tag:blogger.com,1999:blog-30413967023392370682024-03-14T16:44:15.208+08:00Investing for your futureErnesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.comBlogger130125tag:blogger.com,1999:blog-3041396702339237068.post-38513945347666708972015-08-18T17:02:00.000+08:002015-08-18T17:02:10.231+08:00We had moved to: http://ernest15percent.com/
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</script>Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-42247253005428648672015-06-17T23:25:00.000+08:002015-06-17T23:25:24.475+08:002 interesting charts to watch out in the next few weeks<div class="MsoNormal" style="tab-stops: 0in; text-align: justify; text-justify: inter-ideograph;">
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<!--[if !supportLists]--><b>1.<span style="font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></b><!--[endif]--><span dir="LTR"><b>Guocoleisure<o:p></o:p></b></span></div>
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With reference to my writeup on Guocoleisure (“GLL”) dated 27
May 2015, <span class="MsoHyperlink"><span style="color: navy;">http://www.ernestlim15.blogspot.sg/2015/05/guocoleisure-potential-chart-breakout.html</span></span>,
I wrote that the measured technical target price was S$1.050, should it break
the four month trading range of $0.910 – 0.980 on the upside. In line with my
expectations, GLL reached 1.045 on 8 June 2015 (one bid away from my target)
before profit taking set in. </div>
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<br /></div>
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With reference to <b>Chart 1</b>,
GLL has been consolidating around $0.990 – 1.045
since 28 May 2015. Its exponential moving averages have been rising and have
formed golden crosses in the last two weeks of May. This is supportive of a
medium term uptrend. The price seems to have found support around $0.990 –
0.995. The next push (if it happens) is likely to take it to around $1.075 –
1.100. Supports are at $1.000 / 0.990. Resistances are at 1.020 – 1.025 /
1.050. GLL closed -$0.005 to $1.005. Day range was $1.000 – 1.015.</div>
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<br /></div>
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The bullish setup of the chart will be negated if it breaches
S$0.970 with volume and on a sustained basis.</div>
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<br /></div>
<div class="MsoNormal" style="mso-list: skip; text-align: justify; text-justify: inter-ideograph;">
<u>Other noteworthy points on GLL<o:p></o:p></u></div>
<div class="MsoNormal" style="mso-list: skip; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
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a) GLL is hosting a corporate
presentation tomorrow (18 Jun 2015) to update the investment community of its
developments; <o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="mso-list: skip; text-align: justify; text-justify: inter-ideograph;">
b) Mr Quek Leng Chan has bought back
350,000 GLL shares at an average approximate price of $0.950 over the period of
21 – 25 May 2015. This was the first purchase since Oct 2012; <o:p></o:p></div>
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<br /></div>
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<!--[if !supportLists]-->c)<!--[endif]--><span dir="LTR"> According to the analysts, the average analyst target is
around 1.180; RNAV is around 1.68-1.80.</span></div>
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<br /></div>
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d) GLL has been giving S$0.02
dividends annually for the past four years. Financial year end is in June hence
the dividend payout is likely to be announced in Aug and payout in Nov. </div>
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<br /></div>
<div class="MsoNormal" style="mso-list: skip; tab-stops: 0in; text-align: justify; text-justify: inter-ideograph;">
<b>Chart 1:
GLL has been consolidating around $0.990 – 1.045 <o:p></o:p></b></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEju3jz2EX-XsSY2A-mR4BWqfQmQyP51Bzavml765ANNcgRQLG3ap9xSdQDUgR2iOCYJRd7attbcQAQD0B_M1Ko-up2ZFhJ-VFFRKrPWHQuZwgX1grAdWlKml6E3W0cmTkNmkQUQMZVdobU/s1600/Guocoleisure+chart+as+of+17+Jun+15.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEju3jz2EX-XsSY2A-mR4BWqfQmQyP51Bzavml765ANNcgRQLG3ap9xSdQDUgR2iOCYJRd7attbcQAQD0B_M1Ko-up2ZFhJ-VFFRKrPWHQuZwgX1grAdWlKml6E3W0cmTkNmkQUQMZVdobU/s640/Guocoleisure+chart+as+of+17+Jun+15.gif" width="640" /></a></div>
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<span style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Source: CIMB chart as of 17 Jun 2015<o:p></o:p></span></div>
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<b><span style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span></b>
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<!--[if !supportLists]--><b>2.<span style="font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></b><!--[endif]--><span dir="LTR"><b>Resources Prima<o:p></o:p></b></span></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Since 17 Apr 2015, Resources Prima (“RPG”) has traded
within a potential flag formation (See <b>Chart
2 </b>below). RPG has dropped around 19% since
the intraday high of $0.141 on 4 Jun 2015 to close $0.114 today. The weak ADX,
coupled with relatively low readings of MFI, RSI and oversold indicator such as
MACD likely indicate that the selling pressure (if any) is unlikely to be
strong. In addition, the recent drop is typically not accompanied with much
volume on a relative basis. Support is around 0.110 - 0.114. Resistance 0.122 /
0.130 - 0.132. </div>
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<br /></div>
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Notwithstanding
the above, the chart outlook is still uncertain with a tinge of bearishness,
especially with the declining EMAs. It will be
positive if RPG can breach $0.137 on a sustained basis. On the flip side, if it
breaks below $0.110 with volume and on a sustained basis, the outlook is likely
to be bearish from a chart perspective. <br />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<u>Other
noteworthy points on RPG<o:p></o:p></u></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br />
a) Mgmt outlined four major steps in getting the IPPKH2 licence in their 4QFY15
financial results. They have completed the first three steps and have commenced
the final step with an application submitted to the Ministry of Forestry.
