Singapore Stock Market News

Singapore Property - A non-consensus call: office to return

noreply@blogger.com (StockFanatic) — Sat, 11 Feb 2012 04:50:00 +0000

Singapore residential and office stocks have moved ahead of the bottoming out of the physical market in the last two decades. In this report, we try to identify the leading indicators for an inflection point in the physical market. Our analysis indicates that the rate of decline for office rentals and secondary residential transaction volumes are the best indicators. We also take the view that the physical office market is likely to bottom out this year, and we are therefore turning more positive on office stocks. We upgrade CapitaCommercial Trust to Overweight, with a Dec-12 PT of S$1.30. We also upgrade K-REIT Asia to Neutral with a new Dec-12 PT of S$0.85. We assume coverage of Wing Tai Holdings, Overseas Union Enterprise, and City Developments.

Office likely to bottom out this year: News flow for the sector has been unilaterally on the negative side since last December with the first rental decline reported for 4Q11. While data points - rentals in particular - could get worse in the next two quarters, we are seeing pick ups in leasing enquiries as a result of the better rates and better leasing terms on offer. Landlords’ willingness in price negotiations would also, in our view, facilitate the establishment of a market bottom.

We turn more positive on office stocks as they tend to move 3-6 months ahead of the bottoming out of the market, and as a substantial risk premium has already been priced in. We upgrade CCT SP to OW and see this stock as providing hedged exposure to the office sector, offering a 6.5% yield in FY12E. We also upgrade K-REIT to Neutral.

Policy measures to stay with residential market: Despite new measures being introduced in last December, new condo launches and land tenders in January have been refreshing pricing highs. While residential developers are also trading at significant discounts to their RNAV estimates, the lingering concerns about government measures could cap the stocks’ returns for a prolonged period, in our view.

Key risks to our calls: While the downside risks (other than external shocks) appear limited as a result of the valuations, the still challenging long-term fundamentals could cap the return at 20-30%, in our view. (Read full report)

Read related reports
CapitaLand - Bullish breakout above key resistances
CapitaLand - Cabinet reshuffle

Source : JP Morgan Investment Research

Hang Seng Index – Ripe for a turn?

noreply@blogger.com (StockFanatic) — Fri, 10 Feb 2012 04:06:00 +0000

• The Hang Seng Index’s rebound from the October 2010 lows appears to be coming to an end soon. We have been on the ‘right’ side of the market since December, which means that we caught most of the gains since then. However, we believe it is time to be extra cautious now.

• Prices have reached and surpassed its 200-day SMA as well as its 50% Fibonacci retracement levels. It is now testing the 20,939-21,884 huge gap, which we think is likely to keep the bulls at bay. Also, note that the upward momentum is waning and hence our more cautious stance.

• Even though the index could continue on a tad higher in the coming week, we prefer to be sellers on strength here. 21,884 is likely to be the key level to watch out for. Anything below the 20,649 would alert us that the price reversal may be taking place while a close below 20,144 would likely confirm it. Even though there are still no reversal patterns yet, bulls should tighten their stops. A reversal is likely to be swift when it turns.

Source : CIMB Investment Research

Yanlord Land - Bullish break suggests further recovery

noreply@blogger.com (StockFanatic) — Fri, 10 Feb 2012 03:55:00 +0000

Closing Price:	Last Market Volume:	52 Week Range:
$1.32	21.4m shares	$0.685 - $1.64

Daily Chart

Key resistances overcame. Yanlord Land is likely to see more upside ahead after overcoming its 2.5-year downtrend channel and 200-DMA recently; this was followed by another strong bullish break above the $1.25 key resistance on heavy volume yesterday.

Indicator is bullish. With the MACD still trending higher steadily at the moment, it suggests that the upside
momentum is intact.

Initial resistance at $1.64. We expect the counter to recover further towards the next key obstacle at $1.64 (key peak in Oct ‘11) in the weeks ahead, with the subsequent resistance pegged at $2.00 (various key peaks in 2010).

Immediate support at $1.25. Meanwhile, we advocate a stop-loss exit around $1.15, which is slightly below the newly established key resistance-turned-support at $1.25.

Source : OCBC Investment Research

Overseas Union Enterprise - More upside ahead after bullish break

noreply@blogger.com (StockFanatic) — Fri, 10 Feb 2012 03:43:00 +0000

Closing Price:	Last Market Volume:	52 Week Range:
$2.47	10.4m shares	$1.975 - $3.30

Daily Chart

Key resistances conquered. Overseas Union Enterprise could see further recovery after overcoming its 1-year key downtrend channel and $2.40 key resistance on heavy volume over the past two sessions.

Indicator is bullish. With the MACD having just initiated a bullish crossover and still trending higher, this suggests that the upside momentum is accelerating.

Initial resistance at $2.80. We expect the counter to recover further towards the next key obstacle at $2.80 (key support-turned-resistance) in the weeks ahead, with the subsequent resistance pegged at $3.10 (various peaks in 2011).

Immediate support at $2.40. Meanwhile, we advocate a stop-loss exit around $2.30, which is slightly below the newly established key resistance-turned-support at $2.40.

