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Valuetronics - Phillip Securities Research Team Response To Recent Sell-Down

Shared By Stock Fanatic on Wednesday, October 15, 2014 | 15.10.14

Recently, a negative report by another research house was released yesterday, calling for a TP of $0.25, causing share price to tumble down to $0.32+. We believe this negative sentiment is very overblown and belongs to the worst case scenario category, we will address some of the key points below :

Vard Holdings - Recovery story derailed

■ Vard guides for negative EBITDA in 3Q14 results

■ Poor results due to slower ramp up at new Promar yard in Brazil, cost overruns spilling over to European yards as well

■ Cut core FY14/15F earnings by 54%/34% to factor in lower margins

Downgrade to FULLY VALUED, TP slashed to S$0.65

Singapore Post Ltd - Catering for growth with new Regional eCommerce Logistics Hub

■ Developing fully integrated eCommerce Logistics Hub in Singapore to cater to expanding ecommerce logistics business and rapid ecommerce market growth.

■ Project is estimated to cost S$182 million and is expected to complete by end Jan 2016; development will be funded internally from Group’s cash holdings.

■ We viewed the new hub development positively, indicating huge growth potential in SingPost’s ecommerce logistics business.

■ Maintain TP at S$2.07; revised rating to Accumulate as share price moved closer to our TP since our initiation on 12 Sep-14.

Shipyards & Oil Services - Dialog's new Executive Chairman; Linc Energy spuds 1st well in Arckaringa Basin

ASEAN Energy & Upstream
Linc Energy spuds first well in the Arckaringa Basin exploration program, near Cooper Pedy in South Australia. (Linc Energy Ltd., Oct 13)

■ Linc Energy confirms that it has received AU$90M from Adani and expects a second tranche payment of AU$65M within 12 months. (Bloomberg, Oct 13)

Weekly Support & Resistance Watch


We highlight the support and resistance levels of 20 stocks with the largest traded value in this weekly special and further highlight two stocks that could be trading near their potential resistance levels and another two stocks that could be trading near their potential support levels in the following pages. All prices are in Singapore dollars unless otherwise specified.

The scheduled dates of the quarterly results announcement based on some of the listed companies featured here are listed below

Top pick for the day - Direxion Daily Small Cap Bear 3X Shares ETF

Still looking at small caps?

Direxion Daily Small Cap Bear 3x (TZA) ETF that tracks Russell 2000 Index broke above the resistance trend line on the back heavy volume last week

Prices have been on a decline for the past 5 years as it is inversely related to the small cap Russell 2000. As major indices have turned negative recently, buying on an inverse ETF would be a good strategy besides short-selling or holding cash. 

Singapore Commodity Traders - 3Q14 results preview

Neutral maintained, given lack of near-term catalysts. Wilmar (BUY, TP SGD4.08) our sector pick. Could make strong QoQ recovery on better sugar & soybean-crushing operations.

■ Noble’s (HOLD, TP SGD1.47) agri division may surprise nicely but Energy & Metal margins could be weak.

■ Olam’s (HOLD, TP SGD2.52) Jul-Sep quarter typically its trough, at 10% of full-year core net profit.

REIT - Is 45% leverage limit sufficient?

REITs being a leverage class have traditionally relied on taking on debt to finance acquisitions and sustain growth. Although S-REITs in general have hardly crossed the 45% leverage limit, if this is built into the S-REIT framework as proposed by the MAS, it would be negative as we believe there could be more cons than pros from such a change.

Although the leverage ratio of 45% may deem to be sufficient on the surface, the incorporation of such leverage limit into the REIT framework could prove to be operationally demanding for the S-REITs. Some of the potential implications include slower rate of growth, lower yielding acquisitions and higher cost of debt.

Singapore Strategy - Assessing Trough Valuations

We review previous trough valuations to assess where potential opportunities lie and to avoid stocks that may look expensive. Opportunity knocks for selected developers and oil services companies. Stocks we are staying clear of for now include IHH and Tigerair.

Lian Beng - Kicking Off FY15 With On a Strong Note

Lian Beng reported a strong set of 1QFY15 (May) results, with revenue growing 10.8% y-o-y to SGD167.6m and PATMI surging 58.5% y-o-y to SGD12.0m. The surge in profits is largely attributable to the recognition of profits from property development projects amounting to SGD5.1m. Its construction orderbook remains strong at c.SGD1.0bn, providing visibility. 

We expect near-term catalysts to aid in unlocking its value. Maintain BUY, with a SOP-based TP of SGD1.17 (85.5% upside).

Trek’s - Toy Story

We initiate coverage on Trek with BUY and a SGD0.61 TP, based on a 16x FY15F P/E which results in a 49% upside. Trek has managed to boost its wireless Flucard sales on a big scale given its partnership with Mattel China. We expect orders to surge in FY15, which could lead to revenue and NPAT rising by 40% and 267% CAGRs from FY13 to FY16F. We believe this has been a long time coming for Trek, on top of positive drivers like consumer SSDs and its e-platform Cloud Stringers.
**** Recommendation ****

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