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Singapore Strategy - Refreshing our top five Buy picks

Shared By Stock Fanatic on Monday, September 1, 2014 | 1.9.14

Top 5 Buys in Singapore: CD / DBS / MCT / ST / YZJ
We have reassessed our top picks following a lacklustre 2Q reporting season in Singapore. We add DBS Group and Singapore Telecom (Singtel) to our top 5 Buy picks portfolio and drop Golden Agri and Genting Singapore (GENS). DBS’s fundamentals are better than peers in our opinion because of its deposit franchise, Greater China exposure and lower valuations. Singtel's market dynamics for its Australian subsidiary, Optus, and associates in Indonesia / India are improving. It also has an attractive forecasted dividend proposition of c.5% for the next 2 FYs. We turn slightly cautious on GENS because of a continued challenging operating environment in Singapore.

Micro-Mechanics (Holdings) Ltd – FY14 analyst briefing highlights‏

OCBC Research attended Micro-Mechanics (Holdings) Ltd’s (“Micro-Mechanics”) FY14 results briefing last Friday. Here are some key takeaways:

Herd Instinct - Key Emerging Markets and Developed Asia Fund Flow Weekly, 21 - 27 August 2014

During the week to 27 August, there were net subscriptions of US$2.2billion in EM equity funds. YTD redemption in 
EM is US$4.3billion.

The net flows by mandate were:

Singapore Traders Spectrum - Wired Weekly

 STI – Low market volatility environment to continue, pullback support currently at 3250 and 3435 by yearend, rising to 3530 should earnings revision trend turn up

 Prefer companies with proven track record in outperforming peers or delivering on margin enhancement - Ezion, Keppel Corp, OCBC, Osim, Pacific Radiance, Sheng Siong & Yangzijiang

Ausgroup - A Hard Look At Numbers And Valuations

AusGroup’s 4Q14 results were weak with a core loss of c.AUD2.2m. Going forward, an operational recovery may be in the works with a relatively healthy AUD376m orderbook. However, with the 35% dilution from the two placements this year plus a likely 18% dilution from outstanding options, the stock is already priced at 17x FY15F P/E, using optimistic assumptions. 

Maintain SELL with SGD0.38 TP (from SGD0.35) pegged to 10x FY16F P/E.

Traders' Corner - KrisEnergy, Suntec REIT, Silverlake Axis & Global Invacom Group

Daily Chart
KrisEnergy (KRIS SP, SK3)
Technical BUY with 22.5% potential return
Last price: S$0.80
Target price: S$0.98
Protective stop: S$0.74

BUY with a target price of S$0.98 with protective stops placed at S$0.74. The stock appears to have bottomed out and formed higher lows in recent trading sessions. We expect the stock to test S$0.85 (resistance trendline) in the near term and head towards S$0.98. The stock currently trades above the 50-day EMA which is a resistance-turned-support level and the MACD indicator looks poised to move above its centerline.

Expected timeframe: 2 weeks to 1 month

Our retail institutional research has a fundamental BUY and target price of S$1.15.

Shipyards & Oil Services - SDRL cautious on rig market outlook; 6.89% BAB block traded off-market at RM2.96

Singapore/Malaysia Offshore & Marine News
Ezra Holdings Limited has incorporated a new subsidiary company known as JKTS Asset Management Pte. Ltd. in Singapore. JKTS has a paid up capital of SGD100 comprising of 100 ordinary shares. Ezra has a 49% interest in JKTS and the remaining 51% interest is held by Jit Sun Investments Pte. Ltd. The principal activity of JKTS is to provide corporate shared services to Ezra Group and Jit Sun Group of companies. (Bloomberg, Aug 28)

Malaysia Aviation - What does Malaysia Airline’s restructuring mean?

Khazanah’s restructuring plan for MAS involves job cuts, a supply contract review and capital reform; network review comments limited but a regionally focused MAS emphasised

■ A regional focus for MAS suggests benefits for home-base competitors could be limited, if any

■ Reiterate N on AirAsia, UW on AirAsia X and Malaysia Airports; Singapore Airlines (N) could be a beneficiary

Valuetronics - Share price broke an uptrend technical support last Friday on higher than normal volumes

Valuetronics’ (44.5 cents, down 3.5 cents) share price broke an uptrend technical support last Friday on higher than normal volumes of 16.815mln shares (6 month average 3.6mln shares). The technical break-down on higher than normal trading volumes is not good. Fact is, since peaking at 58.5 cents on 24 July’14, Valuetronics’ share price has been sliding on the back of profi t taking and ex-dividend of 20 HK cents a share (16 normal and 4 special).

Eu Yan Sang Int'l Ltd - Ended 4Q with a slight loss

Despite FY6/14 sales meeting consensus and our expectations, Eu Yan Sang’s core net profit was 26% below our and consensus estimates. Profits were eroded by higher interest and operating expenses. In 4QFY14, core earnings slipped into the red with a small loss of S$0.4m. We factor in higher operating expenses, leading to 3-9% cuts in core EPS for FY15-16. We also introduce FY17 forecasts. We reiterate our Reduce rating with a lower target price of S$0.74, still based on 16.3x CY15 P/E, 0.5 s.d. above its 5-year mean. The main potential catalyst remains the turnaround of its Australian operations.

Sin Heng Heavy Machinery - Satisfactory results in a challenging environment

Sin Heng reported 4Q14 revenue of S$58.9m which was in-line with our forecast. Reported PATMI at S$3.4m was 19.5% lower than the previous corresponding quarter. FY14 normalized PATMI (adjusted for forex gain/loss) came in at S$14.5m, slightly underperforming our expectations of S$15.1m, largely due to higher administrative and tax expenses following its aggressive expansion into developing nations such as Myanmar and Vietnam. We lower our FY15 normalized PATMI forecast by 16% and introduce FY16 financial numbers.
**** Recommendation ****

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