Source : OCBC Investment Research

Plantations - Counting on weather woes

noreply@blogger.com (StockFanatic) — Fri, 10 Feb 2012 03:32:00 +0000

South American weather woes have triggered cuts in global soybean crop estimates, which is good news for CPO price. This, plus receding euro debt worries, sparks a 10-12% upgrade of our 2012-13 CPO price forecasts. We are also turning bullish on Indonesian planters.

Factoring in the higher prices, we raise our FY12-13 EPS forecasts by up to 38% while upping target prices by as much as 45%. We upgrade Indonesian planters to Overweight and regional plantations to Trading Buy.

CPO price upgrade
We are raising our 2012-13 CPO price forecasts by 10-12% in light of persistent dry weather in the soybean and corn planting areas in South America throughout Jan 2012. This has resulted in irreversible damage to crop development and a 7-8% downgrade in soybean crop estimates from Brazil and Argentina. This will tighten global soybean oil supply, which is good news for CPO price. The weather risk and easing concerns over the euro debt crisis may boost demand and prices in 1H12.

Expect stronger 1H prices
We project CPO price to be stronger in 1H12 due to fears of a smaller soybean crop and a demand recovery. But supply prospects could improve in 2H as the likely favourable selling prices in 2Q should encourage US farmers to raise their plantings.. This and better weather prospects following the end of La Nina may dampen price prospects later in the year.

Favour Indon planters
We raise Indonesian planters to Overweight due to their improved valuations and rising prospects for sharing export tax benefits with refiners. We maintain our Trading Buy call on Singapore planters for liquidity and valuation reasons. Malaysian planters remain an Underweight due to their rich valuations, rising labour costs and earnings risk from a potential change in the export policy. We upgrade our rating for four stocks in Indonesia and Hap Seng Plant in Malaysia. BW Plantations is our new top pick in Indonesia, Wilmar remains our pick for Singapore and Sime Darby is our favourite Malaysian planter. (Read full report)

Source : CIMB Investment Research

Singapore Conglomerates - Feedback from US investor meetings

noreply@blogger.com (StockFanatic) — Fri, 10 Feb 2012 01:34:00 +0000

Growing investor interest in the O&M sector; focus on UDW orders

We recently concluded a US marketing trip and observed, on average, greater investor interest in the O&M sector. Investors were keen on the potential in the ultra-deepwater space (UDW), global demand prospects (apart from Petrobras), competition, positioning of the Singapore yards in Brazil, and risks (Buy KEP and SMM). Focus was also on the potential O&M beneficiaries in the small/mid-cap space (Buy Ezra). However, investor interest was less in Chinese shipbuilders, considering the continued challenging industry fundamentals (Hold COS and 1101 HK; Buy YZJ).

Activity up in the UDW space; positive momentum should continue

The UDW space has seen activity rise recently; SMM won a US$793m contract from Sete Brasil (Feb 2012) to build an UDW drillship, KEP secured a US$809m contract from Sete Brasil (Dec 2011) to build an UDW semisub, while rig contractor Ensco announced (Jan 2012) a 2.5-year contract for its UDW semisub (currently being constructed in KEP) in the US Gulf of Mexico at a healthy day rate of US$530,000. Ocean Rig also announced (Feb 2012) a three year contract for its UDW semisub at about US$610,000/day. Note that most of the fixtures in 2010 were around US$400,000-450,000/day. We had highlighted the strength of the UDW market, citing demand exceeding supply with rig requirements in multiple locations around the world. The continued market strength and current slowdown in delivery of floaters (only five un-contracted UDW units to be delivered from 1Q12 to 1Q13) has led to a tighter market and a healthy increase in high-spec rig day rates.

Interest rising for O&M beneficiaries in the small/mid-cap space

Several investors were interested in potential small/mid-cap beneficiaries of the improvement in the O&M space. Ezra featured strongly in our discussions, as we believe market expectations are low, its ability to win new subsea contracts has significantly improved following the acquisition of AMC, 2H12 should see a strong turnaround in subsea earnings, and new orders should remain robust with the overall strength of the O&M/subsea markets.

Challenging prospects for Chinese shipbuilders
While share prices of the Chinese shipbuilders have risen recently, industry fundamentals remain poor with significant vessel oversupply, intense competition keeping vessel selling prices low, and tight credit conditions for ship owners limiting their funding ability. Overall, we believe investors were neutral/cautious on the Chinese shipbuilders and prefer the O&M sector.

Strength in O&M share price performance could continue
Share prices of Singapore O&M names have done well over the past three months, rising 14-24%, and currently trading around their historical PE and PB averages. We think this strength could continue as industry conditions are strong and their market positioning is firm. We remain overweight on the O&M sector and expect increased industry spending and upgrade/replacement opportunities. Our SOTP-based target prices are as follows: KEP S$13.40, SMM S$5.80 and SCI S$6.65. Risks: US$ depreciation, execution and a sustained plunge in oil prices (see pages 15-16). (Read full report)

Read related report

Offshore and Marine - Unceasing high tide

Source : Deutsche Bank Markets Research

Singapore: FY2012 budget expectations‏

noreply@blogger.com (StockFanatic) — Thu, 09 Feb 2012 02:58:00 +0000

Singapore’s expected FY2011 fiscal position is likely to be very healthy

For the FY2012 out-turn, we are expecting a healthy fiscal surplus outcome amid buoyant tax revenues. Operating revenue for Apr-Nov 2011 is already running ahead of plan by around 15%, arising from healthy corporate income tax and stamp duty receipts. In contrast, the total expenditure for the Apr-Sep 2011 is under-shooting and only running at about 42% of FY11 plan. Even taking into account the lumpy nature of operating and development expenditure, the primary surplus likely exceeded $5b for the first 8 months of FY11, which is higher than the $76m overall budget surplus planned for in the FY11 Budget. Assuming the FY11 special transfer and net investment income contribution does not deviate from plan, the overall surplus could easily come in between $4-5b (equivalent to about 2+% of GDP). This would make the FY2012 fiscal position a front-runner on track to match, and possibly even surpass the FY2007 Budget outturn where a $7.6b overall budget surplus was recorded (equivalent to 2.8% of GDP then).