According to RPG, the first two steps were the most difficult to clear. Based
on personal estimate, I would think we should be able to hear from RPG in the
next 2-6 weeks if they are successful.<o:p></o:p></div>
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<br />
b) Although the coal industry remains in the doldrums, there are reasons to be
optimistic in RPG. <br />
<br />
- Based on an Apr 2014 JORC report, RPG has coal resources and reserves
amounting to about 24m tons and 6.9m tons respectively for the *309 ha of land
available for mining. Once the IPPKH2 for the remaining 1,624 ha is approved,
RPG’s coal resources and reserves are expected to jump. <br />
<br />
*309 ha includes the logistics aspect e.g. coal loading conveyor, stockpile
etc. Current effective area for mining is around 280ha +. <br />
<br />
- Cost reduction effects – more significant in FY16F than FY15. The reduction
in waste mining rate which results in a potential cost saving (including value
added tax) of between US$2.70 – 3.40 per MT will be applicable in FY16F. <br />
<br />
- Provision of coal mining facilities to 3<span style="mso-text-raise: 3.0pt; position: relative; top: -3.0pt;">rd</span> party mine owners expects to gain traction in
FY16F with at least another one coal mining owner likely to lease their
facilities in 1HFY16F. <br />
<br />
- High coal content allows blending opportunities: RPG’s high calorific value
of 5,600 places it at an enviable position to cooperate with other mine owners
whose calorific values are lower by blending both coal together to get an
acceptable quality. It is noteworthy that there is a likelihood that the
remaining 1,624 ha may contain coal of higher calorific value than **5,600. <br />
<br />
** Indonesia coal has typically five coal grades viz. 6,500 (ICI 1), 5,800 (ICI
2), 5,000 (ICI 3), 4,200 (ICI 4) and 3,400 (ICI 5) kcal/kg GAR. ICI1 is the
most premium coal. RPG’s coal is at ICI2 level. <br />
<br />
- Depending on management’s schedule, there may be a site visit for analysts to
their Indonesia coal mine in the next 1-3 months. <br /><b><br /></b></div>
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Chart 2: RPG has dropped around 19% since 4 Jun 2015</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiRc9NArsz0c_9aUqEZddkewuJltecOI4Kk-IQ5hPieTk-yhP8QLCjynSQH76c4uW7p4hSEZy7XIzQpbouXf-uEv1tkhkuCmlQdv2Ao-ElZOl1oL1jw0gOShi8pNgR2433h9kiEH1KDgr0/s1600/Resources+prima+chart+17+Jun+15.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiRc9NArsz0c_9aUqEZddkewuJltecOI4Kk-IQ5hPieTk-yhP8QLCjynSQH76c4uW7p4hSEZy7XIzQpbouXf-uEv1tkhkuCmlQdv2Ao-ElZOl1oL1jw0gOShi8pNgR2433h9kiEH1KDgr0/s640/Resources+prima+chart+17+Jun+15.gif" width="640" /></a></div>
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<span style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;"><br /><!--[endif]--></span></div>
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<span style="font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Source:
CIMB chart as of 17 Jun 2015<o:p></o:p></span></div>
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<br /></div>
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<span style="font-size: 12pt;">Disclaimer</span></div>
<span style="font-size: 12pt;"></span><br />
<div style="text-align: justify;">
<span style="font-size: 12pt;">The information contained herein is the writer's personal opinion and provided
to you for information only, and is not intended to, or nor will it
create/induce the creation of any binding legal relations. The information or
opinions provided herein do not constitute an investment advice, an offer or
solicitation to subscribe for, purchase or sell the investment product(s)
mentioned herein. It does not have any regard to your specific investment
objectives, financial situation and any of your particular needs. Accordingly,
no warranty whatsoever is given and no liability whatsoever is accepted for any
loss arising whether directly or indirectly as a result of this information.
Investments are subject to investment risks including possible loss of the
principal amount invested. The value of the product and the income from them
may fall as well as rise. You may wish to seek advice from an independent
financial adviser before making a commitment to purchase or invest in the
investment product(s) mentioned herein. In the event that you choose not to do
so, you should consider whether the investment product(s) mentioned herein are
suitable for you. The writer will not, in any event, be liable to you for any
direct/indirect or any other damages of any kind arising from or in connection
with your reliance on any information in and/or materials appended herein. The
information and/or materials are provided “as is” without warranty of any kind,
either express or implied. In particular, no warranty regarding accuracy or
fitness for a purpose is given in connection with such information and
materials.</span></div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-10066318297060793372015-05-27T09:54:00.002+08:002015-05-27T09:59:27.213+08:00Guocoleisure – potential chart breakout amid interesting developments (Written 26 May 2015)<div align="JUSTIFY" style="margin-bottom: 0in;">
<span style="color: black;">Since
5 Jan 2015, Guocoleisure has been trading within a range of $0.910 –
0.980. With reference to </span><span style="color: black;"><b>Chart 1</b></span><span style="color: black;">
below, Guocoleisure's exponential moving averages (“EMAs”) seem
to have formed golden crosses. ADX has also risen from the low of
11.2 on 9 Apr 2015 to 28.9 on 26 May 2015. This signifies that the
trend seems to be strengthening. Price action also seems bullish.
