12 January 2014

Singapore Stock Market 2014 Week #2 - Short Summary

Week 2 (11/1/2014)

YTD STI performance improved to -0.74% from -1.14% a week ago. Since beginning of the year, the STI performance was still in red, partly due to the global economy outlook ( US market profit taking after last year's great return record). With many economists issued a negative view on QE tapering, more and more hot monies are now flowing back to US from emerging markets. Several research houses released their predict on STI performance this year, ranging from 3,400 to 3,600.  

For China, new IPO listings in China market would attract eye ball of certain investors. 

In US, US market continued its downtrend after reaching a record high end of Year 2013. So far the market sentiment is still remain stronger, as more and more investors are looking good in US economy recovery story. The question now lies on whether the US investors are focusing on QE tapering impact or improvement in US economy. 

To my personal opinion, I believe that this year performance could be merely better than last year flat performance, but you may need to work harder to find out hidden gems that I believe is under unfavorable sectors (e.g. REIT / Property / Construction etc). Of course to most of the investors, it may look silly because you may risk losing paper money if you invest in those sectors, however I believe that once the toughest time has passed, you may enjoy a better result compared to others. However, it must be based on how much homework you have done and hold on to the counters even if it may drop further due to unfavorable condition.  

Some of the corporate news for past 1 week:
  1. Tiger Airways -  Confirmed that it is currently negotiating a proposed transaction involving 40% associate Tigerair Philippines.
  2. OUE - Received eligibility-to-list letter from SGX for its proposed IPO of OUE Commercial Trust, which comprises of OUE Bayfront.
  3. OCBC - emerged as front runner in the potential takeover of Wing Heng Bank listed in Hong Kong.
  4. Ausgroup - proposed placement of up to 20% of total outstanding shares to raise about S$15.2M net proceeds to support its working capital requirement and future bonding requirement. The price rose to near to 30C from 17C in just a week time.
  5. Sound Global - Exit offer of S$0.70 has now became unconditional.
  6. Otto Marine - Agreed to sell 7 vessels at US$10 M.
  7. See Hup Seng - Completed S$42.4M acquisition of Hetat Group via S$31.8M cash and issue of 42.5M shares @ S$0.2493.
  8. Property Sectors - residential prices registered broad-based declines in the fourth quarter of 2013. Some research houses forecast a 10-15% decline in residential property price over the next three years before stabilized. My personal view is that some property investors may still benefited from declining price as they could enjoy a better rental yield while interest rate yet to increase.
  9. Sarin Technology - Launched a new software to sharpen its accuracy of polished diamond modeling, in-process polishing control and user-friendliness.
  10. GLP - has leased 106,000 sqm to new customers in Brazil and 110,000 sqm across China, of which seven are first-time customers.
  11. Midas - secured another 2 contracts worth RMB1.1B.
  12. Kreuz - received approval from SGX for its application for delisting.
  13. ST Engineering - won $446M of orders.
  14. RH Energy - entered an exchange of land rights arrangement with the Langfang Investment & Cooperation Bureau as a result of rezoning the current 24,400 sqm site into non-industrial use by the local authority. The bureau will compensate Ruihua the land use rights for a 28,875 sqm piece of land in Langfang plus cash of Rmb34.8m, mainly for rebuilding a new manufacturing facility, and RMB5.3M for estimated loss during the relocation process
  15. Ezra - 1QFYAug14 revenue +22% y/y to US$339.8m, net profit -6% to US$6.3m, due to a dip in gross margins, absence of a disposal gain of US$3.8m from a year ago, and higher minority interests. EMAS AMC, the subsea services division, remained the main revenue contributor boosted by increase in project activities and addition of pipelay installation assets during 4QFY13. Order book remains strong at above US$2b with the offshore support services division utilization of ~90%
  16. Triyards - 1QFY14 net profit rose 13% y/y to US$7.3m, while revenue soared 69% to US$90.1m on contributions from three self elevating units, which are in advanced stages of construction. But gross margin slid from 21% to 14% due to different mix of projects at respective completion stage. Separately, it announced two new refurbishment and outfitting contracts for two cruise ships with total value of $7.5m
  17. SPH REIT- In maiden results for period between 24 Jul (listing date) to 30 Nov ‘13, distributable income amounted to $46.5m (3.2% y/y) , giving a DPU of 1.86¢, which is 2.2% above forecast. Gross revenue came to $70.4m (+2.4%), while net property income was up 1.8% to $51.4m, supported by strong rental reversions from Paragon and steady performance from The Clementi Mall. As at end Nov, it registered a gearing of 26.7% with no refinancing requirement till 2016 and NAV of $0.90
  18. Hiap Hoe - Executed the letter of intent of proposed development of Starwood's hotels on two of its recently-acquired sites in Victoria, Australia.
  19. Mermaid Maritime - has ordered two newbuild tender rigs and one dive support vessel for an aggregate sum of US$436m, from China Merchants Industry. Delivery of the vessels is expected to take place between 1Q16 and 3Q16. The move reflects Mermaid’s commitment to expand and modernize its fleet to enhance its offshore oil and gas support services, as well as to achieve greater economies of scale. Mermaid currently owns 2 tender rigs, and 7 owned and 2 chartered subsea support vessels.
  20. OUE Commercial REIT: Lodged its preliminary prospectus and will start book building next Monday. OUE Commercial Reit is selling 433m units at $0.80 each, offering a yield of 6.8%. Distributions will be made to unitholders on a semi-annual basis. Five cornerstone investors are taking up more than half of the offering (225m units). This includes:
    1) A Malaysian asset management company owned by RHB Investment Bank Berhad (1.4%), 2) Yang Dehe, a seafood restaurateur in Guangdong, China, who heads the Hai Run Group of companies (2.9%). 3 & 4) Gordon Tang and his wife, Chen Huaidan, both members of the board of SGX-listed SingHaiyi Group (3.6% stake each) 5) Investment holding company Summit SPV, wholly owned by Tong Jinquan, China’s 35th richest man according to Forbes magazine.
    The OUE Commercial REIT will feature office building OUE Bayfront in Singapore and the Lippo Plaza Property in Shanghai, both contributing to the IPO portfolio value of $1,623.6m and total GFA of 105,296.1 sqm.
    CIMB, OCBC and Standard Chartered are the joint global co-ordinators on the IPO, as well as joint bookrunners with Citigroup, JPMorgan and RHB


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