More help, but not yet time to bring out the big guns yet?

No big guns are expected for now, given the external settings are less than dire - while the global economy is in the midst of a slowdown, it does not qualify as on the brink of another global financial crisis (barring the stalled Greek PSI which could still be a wildcard), while the domestic economy is also not expected to enter a full-fledged recession at this stage, and the general elections are over. Hence, pre-Budget expectations could be slightly more muted, and a neutral to possibly a modest deficit fiscal target (<1% of GDP) may be in line for the FY2012 Budget.

Striking a balance between short-term support and medium-term goals

The 2012 challenge of below-trend growth (1-3% with downside risks) and elevated inflation (forecast at 2.5-3.5% for headline CPI, and 1.5-2.0% for MAS core inflation excluding accommodation and private road transport) will likely imply a need for some immediate counter-cyclical measures and help for needy households. But policymakers would likely want to calibrate the short-term measures to keep some policy powder dry should the global economic environment deteriorate further, in spite of the fading tail risks from Europe. (Read full report)

Source : OCBC Investment Research

Singapore Banks - Book profits on UOB and OCBC going into results

noreply@blogger.com (StockFanatic) — Thu, 09 Feb 2012 02:45:00 +0000

DBS will kick off reporting season with full year results on 10th Feb. OCBC results are out on 20th and UOB on 23rd Feb. We recommend trimming UOB and OCBC (both Neutral) positions going into results. We expect 4Q11 core net profits to increase 4% q/q and 2011 full year profits to increase 3% y/y. Revenue pressure should persist with margins at lows and non-interest income staying volatile. Credit costs are likely to move up starting this quarter as loan growth has been strong despite uncertain macro. Our estimates are lower than street but we may see a positive surprise if banks choose not to increase their provisions.

Trim UOB going into results: Singapore banks are trading at or close to two-year high PEs on 2012 consensus estimates. This is signaling high expectations from results. In addition, correlation of these stocks
with STI appears to be breaking down (charts on page 3), with UOB the most vulnerable. UOB is close to our year-end PT and we do not expect any upside from current levels. Hence, in case rally sustains, we do not expect the stock to participate.

DBS: We expect core net profit of S$720mn for 4Q11, up 1% q/q and 6% y/y. Volume growth should sustain NII, while non-interest income (Non-II) will remain broadly flat q/q. Consistency of Non-II has surprised in last 7 quarters and we do not see that changing. Costs should grow in line with revenues but higher provisions would limit bottom line growth. DBS stays our top pick in the sector.

UOB: We expect core net profit of S$533mn for 4Q11, up 2% q/q but down 25% y/y. Slowing volumes growth and declining margins is likely to be a drag on NII. Non-II would reverse some of the mark-to-market losses of 3Q11 to support overall revenues. We expect credit costs to increase as NPLs of 1.9% are highest in the sector due to higher risk appetite in the last few years.

OCBC: We expect core net profit of S$565mn for 4Q11, up 10% q/q and 12% y/y from low base on both cases. Reversal of trading losses of 3Q11 and better Non-Par outcome at GEH should support q/q earnings growth, though the latter remains a difficult call. Quality of earnings should be mixed and post results share price action would depend mainly on strategic outlook from the CEO designate. (Read full report)

Source : JP Morgan Investment Research

Maersk rate hike unlikely to stick, let alone fix the industry

noreply@blogger.com (StockFanatic) — Thu, 09 Feb 2012 02:20:00 +0000

Maersk rate hike looks extremely optimistic

Asian container shipping stocks have rallied strongly after Maersk announced its intention to raise its rates on Asia-Europe services by a record US$775 per TEU – a 100% increase from 1 March 2012. We think such an increase in the middle of the slack season will not stick in the face of a challenging European economy. Historical precedent suggests a rate hike of US$100-200 per TEU is likely the most that could be pushed through (even then assuming other liners “play ball”). An increase of US$160/TEU would merely bring Asia-Europe rates in-line with our 2012 assumptions that underpin our US$2bn industry loss forecast.

Market dynamics do not support a doubling of rates

We expect shippers to strongly resist against any attempt to lift rates on the Asia- Europe trade. The last time such a dramatic increase in rate was seen occurred gradually in 2010 when rates increased by US$700/TEU over the year at a time of global restocking, 12% of the world fleet idled (currently only 4%) and the introduction of slow-steaming. The outlook today is very different - prospects for Asia-Europe demand in 2012 look weak given a softening Eurozone economy, only 4% of the world fleet is idled and the industry will need to absorb 10% capacity growth on the route from upsizing to megaships alone.

