agree with me, but generally that's my encounter. If the service staff could be mindful of the service he/she is providing, I believe all of us would live in a more pleasant world.
You can watch the video here. Video link
It is a nice video to watch for everyone, regardless whether you are service staff or not. I hope it would inspire you also.
Service quality in Singapore is poor. You might not agree with me, but generally that's my encounter. If the service staff could be mindful of the service he/she is providing, I believe all of us would live in a more pleasant world.
You can watch the video here. Video link
It is a nice video to watch for everyone, regardless whether you are service staff or not. I hope it would inspire you also.
ARA IPO
SINGAPORE, Oct 24 (Reuters) - Real estate firm ARA Asset Management will price its $190 million Singapore initial public offering late on Wednesday and the order book is fully covered, sources close to the deal said.
"It is fully subscribed and there is no price sensitivity," a source told Reuters, adding that the deal would likely be priced at the top of an indicative range.
>> This seems to be a hot IPO. Should be going up strongly on first day.
23,300,000 Shares to the public in Singapore, including 8,300,000 Shares (the Reserved Shares) reserve for the directors, management, employees and business associates of our Company, our subsidiaries and associated companies who have contributed to our success
>> There are 23,300 lots up for grab and the underwriter would be able to do over allotment. Meaning that there should be a fair chance of getting it.
Our business comprises three primary segments:
- REIT management
- Private real estate fund management
- Specialist equity fund management and corporate finance advisory services
Investment highlight:
Proven expertise and track record in real estate fund management
- Pioneer in the establishment of REITs
- Growth in REIT real estate assets under management
- Strong performance of the REITs we manage
- Growth in funds under management
Attractive business model
- Diversified and complementary strategies
- Stable income
- Growth potential
- Strong financial performance
Strong team and relationships
- Experienced team
- Strong relationship with the Cheung Kong Group
- Established relationships with institutional investors
>> They have a unique strength, but competition is strong too. I think I read some weeks back, Calpers(California Public Employees' Retirement System) is also one of the investor. I think this say something about the management skill.
"It is fully subscribed and there is no price sensitivity," a source told Reuters, adding that the deal would likely be priced at the top of an indicative range.
>> This seems to be a hot IPO. Should be going up strongly on first day.
23,300,000 Shares to the public in Singapore, including 8,300,000 Shares (the Reserved Shares) reserve for the directors, management, employees and business associates of our Company, our subsidiaries and associated companies who have contributed to our success
>> There are 23,300 lots up for grab and the underwriter would be able to do over allotment. Meaning that there should be a fair chance of getting it.
Our business comprises three primary segments:
- REIT management
- Private real estate fund management
- Specialist equity fund management and corporate finance advisory services
Investment highlight:
Proven expertise and track record in real estate fund management
- Pioneer in the establishment of REITs
- Growth in REIT real estate assets under management
- Strong performance of the REITs we manage
- Growth in funds under management
Attractive business model
- Diversified and complementary strategies
- Stable income
- Growth potential
- Strong financial performance
Strong team and relationships
- Experienced team
- Strong relationship with the Cheung Kong Group
- Established relationships with institutional investors
>> They have a unique strength, but competition is strong too. I think I read some weeks back, Calpers(California Public Employees' Retirement System) is also one of the investor. I think this say something about the management skill.
Q&A with Dr. Mark Mobius on China
I read the article "Q&A with Dr. Mark Mobius on China" last week. There is a paragraph which is insightful. Full story.
*****
Is it time to take profits in the Chinese stock market? What is your outlook about
growth? Is the current trend sustainable or is it due for a correction?
There is no way anyone can predict whether a market is at its peak. No one can predict the
market direction and a bear or bull market could start or end at any time. However, the good
news is that bear markets are shorter in duration than bull markets and bear markets go
down a smaller percentage than bull market increases. This is why one must invest with a
long-term view. It’s true that the excess liquidity in China is sending the A market valuations
higher and higher but since China's capital account is still under control, this situation of
expensive valuations could last longer than most could expect. The Chinese government
has realized that the risks associated with an overheated stock market could be tragic and
we believe that it will introduce more measures to contain the excessiveness. Having said
that, we also believe that they would not like to see the stock market experience dramatic
falls as the impact would not just be limited to the economy. There could be social and
political implications as well.
*****
No one can predict the top and bottom of a market, just like what we have witnessed these two years. Just as when everyone thinks that it is all the way up, a sudden crash happened. Just when everyone thought it is going down, it rebounded strongly. There are too many players in the market which affect the supply and demand situation. The advance of technology and financial market, emergence of hedge fund and momentum player would increasingly magnify the price swing. However, the good news to fundamental investor is you got more chance to pick up good stock at bargain price.