Barring unforeseen circumstances, there is an increasingly high
likelihood that it may stage an upside breakout from its four month
plus trading range of $0.910 - 0.980 in the next couple of months.
Measured eventual technical target is S$1.050. Guocoleisure closed at
$0.960. Day range was $0.955 – 0.960.</span></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<span style="color: black;">Supports:
0.955 / 0.935 - 0.945 </span>
</div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<span style="color: black;">Resistances:
0.970 / 0.980 / 1.00 </span>
</div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<b>Chart 1 – Range
trade since 5 Jan 2015</b></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-gAIr2BPK2_YH0NHbyTirbOba5ahyphenhyphengd02pnS8P24GkxPUDeP4DX2jDVM3WTlIiAoSWkJriKIi0I0GawSVZoxs0b6fp6hO6MUEAq8kj7pI-Oq8jxNJvEF2Qvq6xMgWtY_BBTnMtqr5mvg/s1600/Guocoleisure+IT+Finance+chart+26+May+15.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-gAIr2BPK2_YH0NHbyTirbOba5ahyphenhyphengd02pnS8P24GkxPUDeP4DX2jDVM3WTlIiAoSWkJriKIi0I0GawSVZoxs0b6fp6hO6MUEAq8kj7pI-Oq8jxNJvEF2Qvq6xMgWtY_BBTnMtqr5mvg/s640/Guocoleisure+IT+Finance+chart+26+May+15.gif" width="640" /></a></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
</div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<span style="font-size: x-small;">Source: CIMB
chart as of 26 May 15</span></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<u><b>Some noteworthy
events</b></u><u> </u>
</div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<b>Strong committed
management with solid reputation</b></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
Michael Denoma was first
appointed as CEO of Guocoleisure's hotel business in 2012 and was
promoted to Group CEO in 2014. Denoma has an excellent track record
and is best known for his role in Standard Chartered's global
consumer bank. In his 10 year stint at Standard Chartered, he grew
their customer base from five million to 14 million and the
division's revenue by S$4b. He also “globalised” Standard
Chartered's consumer business across Africa, Asia and the Middle
East. Denoma’s plan is to bring Guocoleisure to the same level as
major international hotel chains such as Hilton Worldwide and
Starwood Hotels and Resorts Worldwide.
</div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
According to Lim &
Tan, Denoma and his team have around 75m share options at an exercise
price of 86 cents, thus it is likely that the management’s
interests and shareholders are rather aligned.</div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<b>Significant interest
savings</b></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
Guocoleisure has
refinanced its GBP138m 10.75% mortgage debenture to below 4% in Dec
2014. According to management, this will result in an annual cost
savings of around US$14m per year. Such annual interest cost savings
are substantial, especially if they were to be compared against
FY14’s group profit of US$39m.</div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<b>Sale of non core
assets</b></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
According to
Guocoleisure’s FY2014 annual report, management indicated that they
are looking to exit non core business such as their real estate
interests in Fiji. Lim & Tan postulated that Guocoleisure may
sell other non-core assets such as Molokai Island and The Casino biz
which are loss making</div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<b>Recent share purchase
by Mr Quek Leng Chan – A positive sign</b></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
After the close of trade
today, Guocoleisure announced that Mr Quek Leng Chan has started
buying back 132.6K Guocoleisure shares @$0.94952 on 21 May. He last
bought 667K Guocoleisure shares @$0.64875 on 18 Oct 2012. In my
opinion, this is a positive and significant sign and should (likely)
cap any potential downside in the near term. Based on my own
observation, I believe there is a chance that Mr Quek may continue to
accumulate some more shares. Mr Quek has 66.7% interest in
Guocoleisure after his purchase on 21 May.</div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<b>Guocoleisure plans to
update the investment community in June</b></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
Guocoleisure is planning
to do a corporate presentation (likely) in June 2015 to update the
investment community. It will be interesting to observe the matters
discussed in the corporate presentation.</div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<u><b>Valuation</b></u></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<span style="color: black;">According
to </span><span style="color: black;"><b>Figure 2</b></span><span style="color: black;">
below, analysts’ target prices for Guocoleisure range from S$1.18
to S$1.43. Its NAV / share is approximately around S$1.120 but
according to the analysts, Guocoleisure’s RNAV can be as high as
S$1.80. </span>
</div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<b>Figure 2: Analysts’
target price for Guocoleisure</b></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifNzJt6flX8lrna6Ai9fVM8FaN96c0Qcntlm2_V0AvW8o5qdKHyhMmb5LW_s6YOIaSpgievVszv140LkSxme0vUJZmGAD0aCBST0DscpD2dyD9s0rt_reYzj5rydtkLNZPAA_fAiPtE-4/s1600/Guocoleisure+analyst+target+prices+26+May+15.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="458" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifNzJt6flX8lrna6Ai9fVM8FaN96c0Qcntlm2_V0AvW8o5qdKHyhMmb5LW_s6YOIaSpgievVszv140LkSxme0vUJZmGAD0aCBST0DscpD2dyD9s0rt_reYzj5rydtkLNZPAA_fAiPtE-4/s640/Guocoleisure+analyst+target+prices+26+May+15.gif" width="640" /></a></div>
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
</div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<span style="font-size: x-small;">Source: CIMB
chart as of 26 May 15</span></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in; page-break-before: always;">
<u><b>Conclusion</b></u></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
The above is a brief
writeup on Guocoleisure with the emphasis more on its technical chart
and its recent interesting developments. Readers who are keen to know
more on Guocoleisure should refer to Guocoleisure’s financial
statements. U can email me at <span style="color: blue;"><u><a href="mailto:crclk@yahoo.com.sg">crclk@yahoo.com.sg</a></u></span>
for the analyst reports.</div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<i>P.S: I have sent out a
short writeup on Guocoleisure to my clients on 7 May and 13 May to
inform them of Guocoleisure's recent developments.</i>
</div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
<br /></div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
Disclaimer</div>
<div align="JUSTIFY" style="margin-bottom: 0in;">
The
information contained herein is the writer's personal opinion and
provided to you for information only, and is not intended to, or nor
will it create/induce the creation of any binding legal relations.