Rate outlook depends on the high growth carriers
Maersk was highly aggressive in pricing in 2011 as it needed to fill an aggressive capacity expansion (total fleet TEU grew by 18%). In 2012, it is scheduled to only add 7 large ships between 7,500-10,000 TEU. However, the world’s second largest liner MSC will take delivery of 20 large vessels (of which 18 are 13,000+ TEU). It now faces similar issues to Maersk in 2011. We think how aggressively it (and other liners taking new megaships) needs to discount to fill this extra capacity in the face of a sluggish demand environment will be more important for the 2012 rate outlook than any unilateral price moves made by Maersk.

Still forecasting losses, mid cycle valuation too high

While we see short-term upside risk to share prices as other liners attempt to introduce rate increases, we think their limited success will cause stocks to come under renewed pressure. We continue to believe that price increases (and therefore a profit recovery) can only be driven against the backdrop of a strengthening of demand and a substantial withdrawal of capacity. At 1.0x PBV, the sector is trading at a mid-cycle valuation which we believe remains highly unjustified. We reiterate our negative stance on the sector. (Read full report)

Read related reports

Neptune Orient Lines - Rates continue slide into year-end
Neptune Orient Lines - December Container Monitor
Container shipping Sector - Weekly container shipping commentary
Shipyards & Supply Chain - Keppel likely bidder to supply JUs to Pemex; Fred Olsen seeks 'newbuild' Semi-sub - 30/1/12

Source : Bank of America Merill Lynch Global Research

CapitaMalls Asia – Triple bottom bullish pattern breakout

noreply@blogger.com (StockFanatic) — Wed, 08 Feb 2012 05:43:00 +0000

Daily Chart

Following the formation of a triple bottom bullish reversal pattern over the past six months, CapitaMalls Asia has now initiated a strong bullish breakout above the upper boundary of its 2-year downtrend channel, 200-DMA and key S$1.38 support-turned-resistance this morning.

The price action suggests that the counter could potentially see a medium to long term recovery towards the next key resistance at $1.59, followed by the $1.85 obstacle in the weeks ahead.

With the MACD still trending up steadily at the moment, it too suggests that the upside momentum is building up now.

Meanwhile, $1.38 is now the newly established key resistance-turned-support, with the subsequent support level pegged at $1.15.

2nd resistance	$1.85	Key support-turned-resistance
1st resistance	$1.59	Key support-turned-resistance
Current Price	$1.46
1st support	$1.38	Key resistance-turned-support
2nd support	$1.15	Trough in Dec '11

Source : OCBC Investment research

Yoma Strategic Holdings - Riding on Myanmar’s Moment

noreply@blogger.com (StockFanatic) — Wed, 08 Feb 2012 04:53:00 +0000

Liberalisation is the key.

Yoma Strategic Holdings (Yoma) has its core business focus in Myanmar. Recent plans by the Myanmar government to liberalise the previously isolated and reclusive country’s economy have not gone unnoticed by foreign nations and investors alike. In our view, future political developments hold the key to Yoma’s fortunes, as the company’s real estate focus relies heavily on policy changes directly related to the ease of foreign investment. We present a brief history of Myanmar and recent events to provide a context for discussion.

Mirroring Vietnam.

As with other companies operating in emerging markets, Yoma faces much uncertainty and risk ahead. Fortunately, we can look to Vietnam, Myanmar’s neighbour (the two countries are separated only by Laos), which has only recently written its own economic expansion story, as a point of reference. We revisit Vietnam’s growth timeline, drawing parallels between the countries, to construct possible scenarios of Myanmar’s future progress, especially in real estate.

The bare numbers.

Weekly Chart with Fib support

Amidst the current euphoria surrounding the stock, we are adopting an objective stance. In this report, we present information about Yoma’s core businesses and delve into its balance sheet in order to understand its fundamentals. We also explain how its current pricing translates to an approximate 2.6x price-to-book value of its Land Development Rights (LDRs).

Political and other risks.
The largest risk, by far, affecting Yoma is political risk. It is uncertain that the formerly military-run government that has ranked consistently poorly in corruption indices1 would make decisions that are in the best interests of the business community. We discuss the main risks an investor should be aware of before taking the plunge, as well as present a probability-weighted valuation model as a possible method for investors to factor in these risks. (Read full report)

Read related article
Yoma hits high as Myanmar optimism generates interest; the stock is possibly undervalued - Fund Manager

Source : Maybank Kim Eng Research

CSE Global - Investors' confidence may be shaken

noreply@blogger.com (StockFanatic) — Wed, 08 Feb 2012 03:21:00 +0000

4Q11 profit warning.

CSE Global warned that its 4Q2011’s profit after tax will be around 75% of what is achieved during 3Q2011. This is in contrast to its earlier guidance (on Nov 2011 Results Announcement) which stated that 4Q2011 performance “will be better than 3Q2011 and 4Q2010”. The group explained that several of its customers were late in providing approval to their engineering designs during the quarter, resulting in a lower-than-expected revenue and profit contribution from these contracts.

Investors’ confidence may be shaken.