The situation at China A share market makes the whole world worry. However, worry is not enough. There should be concrete measures to cool the speculation. Since the bull run, I have been reading the news on how speculative the A share market is and how a novice has been making tons of money. Cleaner lady put her life saving into stock and double it within 6 months. People borrow money to buy stock to get leveraged return. The stock mania has spread to everyone.
My view is it is unlikely to fade anytime soon. Once the people has tasted the sweet return of stock, the confidence is unlikely to collapse anytime soon. The uniqueness of China situation are there are too much idle deposit which earning pathetic return and the retail population is sufficiently big enough to absorb big selling. The China government should be planning for additional measure to cool the speculation. Get the situation under control, not suddenly burst the bubble. A correction is highly possible but a total collapse is unlikely.
*****
Is it time to take profits in the Chinese stock market? What is your outlook about
growth? Is the current trend sustainable or is it due for a correction?
There is no way anyone can predict whether a market is at its peak. No one can predict the
market direction and a bear or bull market could start or end at any time. However, the good
news is that bear markets are shorter in duration than bull markets and bear markets go
down a smaller percentage than bull market increases. This is why one must invest with a
long-term view. It’s true that the excess liquidity in China is sending the A market valuations
higher and higher but since China's capital account is still under control, this situation of
expensive valuations could last longer than most could expect. The Chinese government
has realized that the risks associated with an overheated stock market could be tragic and
we believe that it will introduce more measures to contain the excessiveness. Having said
that, we also believe that they would not like to see the stock market experience dramatic
falls as the impact would not just be limited to the economy. There could be social and
political implications as well.
*****
No one can predict the top and bottom of a market, just like what we have witnessed these two years. Just as when everyone thinks that it is all the way up, a sudden crash happened. Just when everyone thought it is going down, it rebounded strongly. There are too many players in the market which affect the supply and demand situation. The advance of technology and financial market, emergence of hedge fund and momentum player would increasingly magnify the price swing. However, the good news to fundamental investor is you got more chance to pick up good stock at bargain price.
The situation at China A share market makes the whole world worry. However, worry is not enough. There should be concrete measures to cool the speculation. Since the bull run, I have been reading the news on how speculative the A share market is and how a novice has been making tons of money. Cleaner lady put her life saving into stock and double it within 6 months. People borrow money to buy stock to get leveraged return. The stock mania has spread to everyone.
My view is it is unlikely to fade anytime soon. Once the people has tasted the sweet return of stock, the confidence is unlikely to collapse anytime soon. The uniqueness of China situation are there are too much idle deposit which earning pathetic return and the retail population is sufficiently big enough to absorb big selling. The China government should be planning for additional measure to cool the speculation. Get the situation under control, not suddenly burst the bubble. A correction is highly possible but a total collapse is unlikely.
Thursday, 25 October 2007
Company news 25 Oct
There are few company news today.
Kim Eng on Rotary
Share price pull-back suggests good entry opportunity. We rate Rotary as one of the better proxies to the region and Singapore’s increasingrefinery/oil terminal capex cycle. We maintain our target price of S$1.79 based on aminimum ex-cash multiple of 17.6x 2007 PE (0.7x PEG). Valuation looks attractive asthe stock is trading at PE multiples of 13.8x and 11.5x for FY07-08 respectively.Reiterate BUY.
>> Rotary is one of the safe play on Oil & Gas, or more precisely Jurong Island. Accumulate on dip.
Technics Oil & Gas
Technics Oil & Gas yesterday said it now expects weaker revenue for the fiscalyear ended Sept 30 and that its earlier bullish forecast of a 10-15 per cent revenue growth cannot be achieved, due to further delays in its project work schedulesplanned for its yard operations. Hence, while the group will definitely be profitable for the fiscal second half, its financial performance during the period will not bebetter than that achieved for the fiscal first half, it said. But given continuing robust sector demand, the company said it maintains a positive outlook for fiscal 2008.
>> I am interested in the company on the basis that it involves in FPSO related projects. However, problem with project based company is they are affected by project delay and problem in securing new projects. I need to research into the company numbers first before decide on whether to buy into the company.
Kim Eng on Cosco
Cosco still a BUY
The significance of this order is that it is ahead of our previous assumption of the pace of order growth. Furthermore, Cosco clearly has capacity to utilise at its Dalian and Guangzhou shipyards, which differs from our previous assumption that further new buildingorders will mainly be the domain of its Zhoushan shipyard, where it is adding a massive amount of capacity and has the ability to expand that yard even further. Although we arenot changing our forward 3-year forecasts, we are upping our growth assumptions for FY10and beyond. This is therefore captured in our DCF valuation, where we are now adjustingour fair value upward target to S$8.10, from S$7.50. 3 year earnings CAGR stands at 43%p.a.
