Author Archive

Posted on March 2, 2010 - by kevinscully

Sing Holdings 2009 results – no major surprises but company did give update on Laurels….

Sing Holdings, one of my newer Stock Picks released its 2009 results last Friday. There were no major surprises in the numbers but the company did give an update on its project in Cairnhill – The Laurels”.

2009 results take-aways:

a) revenue in 2009 rose 243.6% to S$71.03mn

b) net profit was S$7.24mn up 426.6% from 2008 with S$3.0mn being recorded in Q4-2009

c) company is proposing a final dividend of 0.7 cents

e) 2009 EPS = 1.61 cents giving a 2009 PER of 25.0

f) NTA was 34.9 cents

Update on the Laurels:
Read more…

Posted on February 21, 2010 - by kevinscully

New measures to ensure a stable and sustainable property market might cool interest in property stocks for a while…

…what does this mean to Sing Holdings ??!!

Last night the Ministry of National Development announced two new measures to further cool the property market in Singapore. The measures included a stamp duty payable on properties sold within one year of purchase of 3% and  a reduction in banking financing quantum from 90% to 80% of Loan to Value.   This is the second round of measures after those introduced in September 2009 as according to the MND announcement, the property market was heating up again.

These measures are not unexpected.  Over the last couple of months, the issue of a private property bubble and even concerns about the affordability of public housing have emerged as serious areas of concern by Singaporeans.  The Government has sought to address the issue of property affordability and limited supply since the third/fourth quarter of 2009 by its first set of measures and also by increasing the supply of land available for sale – but possibly because of the time lag and concerns about limited supply and run-away prices, property launches have been well received. Read more…

Posted on February 14, 2010 - by kevinscully

Launching of SNCIR (SIAS NRA Corporate Initiated Research) scheme on February 10, 2010……a further aid for retail investors

On February 10, 2010, SIAS, SIAS research and NRA (us) called a press conference to launch SNCIR scheme.  There are 14 companies (2 names to be disclosed soon) on the scheme todate with investors being able to access the reports at www.sncir.com for free after a simple registration.

SNCIR is very similar to the previous MAS-SGX research scheme which was terminated in October 2009.  We also have the NRA Research Scheme – 23 companies have signed with us – the list can be found below.  It is our intention to eventually merge all corporate initiated research from SIAS Research and NRA (Netresearch) into SNCIR as and when existing contracts expire.

Investors should avail themselves of these reports as they come free and are commissioned by the companies themselves.  All corporate initiated research reports can be found on our website Read more…

Posted on February 12, 2010 - by kevinscully

Jaya Holdings – Q2-2010 results briefing takeaways……debt restructuring better than expected!!

..doing more work but definitely worth keeping on the radar screen

In my February 1, 2010 blog, I talked about Jaya Holdings being interesting after the Courts approved its debt restructing plan.  But no details were available then and I was worried about possible dilution from debt capitalisation.

The company revealed details of the debt restructing last night at an analysts briefing attended by one of our analyst.  The debt restructing plan is very attractive and good for Jaya shareholders.  S$362mn of existing borrowings will be converted into a 5 year secured note in US$.  No principal repayment for the first 2 years and repayments of S$66mn in 2012, S$85mn in 2013 and S$211.6mn in 2014.  Interest is 2.5% above Libor.  There are some dividend restrictions but the conditions were not disclosed.  This deal means no dilution of the company’s existing share base from debt capitalisation and also an orderly repayment of the debt. Read more…

Posted on February 9, 2010 - by kevinscully

Current market jitters from weak US data and soverign debt problems in Europe but I was expecting these…….and the irony is that

In 2009, we saw the possible collapse and eventual collapse of some of the biggest corporate names in the world – Lehman, Merrill Lynch, GM, AIG, Fannie Mae, Freddie Mac, etc.  With that behind us, I was of the view that there isnt another corporate failure/s big enough to frighten and spook markets in 2010.  In my Blog of 4 Jan 2010, I highlighted the risks of the withdrawal of fiscal stimulus and low interest rates and also the burgeoning debt of many economies especially in Europe (the three weakest were Greece, Spain and Italy) and lets not forget about the UK which is not part of the EU.  All the economies in the EU have exceeded that national debt to GDP limits which were conditions of the economic union.