Daily Chart

We note that this is the second disappointment in FY11. The first was in Aug 11, where it announced S$21.7m in provisions for cost overrun in four Telecommunication projects. In view of the two negative surprises happening within the same financial year, we think that investors’ confidence may be somewhat shaken by the group’s disappointing execution of its contracts.

Experienced former MD goes on sabbatical leave.

In the meantime, the group announced that former Executive Deputy Chairman Mr. Tan Mok Koon will be taking a one-year sabbatical leave and will be re-designated as Non-Executive Chairman. Mr. Tan had led the group from 1997 until 2011 when he passed on his responsibilities as Group MD to Mr. Alan Stubb. Mr. Tan was then re-appointed as Executive Deputy Chairman.

Downgrade to HOLD with fair value estimate of S$0.80.
On the points mentioned above, it appears that the leadership transition may have not been as smooth as envisioned. The learning curve is understandably steep, especially when the group has operations in over 20 countries. While we have adjusted our FY11 numbers, we have kept our FY12 estimates unchanged. However, we are lowering our valuation peg from 9x previously to 7.5x, resulting in a lower fair value of S$0.80 (versus S$1.06). We also downgrade our call to HOLD. (Read full report)

Source : OCBC Investment Research

Biosensors International - report 3Q results tomorrow

noreply@blogger.com (StockFanatic) — Wed, 08 Feb 2012 02:34:00 +0000

Biosensors will report its 3QFY12 results tomorrow

Nomura research analysts expect the group to continue posting good results, with a net profit of about USD30mn, a 30% rise q-q and 100% rise y-y. The results should confirm market estimates of a full-year number of USD107mn. (Nomura: USD108mn) The share price has rerated strongly, and analysts believe it could start to pull back if there are no major surprises.

Nobori will continue to be a key driver in 3Q

Following the strong contribution over the past two quarters, analysts believe the momentum from Japan will continue underpinning net profit estimate of US$108m for the full year and US$30m for the quarter. However, they pointed out that competition will likely intensify in Japan as the incumbents launch new products in the 2H of the year.

JWMS results will be consolidated

As this will be first time the result of JWMS will be consolidated, there could be some accounting drag as a result of the amortization from the revaluation of client lists and patents on the takeover of the company. Recall that Biosensors indicated that up to USD12mn may be reflected as an amortization of intangibles, although analyst believes there will be no impact on cashflow.

Share price may pull back following strong performance

The share price has jumped 17% since the start of the year, and while analysts continue to like the stock, they would not be surprised if the share price saw a temporary pullback.

Source : Nomura Research; Jit Soon Lim, CFA & Wen Jie Chan

Rotary Engineering - Bullish break suggests further recovery

noreply@blogger.com (StockFanatic) — Wed, 08 Feb 2012 01:51:00 +0000

Closing Price:	Last Market Volume:	52 Week Range:
$0.715	1.5m shares	$0.55 - $1.02

Daily Chart

Key resistance conquered. Rotary Engineering could see more upside in the medium term following a strong bullish break out of its 6-month consolidation horizontal channel (also the $0.68 vital resistance) on significant volume yesterday.

Indicator still bullish. With the MACD still climbing steadily at the moment, it suggests that the upside momentum is building up.

Initial resistance at $0.80. We expect the counter to climb towards the next key obstacle at $0.80 (support-turned-resistance and gap resistance) in the weeks ahead, with the subsequent resistance pegged at $0.87 (key support-turned-resistance).

Immediate support at $0.68. Meanwhile, we advocate a stop-loss exit around $0.65, which is just below the newly established key resistance-turned-support at $0.68.

Note: We currently have a fundamental HOLD rating on Rotary Engineering with S$0.61 fair value.

Source : OCBC Investment Research

Interra Resources Limited - Exposed to Myanmar but cheaper than Yoma

noreply@blogger.com (StockFanatic) — Wed, 08 Feb 2012 01:12:00 +0000

Should traders ponder a switch from Yoma to Interra?

• Valuation. Interra is currently trading at a historical P/E of 17x. Both its comparable peers Anadeus Energy and Strike Energy are loss making. Yoma , with real estate exposure in Myanmar is now trading at a historical P/E of 37.2x. Interra looks cheap compared to Yoma. With oil being a scarce commodity and price likely to stay high, we believe Interra Resources has earnings potential if the company executes well.

• Technical BUY. Our chartist sees a bullish breakout flag pattern on the weekly chart with potential to rise further to S$0.285. Prices could nudge on higher from the resistance of S$0.275-0.33. The odds favour the bulls as long as prices stay above the flag resistance turned support level of S$0.15.

• High exposure to Myanmar. Given the burst of interest in stocks with Myanmar exposure, we highlight Interra Resources a Singapore incorporated company, listed on both the SGX and ASX. Its business includes petroleum production, field development and exploration. Interra has the rights to operate 4 oil fields, of which, 2 are in Myanmar. According to its FY10 results, 68.8% of its revenue (US$14.9m) were derived from its 2 oil fields in Myanmar.

• More than just Myanmar. Apart from its exposure to Myanmar, Interra Resources is also exposed to crude oil prices. Putting production growth aside, we see potential earnings upside for Interra based on our house view for WTI crude oil to hit an average of US$110 for 2012. Currently WTI crude trades at about US$97.