>> Just as we think it has run too fast and hit the road block, they charge forward again. However, I really not sure about the impact of shipping cycle and their business. Investor might exercise own judgement on whether the chase it up or buy on dip. Market seems to like big player, citing scale is key to growth.
Kim Eng on Rotary
Share price pull-back suggests good entry opportunity. We rate Rotary as one of the better proxies to the region and Singapore’s increasingrefinery/oil terminal capex cycle. We maintain our target price of S$1.79 based on aminimum ex-cash multiple of 17.6x 2007 PE (0.7x PEG). Valuation looks attractive asthe stock is trading at PE multiples of 13.8x and 11.5x for FY07-08 respectively.Reiterate BUY.
>> Rotary is one of the safe play on Oil & Gas, or more precisely Jurong Island. Accumulate on dip.
Technics Oil & Gas
Technics Oil & Gas yesterday said it now expects weaker revenue for the fiscalyear ended Sept 30 and that its earlier bullish forecast of a 10-15 per cent revenue growth cannot be achieved, due to further delays in its project work schedulesplanned for its yard operations. Hence, while the group will definitely be profitable for the fiscal second half, its financial performance during the period will not bebetter than that achieved for the fiscal first half, it said. But given continuing robust sector demand, the company said it maintains a positive outlook for fiscal 2008.
>> I am interested in the company on the basis that it involves in FPSO related projects. However, problem with project based company is they are affected by project delay and problem in securing new projects. I need to research into the company numbers first before decide on whether to buy into the company.
Kim Eng on Cosco
Cosco still a BUY
The significance of this order is that it is ahead of our previous assumption of the pace of order growth. Furthermore, Cosco clearly has capacity to utilise at its Dalian and Guangzhou shipyards, which differs from our previous assumption that further new buildingorders will mainly be the domain of its Zhoushan shipyard, where it is adding a massive amount of capacity and has the ability to expand that yard even further. Although we arenot changing our forward 3-year forecasts, we are upping our growth assumptions for FY10and beyond. This is therefore captured in our DCF valuation, where we are now adjustingour fair value upward target to S$8.10, from S$7.50. 3 year earnings CAGR stands at 43%p.a.
>> Just as we think it has run too fast and hit the road block, they charge forward again. However, I really not sure about the impact of shipping cycle and their business. Investor might exercise own judgement on whether the chase it up or buy on dip. Market seems to like big player, citing scale is key to growth.
Tuesday, 23 October 2007
Low cost investing, the ETF way
In one of the business news today,
"According to the Singapore Exchange, total trading value of such ETFs amounted to S$99.6 million for the week ending October 19.
The SGX said the increased trading was largely due to strong interest in iShares MSCI India ETF and Lyxor ETF China (Hang Seng China Enterprises Index). " Full story
ETF (Exchange Traded Fund) is a cost effective way for gaining exposure to a particular market. For unit trust, you give your money to fund manager and let them manage for you. The catch is they would charge management fee which is typical 2% a year, after all expenses. Some people argue that given the cost structure, unit trust is unlikely to outperform the stock market index. The born of ETF is a way for investor to buy into underlying index stock, with a fund like structure. The good thing is investment amount is small and cost is low.
Given the high valuation of India and China market I won't be interested in investing in these ETF mentioned. However, if the market is substantial coming down, this would be a fast and low cost way for participating in their growth. If you have no time to do stock picking, these would be a good alternative. Of course, not to forget that, STI itself also has an ETF.
"According to the Singapore Exchange, total trading value of such ETFs amounted to S$99.6 million for the week ending October 19.
The SGX said the increased trading was largely due to strong interest in iShares MSCI India ETF and Lyxor ETF China (Hang Seng China Enterprises Index). " Full story
ETF (Exchange Traded Fund) is a cost effective way for gaining exposure to a particular market. For unit trust, you give your money to fund manager and let them manage for you. The catch is they would charge management fee which is typical 2% a year, after all expenses. Some people argue that given the cost structure, unit trust is unlikely to outperform the stock market index. The born of ETF is a way for investor to buy into underlying index stock, with a fund like structure. The good thing is investment amount is small and cost is low.
Given the high valuation of India and China market I won't be interested in investing in these ETF mentioned. However, if the market is substantial coming down, this would be a fast and low cost way for participating in their growth. If you have no time to do stock picking, these would be a good alternative. Of course, not to forget that, STI itself also has an ETF.
Sembcorp Marine forex loss
When all seems going well, unexpected would happen. The moral of the story is never invest too heavily in a particular company, no matter how great the company is, unless it is your own company.
The biggest news today is the dismissal of Sembcorp Marine finance director. The unauthorised forex loss could be as high as US$248 million, US$83 million realised, US$165 million base on market to market info.