The information or opinions provided herein do not constitute an
investment advice, an offer or solicitation to subscribe for,
purchase or sell the investment product(s) mentioned herein. It does
not have any regard to your specific investment objectives, financial
situation and any of your particular needs. Accordingly, no warranty
whatsoever is given and no liability whatsoever is accepted for any
loss arising whether directly or indirectly as a result of this
information. Investments are subject to investment risks including
possible loss of the principal amount invested. The value of the
product and the income from them may fall as well as rise. You may
wish to seek advice from an independent financial adviser before
making a commitment to purchase or invest in the investment
product(s) mentioned herein. In the event that you choose not to do
so, you should consider whether the investment product(s) mentioned
herein are suitable for you. The writer will not, in any event, be
liable to you for any direct/indirect or any other damages of any
kind arising from or in connection with your reliance on any
information in and/or materials appended herein. The information
and/or materials are provided “as is” without warranty of any
kind, either express or implied. In particular, no warranty regarding
accuracy or fitness for a purpose is given in connection with such
information and materials.</div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-13009078635889164512015-05-22T15:58:00.002+08:002015-05-23T16:01:48.026+08:00Chart alert: Resources Prima Group’s potential chart break out<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Resources
Prima Group ("RPG") was actively traded with total volume done 17.8m
shares yesterday. This was the highest volume last seen on <st1:date day="15" month="4" year="2015">15 Apr 2015</st1:date> which was the recent peak. It closed +0.004
to 0.135 on Friday. Day range was 0.130 - 0.137.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br />
Based on <b>Chart 1</b> below, RPG seems to be in a flag formation for a month.
At $0.135, it seems to have breached the flag formation with an upside
breakout. The flag formation should be confirmed if RPG can breach $0.137 on a
sustained basis with volume. An upside breakout from the flag formation points
to an eventual technical target of $0.215. This is an eventual technical target
and may not be reached soon. <br />
<br />
Readers who are interested to know more about RPG can email me at
crclk@yahoo.com.sg for the analyst reports. UOB analyst's target for RPG is
$0.295 and CIMB Securities has an unrated report. You can also refer to my
writeup <a href="http://ernestlim15.blogspot.sg/2015/03/resources-prima-group-what-attracts-me.html">http://ernestlim15.blogspot.sg/2015/03/resources-prima-group-what-attracts-me.html</a>
which was published on <st1:date day="30" month="3" year="2015">30 Mar 2015</st1:date>
when RPG was trading around $0.103. Readers can also take note of RPG’s
upcoming 4QFY15 results to be released next week.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br />
Supports: $0.134 / 0.130 - 0.132</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br />
Resistances: $0.136 - 0.137 / 0.142 / 0.149 – 0.151</div>
<div class="MsoNormal">
<br /></div>
<b><span style="font-size: 12pt;">Chart 1: RPG’s
potential chart breakout</span></b><br />
<br />
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifctRv3cphcvovZnSaAcgCzFMD1Qbu3u_58p7xIDdISURaHmfPws6XWTYVq4dnEgE18FWQJKZCDVrX_212-YbuNlVjN7nX9uDfiKfvAGVmd-sKTfDLf3NQL8FzEjoMkJl_U8ix_CYANMI/s1600/IT+Finance+chart+as+of+22+May+15.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifctRv3cphcvovZnSaAcgCzFMD1Qbu3u_58p7xIDdISURaHmfPws6XWTYVq4dnEgE18FWQJKZCDVrX_212-YbuNlVjN7nX9uDfiKfvAGVmd-sKTfDLf3NQL8FzEjoMkJl_U8ix_CYANMI/s640/IT+Finance+chart+as+of+22+May+15.gif" width="640" /></a></div>
<br />
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<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
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<span style="font-size: 10pt;">Source: CIMB complimentary chart as of 22 May 15</span><br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<i><span lang="EN-US">P.S: This is an updated version to
the writeup which I posted yesterday afternoon.</span> I have done some minor
amendments such as update the chart with end of day chart and price etc. <o:p></o:p></i></div>
<span style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Disclaimer<br />
The information contained herein is the writer's personal opinion and provided
to you for information only, and is not intended to, or nor will it
create/induce the creation of any binding legal relations. The information or
opinions provided herein do not constitute an investment advice, an offer or
solicitation to subscribe for, purchase or sell the investment product(s)
mentioned herein. It does not have any regard to your specific investment
objectives, financial situation and any of your particular needs. Accordingly,
no warranty whatsoever is given and no liability whatsoever is accepted for any
loss arising whether directly or indirectly as a result of this information.