I am therefore not surprised by the problems in Greece, Portugal and Spain which had led to severe weakness in the Euro and strength in the US$.  Because the world economy is recovering and corporate earnings are rebounding, it was only a matter of time for the fiscal stimulus to be withdrawn.  As regards to the national debt problems, I am of the view that some rescue from the bigger members of the EU such as Germany and France or even the G7 will alleviate problems – its only a matter of time. Read more…

Posted on February 1, 2010 - by kevinscully

Volatility and uncertainty continue but this is expected to last for another 4-6 weeks……the VIX index starts to rise again (worth keeping an eye on)

A nice intra-day rebound last Friday helped pare morning losses with the STI Index down a modest 12 odd points last Friday compared to a more than 30 point decline on Friday morning.   The uncertainty and volatility of stock markets will continue but as the uncertainty is being generated by fiscal policy and government decisions on when and how much to raise interest rates, we know that Governments and Central Banks have some room to move viz the eventual withdrawal of these measures.   Mutual fund managers missed the rally in 2009 and many of them had to “BUY” performance and were thus less willing to take profit despite handsome gains they made in 2009.  As we start the new year, they have the flexibility to take some profit and this has resulted in the long overdue correction that we thought we would see in the middle and toward the end of Q3-2009.   Originally, i was of the view that the uncertainty was being taken in its stride by investors.  The VIX index rose sharply but then started to ease despite the sharp falls in the market.  I noticed that over the last three days, the VIX has started to rise again and although still modest at about 24 – we should keep an eye on it to see if continues to rise.  A breach above 30 could signal a more meaningful correction (see chart on VIX below).

Read more…

Posted on January 28, 2010 - by kevinscully

The STI Index has broken down through its 100 day moving average yesterday…

…this signals further downside…….maybe to the 2500 level but a lot depends on O

I was a bit surprised by the decline in the STI Index yesterday as it was holding up well until about 3.30pm (see intra-day chart below).

I reiterate my view that this is an overdue correction not a trend reversal as the macro economic and more importantly corporate earnings cycle seems to be strengthening. Read more…

Posted on January 26, 2010 - by kevinscully

Is the March 2009 Bull rally over ?…….this question was put to me by some financial journalists yesterday

Most global stock markets are now down for the year by 2-6% with the notable exception of Tokyo.   The falls were triggered by two events – China’s credit tightening of bank credit and President Obama’s proposed new rules for banks.   In an interview with some journalists yesterday, I was asked whether the Bull rally was over and what was my strategy now.  I thought I would share my views in this posting.

The declines of the last week were all driven by policy changes – credit tightening in China is likely to be followed by other countries especially those in the EU and US.  President Obama’s changes for US banks seems vague and unclear.   Both come on the back of clear signs of a Global economic recovery albeit modest and also a real recovery again albeit modest in corporate earnings as evidenced by the guidance for revenue growth in 2010.  There are now shortages in components in certain segments of the electronics sector probably from an absence of new capacity and a consolidation of capacity from the crisis of 2009.   So a gradual removal of fiscal stimulus and a raising of interest rates from near zero levels is to be expected especially when most economies in Europe have national debts to GDP in excess of 80%. Read more…

Posted on January 25, 2010 - by kevinscully

Is this the start of a meaningful correction ???…..a fund manager told me another 10-15% down !!!!

Even though I said in the middle of 2009 that I would not make macro comments on the market, I think the correction we have seen over the last few days warrants a view.

The correction started with a tightening of credit by China followed on by Obama’s view to curb proprietary trading by US banks. The views of US market observers is mixed. Some think given the recent loss of the Massachusetts Senate seat to the Republicans means that President Obama will not be able to push this policy change through much like his health reform bill. I think this finance bill has stronger Congressional and Senate support given that the US finance sector caused the near collapse of the financial system as well as the weak US economy. An eventual passing of the Bill will curb global liquidity and with it liquidity premiums.

The net result of the China credit tightening and the Obama financial reforms pushed the “VIX” index higher overnight (see chart below). We should continue to watch this because a further rise in the VIX toward the 30 level signals greater market volatility ahead. We are already seeing some flight to quality with the strengthening of the US$. (see chart below).

What does this mean for stocks and this correction ?
Read more…

Posted on January 21, 2010 - by kevinscully

China’s decision to tighten credit not unexpected….

..Central Banks around the world will have to tighten credit and raise rates….maybe as early as Q2-2010

The sell off in Asian and US equities overnight was apparently triggered by China’s Central Bank’s decision to tighten bank credit and to reduce credit growth from more than 30% in 2009 to a more realsitic level of 16% in 2010.  If you remove the global financial crisis from the picture, it is normal for credit growth to be about 2 times GDP growth so – credit growth of 16% in China is reasonable and on the positive side probably reflects a gradual return to normalcy as crisis concerns start to ease.

Putting China aside, all Central Banks around the world need to address the issue of excessive credit and near zero interest rates.  While these have averted a collapse of the global financial system, they are not sustainable for prolonged periods.  We already see severe stress in national balance sheets in Europe with most economies there having national debt to GDP near or exceeding 80% (this is typical of developing not developed economies). Read more…