This is a shocking news. A big company like this should have its own proper internal control which prevent this sort of incident to happen. If you can recall, history tends to repeat itself. We have Baring and CAO went down, because of the internal control lapse. It is paramount that this is being fixed and proper control to be put in place. Full story.
In coming months, company share could be based down. Whether to do bargain hunt, it is up to you to decide.
CIMB:
Target price lowered to S$4.70 from S$4.90 following our earnings reduction;
downgrade to Trading Sell.
DBS:
Downgrade to Hold, TP cut to S$5.50, FY07F-09F estimates adjusted.
Kim Eng:
Downgrade to HOLD, TP revised down to S$4.80
Another notable news is Sembcorp Marine sold 39 million shares of Cosco for a gain of S$230 million. In some way, this is a view on Cosco share is much overvalued at current level. It has become too hot to handle.
The biggest news today is the dismissal of Sembcorp Marine finance director. The unauthorised forex loss could be as high as US$248 million, US$83 million realised, US$165 million base on market to market info.
This is a shocking news. A big company like this should have its own proper internal control which prevent this sort of incident to happen. If you can recall, history tends to repeat itself. We have Baring and CAO went down, because of the internal control lapse. It is paramount that this is being fixed and proper control to be put in place. Full story.
In coming months, company share could be based down. Whether to do bargain hunt, it is up to you to decide.
CIMB:
Target price lowered to S$4.70 from S$4.90 following our earnings reduction;
downgrade to Trading Sell.
DBS:
Downgrade to Hold, TP cut to S$5.50, FY07F-09F estimates adjusted.
Kim Eng:
Downgrade to HOLD, TP revised down to S$4.80
Another notable news is Sembcorp Marine sold 39 million shares of Cosco for a gain of S$230 million. In some way, this is a view on Cosco share is much overvalued at current level. It has become too hot to handle.
Monday, 22 October 2007
What to do with China share?
There is an article today in zaobao. It is about an interview with China Female Buffett. I tend to agree with her view point.
Brief summary:
China stock easy money era has ended
Yang Liu is a famous fund manager in China, nick named "China Buffett". Recently she mentioned, the easy money has been earned, we have to tread carefully going forward. There are 5 areas that are still attractive - Insurance, health care, goods, retail and properties.
Insurance - China Life, Ping An.
Health care - Equipment supplier.
Resource and goods - Petro China and water treatment.
Properties - Port and airport.
Retail - Branded consumer play.
Long the stocks in these area for long term. Original article link
Morgan Stanley issued a report on last Wednesday, citing HK stock could be due to correction up to 30%. This could happen, but the magnitude is unknown. My belief is the China bull has more legs to run. It won't end so soon. It has become a social activity to play stock in China. Even fund manager pulled out, there would be tons of retail investor supporting the price. Having said that, I won't be the one putting the money in though.
Brief summary:
China stock easy money era has ended
Yang Liu is a famous fund manager in China, nick named "China Buffett". Recently she mentioned, the easy money has been earned, we have to tread carefully going forward. There are 5 areas that are still attractive - Insurance, health care, goods, retail and properties.
Insurance - China Life, Ping An.
Health care - Equipment supplier.
Resource and goods - Petro China and water treatment.
Properties - Port and airport.
Retail - Branded consumer play.
Long the stocks in these area for long term. Original article link
Morgan Stanley issued a report on last Wednesday, citing HK stock could be due to correction up to 30%. This could happen, but the magnitude is unknown. My belief is the China bull has more legs to run. It won't end so soon. It has become a social activity to play stock in China. Even fund manager pulled out, there would be tons of retail investor supporting the price. Having said that, I won't be the one putting the money in though.
Sunday, 21 October 2007
Shipping mania
While I was browsing through web, I noticed that one of the hottest topic for this weekend is Cosco and Yangzhijiang. There is nothing wrong with the companies, they are doing great. The problem is with the share price.
It is a strange behaviour we have observed again and again. When the stock is down and out, investor switch off, don't want to look at the stock and price again. But, when the stock price keep going up, you see people jump in hastily. The greater it climb, the more people get sucked in.
Now, listen to your heart. Take your calculator out and punch in the number. Look at the current earning forecast vs forward PE. Look at the current market condition. Is it wise to jump in at this juncture? It might be better to take profit instead.
It is a strange behaviour we have observed again and again. When the stock is down and out, investor switch off, don't want to look at the stock and price again. But, when the stock price keep going up, you see people jump in hastily. The greater it climb, the more people get sucked in.
Now, listen to your heart. Take your calculator out and punch in the number. Look at the current earning forecast vs forward PE. Look at the current market condition. Is it wise to jump in at this juncture? It might be better to take profit instead.
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