Investments are subject to investment risks including possible loss of the
principal amount invested. The value of the product and the income from them
may fall as well as rise. You may wish to seek advice from an independent
financial adviser before making a commitment to purchase or invest in the
investment product(s) mentioned herein. In the event that you choose not to do
so, you should consider whether the investment product(s) mentioned herein are
suitable for you. The writer will not, in any event, be liable to you for any
direct/indirect or any other damages of any kind arising from or in connection
with your reliance on any information in and/or materials appended herein. The
information and/or materials are provided “as is” without warranty of any kind,
either express or implied. In particular, no warranty regarding accuracy or
fitness for a purpose is given in connection with such information and
materials.<span lang="EN-US" style="font-size: 10.0pt; mso-ansi-language: EN-US;"><o:p></o:p></span></div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-52279886620686459192015-05-15T21:06:00.001+08:002015-05-15T21:07:51.675+08:00Stratech – Key takeaways from an exclusive meeting with CEO <div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Some of you would have <span style="font-family: inherit;">remembered</span> the terrible Concorde Crash on </span><st1:date day="25" month="7" year="2000"><span lang="EN-US">25 July 2000</span></st1:date><span lang="EN-US"> where Air France Flight 4590 met with an accident while departing
from </span><st1:city><st1:place><span lang="EN-US">Paris</span></st1:place></st1:city><span lang="EN-US"> airport. The accident was attributed to a titanium alloy strip left
behind on the runaway from the previous departing Continental Airlines DC-10.
This strip was not removed as an originally scheduled runway inspection was not
carried out. This “preventable” accident caused 113 fatalities. (Source: http://en.wikipedia.org/wiki/Air_France_Flight_4590
)</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">How can the above accident be prevented? With Stratech’s iFerret
system, the debris would have been spotted, removed and the accident would have
been prevented. Their system seems to be superior to the other incumbents and
have garnered recognition from various large airports. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">After looking into the company, I decided to email Stratech to
request for an exclusive meeting with Dr David Chew, Executive Chairman of
Stratech. To my pleasant surprise, Dr David promptly replied (even though he
was overseas) and agreed to an exclusive meeting. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Below are my key takeaways<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Foreign object debris is potentially
a US$67b market<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">There are more than 7,400 IATA registered commercial international
airports around the world with an estimated US$67 billion market solely on Foreign
object Debris (“FOD”) Detection Systems for runways. In addition, such FOD
contracts have a maintenance portion where there is recurring revenue
equivalent to about 10% to 15% of acquisition cost for the maintenance every
year. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Moreover, according to Stratech’s management, this figure of US$67b
could increase by at least 50% if other airfield surveillance capabilities are
included.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">FOD market is just taking
off<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Previously, there were no technology or / and financing for FOD
market. The practice of manual FOD sweeps two to three times a day is
inadequate and inefficient. With the issue of FAA Advisory Circulars (“AC”) in
Sep 2009 & Sep 2010, 3 fixed base and one mobile FOD Detection systems / technologies
were certified. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Table 1: Four systems certified by the FAA<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
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<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt;">Source: Various, FAA, Philip Securities<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Financing mechanism / Funding is made available through the </span><st1:stockticker><span lang="EN-US">AIP</span></st1:stockticker><span lang="EN-US"> (Airport Improvement
Program) & PFC (Passenger Facility Charge). The catch is that for airports
who wish to utilize the above grants will need to use the above certified
systems. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">How is Stratech system different from the other players?<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">With reference to <b>Table 1</b>
above, Stratech uses high resolution intelligent vision whereas the other three
systems use radar. There is a likelihood that the use of radar technology may interfere
with the performance of other equipment in the airport. Although Stratech’s
systems incur higher up front costs, they typically require less maintenance
due to its reliability, resulting in lower life cycle costs. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">It is noteworthy that the iFerret contract awarded by the </span><st1:place><st1:placename><span lang="EN-US">Dubai</span></st1:placename><span lang="EN-US"> </span><st1:placetype><span lang="EN-US">Airport</span></st1:placetype></st1:place><span lang="EN-US"> in Jan
2014 was significant on two fronts. Firstly, according to figures from Airports
Council International, </span><st1:place><st1:placename><span lang="EN-US">Dubai</span></st1:placename><span lang="EN-US"> </span><st1:placetype><span lang="EN-US">Airport</span></st1:placetype></st1:place><span lang="EN-US"> was the busiest airport for international travel in 2014. Thus, a
contract win from such an established airport bore testament to the superiority
of the iFerret system. Secondly, it was significant because Stratech has beaten
the Xsight FODetect and replaced the incumbent QinetiQ Tarsier.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Intellectual property valued at </span></b><b>S$249m -</b><b> S</b><b>$810</b><b>m</b><b>
vs current market capitalisation of S$51.7m<span lang="EN-US"><o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Stratech has spent more than 25 years in investing and creating
intellectual property (“IP”). According to an independent valuation report
conducted by Stone Forest Corporate Advisory, Stratech IP may be worth between
S$249m to S$810m. It is noteworthy that notwithstanding the recent spike in the
share price, Stratech’s current market capitalization as of </span><st1:date day="15" month="5" year="2015"><span lang="EN-US">15 May 2015</span></st1:date><span lang="EN-US"> is S$51.7m.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Inroads to military airport & airfield surveillance<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">In Sep 2013, Stratech announced that its iFerret has been selected
by one of the top air forces. iFerret is equipped with the RADAS (Rapid