• New acquisition. The company on 3rd Feb 2012 announced the acquisition of 49% of the share capital of PT Mentari Pambuang Internasional (MPI) which owns 100% participating interest in the Kuala Pambuang production sharing contract, which covers an area of 7,946 sq km and is located onshore Central Kalimantan, Indonesia. The consideration of the acquisition stands at US$312,000 in cash. A call option is also embedded in the agreement to allow Interra to acquire a further 18.5% of MPI.

The Chauk and Yenangyaung fields in Myanmar

• In central Myanmar, Interra holds 60% of the rights and interests to the 2 largest onshore oil fields in Chauk and Yenangyaung under two Improved Petroleum Recovery Contracts ("IPRCs"). The IPRCs with the Myanma Oil and Gas Enterprise commenced on 4 Oct 96 for a term of 20yrs and 6mths.The Myanmar concessions cover a total area of approx. 1,800 sq km and are located along the Ayeyarwady River, approximately 580 kilometres north of Yangon. During 2010, the combined gross production for both fields was 788,877 barrels of oil.

Read related article

Interra Resources - Another Myanmar play shooting to fame soon?
Yoma hits high as Myanmar optimism generates interest; the stock is possibly undervalued : Fund Manager

Read related report
UOB KayHian - Company visit; Interra Resources Limited - Exploring resources in Myanmar

Source : CIMB Research

DBS - 4Q11 preview; expect a solid quarter

noreply@blogger.com (StockFanatic) — Wed, 08 Feb 2012 00:45:00 +0000

DBS reports 4Q11 results on Friday February 10th before the market opens. Deutsche Bank analyst is forecasting PATMI of $713m, -6% QoQ and +5% YoY. While the broader macro environment clearly deteriorated in 4Q11, analyst expects decent underlying results with NIMs stabilising, strong (albeit slowing) loan growth and no spike in credit costs. Given 2H11 share price weakness, analyst suspect growing macro optimism combined with solid earnings will continue to support the share price near term. Despite the recent rally DBS still trades at just 1.1x '12e PB.

Although robust trend net interest income growth should continue, analyst expects non-interest income to fall QoQ: (i) strong 3Q11 loan fees are unlikely to be repeated given less capital markets activity, and (ii) lower liquidity suggests less customer flow revenue which combined with smaller bond portfolio revaluation gains implies weaker trading income.

Credit costs should be benign, although recent gross NPL ratio declines are unlikely to continue. With loan growth slowing the GP charge should decline, providing a buffer against a modest uptick in the SP charge that analyst expects will accelerate during 2012. Also note that the tax rate is seasonally low in the 4th quarter which should provide a boost to the bottom line.

Source : Deutsche Bank Research, Andrew Hill, CFA

Tiger Airways - indications of a challenge to the downward trendline are developing

noreply@blogger.com (StockFanatic) — Tue, 07 Feb 2012 02:02:00 +0000

The weekly chart of Tiger Airways (J7X) shows prices trading in the intersection of a support and a long-term downtrend, such that a decision point between the downtrend and the consolidation will be triggered in the near-term.

The downtrend has been in place since October 2010 and has resulted in a price fall from a historical high at 2.25, to a support around 0.60 which was established in October last year and remains in place. Prices are now approaching the intersection between this support and the downward trendline, and the daily chart shows that the consolidation is taking the shape of a shallow rounded bottom pattern. This bullish pattern has developed a mid-point resistance around 0.70 and a pattern lip around 0.79. A rebound from the 0.60 support has just reached the 0.70 level, and prices are currently consolidating just under the mid point resistance.

Weekly Chart

Up Conditions

Though the long-term downtrend remains in place, indications of a challenge to the downward trendline are developing. The bullish rounded bottom pattern, though shallow, increases the probability of a consolidation or breakout through the downward trendline. The GMMAs also support a potential consolidation, as the long-term group has flattened and is narrowing, such that the previous well established downtrend pattern has recently flattened and converged into a consolidation pattern which provides the basis for a future bullish crossover.

These signals suggest that while trading opportunities are not compelling in the short-term as prices remain below the long-term trendline, the stock should nevertheless be closely monitored for future breakout and reversal opportunities. An initial potential opportunity would be set up by a breakout through the downward trendline, with an initial indicative target around 0.79 and a secondary indicative target around 0.97, both calculated in accordance with the rounded bottom pattern. These indicative targets also approximately coincide with historical resistance levels. Beyond the initial breakout, which if it develops is likely to be short-lived, typical developing reversal opportunities tend to include repeated breakout rallies as the reversal is established and potentially channel trading if an extended consolidation develops.

Down Conditions

In contrast, failure of prices to break above (or consolidate beyond) the downward trendline would reconfirm the downward trendline, and weakness resulting in a price fall through the 0.60 level would confirm that the downtrend remains in place.

Indicator Revision - SAUCER BOTTOMS

Example of Saucer Pattern

The saucer or rounding bottom is a long term chart pattern - It is a very strong reversal signal. The shape of the bottom is best described with an arc rather than with a single trend line. The pattern develops over weeks or months. It is not a short term pattern. There are two price projection methods. The first is the height of the saucer. This is projected upwards to set the targets. Less reliable, but still useful, is the width of the saucer. When this is projected upwards it gives indicative price targets. Confirm this with a point and figure count based on the same pattern. These are much more accurate.