Airfield Damage Assessment System) capability which can rapidly detect, locate,
categorise and measure the severity of damages and hazards on the runways and
taxiways. In peacetime, iFerret can be deployed for FOD Detection.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Stratech also won a contract from our </span><st1:country-region><st1:place><span lang="EN-US">Singapore</span></st1:place></st1:country-region><span lang="EN-US">
government to upgrade the iFerret infrastructure to include airfield
surveillance. This is noteworthy on two fronts. Firstly it marks the entrance
of iFerret into Airfield Surveillance. Secondly, the FOD market / size of FOD
contract could increase by at least 50% if other airfield surveillance
capabilities are included.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Potential turnaround play<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Stratech posted a net profit of S$1.4m for FY14 (financial year end
in Mar), compared with a net loss of S$9.4m for FY13. For the 9MFY15, Stratech
registered S$10.5m revenue and –S$1.7m loss. There is still a likelihood that
Stratech may narrow its losses or become profitable in 4QFY15F. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">According to management, Stratech is bidding for several airport
contracts and they believe FY16F should be a good year, should they secure the
tenders. For example, according to The Edge, Stratech is currently in
negotiations to install the iFerret in six runaways at a major airport.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Risks</span></u></b><span lang="EN-US"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Adoption of FOD systems by
the airports is not mandatory<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">The aforementioned AC guidelines
are not mandatory for airports. For airports which have not decided to use the
funding from </span><st1:stockticker><span lang="EN-US">AIP</span></st1:stockticker><span lang="EN-US"> and PFC are not required to use the above FOD systems. Stratech is
cognizant of this and it is first targeting the top airports such as the </span><st1:place><st1:placename><span lang="EN-US">Dubai</span></st1:placename><span lang="EN-US"> </span><st1:placetype><span lang="EN-US">Airport</span></st1:placetype></st1:place><span lang="EN-US"> in Jan
2014, </span><st1:place><span lang="EN-US">Hong Kong</span></st1:place><span lang="EN-US"> airport in Feb 2015. Once the top airports start to adopt iFerret,
the other large airports may feel “compelled” to adopt this technology. Over
time, 2<sup>nd</sup> tier airports may start to adopt iFerret. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Acceptance of iFerret by
airports is key</span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Stratech’s potential turnaround investment thesis revolves mainly
around the success and acceptance of its iFerret by the airports. In the event
that it did not win any of the contract tenders which they are bidding for, it
may have an adverse impact on their results.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Inclusion in the watchlist
is a concern<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Personally, the largest risk to this company is that it has been on
the Singapore Exchange watch-list since </span><st1:date day="5" month="6" year="2013"><span lang="EN-US">5 June 2013</span></st1:date><span lang="EN-US">,
after recording 3 consecutive years of net losses. Based on my simplistic
understanding, Stratech has to be profitable before tax and maintains an
average market capitalisation in excess of S$40 million for the past 120 days. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Stratech has posted a pre-tax profit in FY2014, and its market
capitalisation is above S$40m since 4 May. Based on my pure simple guess, there
is a chance that SGX may grant an extension to them pending their discussions
with SGX. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">In the event that Stratech could not be removed from the watchlist
or unable to get an extension from SGX, it may be delisted. Thus, this is an
important point which readers should be aware.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<i><span lang="EN-US">The above are just some of the risks which readers should take note.
Please refer to the Philip Securities unrated reports dated </span></i><st1:date day="12" month="11" year="2014"><i><span lang="EN-US">12 Nov 2014</span></i></st1:date><i><span lang="EN-US"> and </span></i><st1:date day="6" month="5" year="2015"><i><span lang="EN-US">6 May 2015</span></i></st1:date><i><span lang="EN-US"> for more information. <o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Valuation<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">According to a Philip Securities research report dated </span><st1:date day="6" month="5" year="2015"><span lang="EN-US">6 May 2015</span></st1:date><span lang="EN-US">, they estimate that Stratech may be able to trade between S$0.040
(steady state) to S$0.069 (high growth stage).</span><span lang="EN-US" style="font-size: 10.0pt;"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Chart <o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Since </span><st1:date day="10" month="4" year="2015"><span lang="EN-US">10 Apr 2015</span></st1:date><span lang="EN-US">, Stratech has
appreciated around 100% from $0.016 to $0.032 today. Its recent share price
performance has been spectacular. However, if we pull back the chart to a ten
year period, Stratech 10 year high and low price (after accounting for
corporate actions) were approximately S$0.110 and $0.010 respectively. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">With reference to <b>Chart 1</b>
below, Stratech seems to be consolidating between S$0.030 – 0.039 after its
hefty gains. Measured eventual technical target for an upside / downside break
points to S$0.048 / 0.021. </span><u><span lang="EN-US" style="font-size: 10.0pt;"><o:p></o:p></span></u></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Supports and resistances are at $0.030 / $0.025 and $0.034 – 0.035 /
$0.039 – 0.040 respectively.</span><u><span lang="EN-US" style="font-size: 10.0pt;"><o:p></o:p></span></u></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<b><span lang="EN-US" style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span></b>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Chart 1: Stratech has
appreciated recently as it garners more investors’ attention<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi50mM52sRUKwlae9q-mZYIX34ujmkFq24GRok0OyucVWquFEqKa1DRqGZ2A6mcNFsP0vP6KhqoW1rB4tF0vsMZasJtlRNATs3JOqbWhZ8xYTckzYOZogISZAQBcho6fAzz0K94Fs6iZ2M/s1600/Stratech+chart+as+of+15+May+15.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="512" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi50mM52sRUKwlae9q-mZYIX34ujmkFq24GRok0OyucVWquFEqKa1DRqGZ2A6mcNFsP0vP6KhqoW1rB4tF0vsMZasJtlRNATs3JOqbWhZ8xYTckzYOZogISZAQBcho6fAzz0K94Fs6iZ2M/s640/Stratech+chart+as+of+15+May+15.png" width="640" /></a></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt;">Source: Shareinvestor </span><st1:date day="15" month="5" year="2015"><span lang="EN-US" style="font-size: 10.0pt;">15 May
2015</span></st1:date><span lang="EN-US" style="font-size: 10.0pt;"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Conclusion<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">This is just a brief introduction on Stratech. Readers should be
cognizant of Stratech’s watchlist status, volatile share price, dependence on
the acceptance of its iFerret. However, the recent significant contract wins,
coupled with the positive industry outlook should make it an interesting stock
to keep it on the watchlist. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">P.S. Readers should refer to the company website <a href="http://www.thestratechgroup.com/">http://www.thestratechgroup.com/</a>
for more information and can email me at <a href="mailto:crclk@yahoo.com.sg">crclk@yahoo.com.sg</a>
for the informative unrated Philip Securities research reports. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<span lang="EN-US" style="font-size: 12pt;"><span style="font-family: inherit;">
Disclaimer</span></span><br />
<div style="text-align: justify;">
<span style="font-family: inherit; font-size: xx-small;">The information contained herein is the writer's personal opinion and provided
to you for information only, and is not intended to, or nor will it
create/induce the creation of any binding legal relations. The information or
opinions provided herein do not constitute an investment advice, an offer or
solicitation to subscribe for, purchase or sell the investment product(s)
mentioned herein. It does not have any regard to your specific investment
objectives, financial situation and any of your particular needs. Accordingly,
no warranty whatsoever is given and no liability whatsoever is accepted for any
loss arising whether directly or indirectly as a result of this information.
Investments are subject to investment risks including possible loss of the
principal amount invested. The value of the product and the income from them
may fall as well as rise. You may wish to seek advice from an independent
financial adviser before making a commitment to purchase or invest in the investment
product(s) mentioned herein. In the event that you choose not to do so, you
should consider whether the investment product(s) mentioned herein are suitable
for you. The writer will not, in any event, be liable to you for any
direct/indirect or any other damages of any kind arising from or in connection
with your reliance on any information in and/or materials appended herein. The
information and/or materials are provided “as is” without warranty of any kind,
either express or implied. In particular, no warranty regarding accuracy or
fitness for a purpose is given in connection with such information and
materials.</span></div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-38682201421610996742015-03-30T21:23:00.002+08:002015-03-30T21:23:41.770+08:00Resources Prima Group – What attracts me to take a closer look<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Resources Prima Group (“RPG”) has
been on the restricted “online list” for a few brokerage houses such as CIMB
Securities, OCBC Securities and UOB Kayhian (i.e. clients are not able to trade
online but have to call their broker to execute). This restriction is typically
for more speculative stocks. So what attracts me to take a closer look and do a
writeup? <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">First glance - What attracts me…<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l1 level1 lfo2; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><span lang="EN-US">1.<span style="font-size: 7pt; font-stretch: normal; font-weight: normal;">
</span></span></b><!--[endif]--><span dir="LTR"><b><span lang="EN-US">Chart formation seems positive<o:p></o:p></span></b></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">I have pointed out in my article dated
</span><st1:date day="23" month="3" year="2015"><span lang="EN-US">23 Mar 2015</span></st1:date><span lang="EN-US"> “Selective stocks may have some small near
term technical rebound” <a href="http://www.sharesinv.com/articles/2015/03/23/selective-stocks-may-have-small-near-term-technical-rebound/">http://www.sharesinv.com/articles/2015/03/23/selective-stocks-may-have-small-near-term-technical-rebound/</a>
that RPG seemed to be building a base. RPG closed at $0.083 on 20 Mar, Fri and
was trading around $0.082 – 0.084 on 23 Mar, Mon. It closed at $0.082 on 23
Mar. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Since 23 Mar, RPG jumped 23% to
close at $0.101 on volume expansion. Based on <b>Chart 1</b> below, RPG surged 11%
& 10% with 10.7m & 14.6m shares traded on 26 Mar & 27 Mar
respectively. The volumes transacted were significantly above its 30D &
100D average volume of 3.6m & 12.8m shares. <b><o:p></o:p></b></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Based on my personal observation,
RPG’s has completed its base formation and it seems to be on the verge of a new
uptrend. 21D exponential moving average (“EMA”) has turned up. Indicators such
as RSI and MACD have formed bullish divergences and they seem to be
strengthening. Although the RSI was a 15 month high (RSI closed at 57.7 last
Fri), it is not overbought yet. Near term supports and resistances are at
$0.097 / 0.094 / $0.090 and $0.109 – 0.111 / 0.122 / 0.136. The “bullish feel”
of this chart will be negated if RPG falls below $0.090 on a sustained basis.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Chart 1: Base formation completed<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<!--[if gte vml 1]><v:shapetype
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<v:stroke joinstyle="miter"/>
<v:formulas>
<v:f eqn="if lineDrawn pixelLineWidth 0"/>
<v:f eqn="sum @0 1 0"/>
<v:f eqn="sum 0 0 @1"/>
<v:f eqn="prod @2 1 2"/>
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o:title=""/>
</v:shape><![endif]--><!--[if !vml]--><img border="0" height="304" src="file:///C:/Users/Ernest/AppData/Local/Temp/msohtml1/01/clip_image002.jpg" v:shapes="_x0000_i1025" width="576" /><!--[endif]--><o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10.0pt;">Source: CIMB itrade complimentary chart (27 Mar 15)</span><o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l1 level1 lfo2; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b>2.<span style="font-size: 7pt; font-stretch: normal; font-weight: normal;"> </span></b><!--[endif]--><span dir="LTR"><b>Negatives seem to have been largely priced in<o:p></o:p></b></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Firstly,
the price for thermal coal has slipped to a six year low. According to a
Bloomberg article dated <st1:date day="24" month="3" year="2015">24 Mar 2015</st1:date>,
the prices for a coal-supply deal between Glencore Plc and Japanese utilities
may be set at a six year low. The low coal prices have already prompted
Glencore to plan to reduce its Australian output by 15m tons in 2015,
equivalent to about one fifth of its production from <st1:country-region>Australia</st1:country-region>.