A common feature of the saucer pattern is the development of a handle on the right hand side. This is similar to the cup and handle short term pattern. This handle - a sideways consolidation movement - is a very bullish signal and provides very good entry opportunities.

Source : By Petra Rak

Falcon Energy - Likely more upside after bullish breaks

noreply@blogger.com (StockFanatic) — Tue, 07 Feb 2012 01:57:00 +0000

Closing Price:	Last Market Volume:	52 Week Range:
$0.275	2.2m shares	$0.165 - $0.46

Bullish reversal pattern formed. Falcon Energy could see further recovery following the formation of a double bottom bullish reversal pattern.

Key resistance conquered. This was followed by strong bullish breaks above the 200-DMA and $0.26 key resistance on significant volume yesterday.

Daily Chart

Indicator still bullish. With the MACD still climbing steadily at the moment, these suggest that the upside momentum is building up.

Initial resistance at $0.35. We expect the counter to climb towards the next key obstacle at $0.35 (key peak in Jul ‘11) in the weeks ahead, with the subsequent resistance pegged at $0.42 (key support-turned-resistance).

Immediate support at $0.26. Meanwhile, we advocate a stop-loss exit around $0.24, which is just below the newly established key resistance-turned-support at $0.26.

Source : OCBC Investment Research

Swiber Holdings – Bullish breakout on heavy volume

noreply@blogger.com (StockFanatic) — Mon, 06 Feb 2012 06:00:00 +0000

Daily Chart

Swiber Holdings has initiated a strong bullish breakout above the key S$0.64 support-turned-resistance and 200-DMA on heavy volume this morning.

The price action suggests that the counter could see further recovery towards the next key resistance at $0.75 in the weeks ahead; the subsequent resistance is pegged at $0.90.

With the MACD still trending up steadily at the moment, it too suggests that the upside momentum is building up now. Meanwhile, $0.64 is now the newly established key resistance-turned-support, with the subsequent support level pegged at $0.56.

Resistances and Supports

2nd resistance	$0.90	Key support-turned-resistance
1st resistance	$0.75	Peak in Aug ‘11
Current Price	$0.665
1st support	$0.64	Key resistance-turned-support
2nd support	$0.56	Trough in Dec '11

Source : OCBC Investment Research

Daily Gold - strongly to the upside?

noreply@blogger.com (StockFanatic) — Mon, 06 Feb 2012 03:55:00 +0000

Chart 1

Chart 1 – A good move above the triangle down line with the MACD still pointing strongly to the upside. The MACD signal is very strong to the upside as you can see but the lines are closing so watch for a cross to the downside.

We hit our previous target of 1,500 very nicely indeed. I’ll post the new Fibonacci Projection target next week but the upside target from here is 1,790 by the study. We have pretty much reached this level.

Chart 2

Chart 2 – The signals here are still overbought and a good correction is still very possible. Look at the RMI as well.

The Bollinger is lending good support and resistance so do keep an eye on it at the upper line. The RMI is now flirting with the overbought line so bear that in mind as we approach our target of 1,790.

Chart 3 – We could be looking at a typical Dow Curve on the very long term chart. This could be similar to the Nadaq in 2000 where the peak is followed by a consolidation period which is followed by a sell off. On this dual chart I’ve moved the current gold price action on a weekly chart back in time to 2000 when the Nasdaq turned around.

Chart 3

The Nasdaq pullback was a classic Dow Curve in as much as when a market peaks out after an overblown rally there is a period of consolidation after the peak when the real bears are offset by those who think the pullback is a better level to buy. In 2000 it was a classic and the true believers in the internet miracle fought against those investors who were convinced the whole internet boom was massively overdone.

Massive market rallies, such as we saw on the Nasdaq and more recently gold have to be watched carefully. I’m not saying we are in the same situation now as the Nasdaq in 2000 but if I were holding gold I’d certainly be keeping it in mind.

Source : Reuters Market Technical Analysis by Phil Smith

Final leg of Dragon Year Rally?

noreply@blogger.com (StockFanatic) — Mon, 06 Feb 2012 02:31:00 +0000

The Singapore stock market has done well for 2012, gaining 10.3% year-to-date. Even long suffering small caps have benefited from this rally. CIMB Securities have observed interest funnelling down to low priced shares or the more unflattering term “pennies”. This is always a warning sign to be cautious as history has always shown that the market is ripe for correction once the market reaches this stage. Meanwhile, traders may find this list of stocks (see tables below) with absolute price less than 15cts that have yet to move year-to-date helpful.

Stocks trading less than S$0.15

Table 1

Table 2 (Source from Bloomberg)

Source : CIMB Securities Research

Genting Singapore - Is one man's loss another man's gain?

noreply@blogger.com (StockFanatic) — Fri, 03 Feb 2012 02:43:00 +0000

Unless the Singapore VIP gaming duopoly market contracted significantly in 4Q11, Marina Bay Sands' (MBS) steep 36% qoq decline in rolling chip volumes suggests a loss of market share to Resorts World Sentosa (RWS) during the quarter.

Expectations for Genting Singapore have been lowered and we think incremental positives such as junket approvals, overseas expansion and market-share gains could catalyse the stock. Maintain OUTPERFORM and SOP-based target price.

What Happened

MBS reported adjusted properrt EBITA of US$427m (+3% qoq, +40% yoy) for 4Q11 on the back of adjusted EBITA margins of 53%. 4Q gross gaming revenue (GGR) fell 10% qoq (-20% qoq for VIP, +2.3% for non-rolling, +0.1% for slot). Gaming volumes on all three segments declined qoq.

Las Vegas Sands (LVS) held a conference call this morning. Management sounded upbeat on the growth prospects for the Singapore and Macau gaming markets.

MBS's 4Q qoq comparison lacks spark. Given the short operating history of the Singapore gaming market, it is still difficult to identify seasonal trends. But the volatility of VIP volumes highlights Singapore's concentrated VIP play.

Unless the Singapore VIP gaming market had contracted significantly in 4Q, MBS's steep 26% qoq decline in rolling chip volumes suggests a loss of market share to RWS during the quarter.

What you should do

Stay invested in Genting Singapore. We believe RWS has yet to reach its full potential, with sufficient accommodation, more complete product offerings, and a boots from its marketing efforts. (Read full report)

Source : CIMB Research

KOSPI Composite Index - Recovering from a previous dominant chart pattern

noreply@blogger.com (StockFanatic) — Thu, 02 Feb 2012 02:08:00 +0000

The KOSPI is more important to the world than just cars, chips and kitchen appliances. The KOSPI is the leading indicator of Asian market performance. The technical features on the KOSPI Index set the strategy for trading tactics in Taiwan, Singapore and Hong Kong.

The KOSPI is recovering from a previous dominant chart pattern and it’s important to understand this because it influences the current index behaviors.

The dominant technical chart feature was the head and shoulder pattern. The neckline for the pattern is between the March lows and the June lows. This pattern developed over 7 months. The distance between the neckline and the head is measured. This value is then projected downwards from the midpoint of the neckline to calculate the downside target. The target was near 1680 and this was achieved in August.

Since August the KOSPI has been in a consolidation recovery pattern. The nature of this pattern determines the nature of the breakout and sets the upside targets. Consolidation resistance developed in a narrow band near 1900 to 1950. The 1900 level is an historical support/ resistance level. The consolidation behavior developed into a broad up sloping triangle pattern. A sustained move above 1900 has an upside target near 2200.

The Guppy Multiple Moving Average relationships show a pattern of test and retest as the breakout develops. The long term GMMA – shown as the red group of averages – show the thinking of investors. When this group is widely separated it suggests trend strength. The long term GMMA has compressed, but it has not yet turned upwards. Compression in this long term group shows the selling pressure is dissipating. This is a necessary pre-condition for any successful breakout above 1900.

This type of breakout usually includes compression in the short term GMMA as traders become more confident and drive the rallies higher. The gap between the short term and long term GMMA is closing.

The chart patterns provide an environment for analysis. The indicator relationships help track the behavior of investors and traders. These point the way towards a continuation of the uptrend with a gradual reduction in the level of volatility. This means slower rallies and retreats which provide more manageable short term trading solutions. Additional rally and retreat behavior is expected before the breakout fully develops. Good for traders, but not so good for investors.

A retreat to the value of the uptrend line near 1850 remains consistent with a continuation of the triangle breakout pattern. This is a bullish chart with a developing uptrend.

Source : Daryl Guppy

Straits Times Index - Breakout caution required

noreply@blogger.com (StockFanatic) — Wed, 01 Feb 2012 02:40:00 +0000

The Straits Times Index has moved above the upper edge of the rounding top pattern. This is a strong rebound from the support area near 2700. It’s a rebound behavior that is seen in other markets and it signals the potential for a solid rally. It is too early to know if this is the beginning of a significant trend change. The fast rallies continue to provide great opportunities for fast traders.

We continue to treat this as a whipsaw market with fast rallies and fast retreats. It is most suited to derivative trading where returns can be leveraged over a short period. This is not a market suitable for trend trading.

The intraday market volatility is high. We take a cautious approach for case study purposes at this time. This means tight stop loss conditions.

The key conclusions:
1) Up trends become very unreliable
2) Trend breakouts collapse quickly when they fail
3) Volume backed rallies fail quickly
4) Average profit targets are small, around 10% to 15%
5) Momentum is king

Source : Daryl Guppy

Baltic Shipping Index - a barometer of economic activity

noreply@blogger.com (StockFanatic) — Tue, 31 Jan 2012 05:50:00 +0000

Chart 1

As you can see (chart 1) when you look at the 90 day correlation between the Baltic Index and the MSCI Global stock market index it is not unusual for it to negative.

The theory is that the Baltic shipping index is a barometer of economic activity and therefore a guide to growth and therefore should be reflected in stock markets which rise when growth does.

As chart 1 pointed out the Baltic has fallen sharply recently while stocks have been rising. So does this drop foreshadow a decline in stock markets?

The simple answer is yes, it probably does. As you can see the correlation with the world’s stock markets is negative and has room to move lower but is getting to a level where the downside is limited.

Chart 2

You can see from chart 2 that there are lags between MSCI Global stock market moves and the Baltic with the Baltic tending to lead the markets. This makes perfect sense if you think about it for a moment.

So beware, the background technicals on many of these markets still point to the downside on a longer term basis. This latest dive in the Baltic can only underscore that view.

Source : Reuters Market Technical Analysis