Glencore also plans to trim output by shutting some mines in <st1:country-region>South
Africa</st1:country-region>. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Notwithstanding
that coal prices may have slipped to an approximate six year low, World Bank
forecasts that coal prices are likely to hit bottom in 2015 and rebound
thereafter (See <b>Chart 2</b>). Other renowned institutions such as IMF and Economist
Intelligence Unit also predict that 2015 is likely to be the bottom for coal
prices. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Chart
2: World Bank coal price forecast through 2020<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<!--[if gte vml 1]><v:shape
id="_x0000_i1026" type="#_x0000_t75" style='width:306pt;height:180.5pt'>
<v:imagedata src="file:///C:\Users\Ernest\AppData\Local\Temp\msohtml1\01\clip_image003.png"
o:title="World%20Bank%20Australian%20Coal%20Price"/>
</v:shape><![endif]--><!--[if !vml]--><img border="0" height="241" src="file:///C:/Users/Ernest/AppData/Local/Temp/msohtml1/01/clip_image004.gif" v:shapes="_x0000_i1026" width="408" /><!--[endif]--></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10.0pt;">Source: World Bank</span><o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Secondly,
the massive 70% RPG’s share price drop from an intraday high of $0.265 on 4 Dec
2014 to $0.079 on 18 Mar 2015, coupled with a three week long base formation
should have exhausted the selling. Coupled with the online trading curbs by
various brokerage houses and the current bearish news on coal, it should be
quite safe to assume that most sellers have already exited. It is likely to be
an “under owned” stock for both retailers and institutions / funds. UOB Kayhian
is the only brokerage house which is covering RPG with a target price of
$0.295. </div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Thirdly,
RPG has incurred a few one off expenses in 9MFY15 results such as the
following.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l0 level1 lfo1; tab-stops: list .25in; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US">a)<span style="font-size: 7pt; font-stretch: normal;"> </span></span><!--[endif]--><span dir="LTR"><span lang="EN-US">Professional fees of
US$1m under Admin Fees in 3QFY15 incurred in relation to completion of the
reverse takeover;<o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l0 level1 lfo1; tab-stops: list .25in; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US">b)<span style="font-size: 7pt; font-stretch: normal;"> </span></span><!--[endif]--><span dir="LTR"><span lang="EN-US">The immediate
recognition of the entire historical depreciation costs of US$11m which should
otherwise have been amortised over a few years; <o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l0 level1 lfo1; tab-stops: list .25in; text-indent: -.25in;">
<!--[if !supportLists]--><span lang="EN-US">c)<span style="font-size: 7pt; font-stretch: normal;"> </span></span><!--[endif]--><span dir="LTR"><span lang="EN-US">Arranger fee of
US$15.7m & goodwill of US$45.9m written off in 3QFY15F in relation to the
reverse takeover; <o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US">According
to management, the above are one off expenses and are not expected to be
incurred in future. In other words, going forward, ceteris paribas, RPG’s
financials are likely to be better without the above non recurring expenses.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Company description<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">RPG </span>(formerly known as Sky
One Holdings Limited) was listed on SGX Catalist Board on <st1:date day="14" month="11" year="2014">14 November 2014</st1:date> via a reverse takeover. RPG is
a mine owner and primarily engages in the business of coal mining and coal
exploration operations in East Kalimantan, Indonesia. Additionally, RPG also
owns and provides coal mining facilities such as coal hauling road, coal
stockpiles, coal crushers, coal conveyor system, jetty and barge loading
facilities to third party mine owners. RPG is 54.67% controlled by Madrone
Enterprises Limited, a company which is 100% owned by the family of Executive
Chairman and CEO Mr Agus Sugiono.<span lang="EN-US"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<b><u><span lang="EN-US" style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span></u></b>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Company developments to watch out
for<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Major catalyst – Potential award of
the 2<sup>nd</sup> IPPKH permit<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">RPG currently has a “borrow-use”
permit to mine 309 ha out of its total mining concession area of 1,933ha. Based
on RPG’s </span><st1:date day="19" month="1" year="2015"><span lang="EN-US">19 Jan 2015</span></st1:date><span lang="EN-US"> press release, RPG has submitted an
application to secure the “borrow-use” permit to mine the remaining 1,624 ha of
total mining concession area. This, if approved, should have a positive impact
to its reserves and future earnings. UOB Kayhian estimates that the award may
be given to RPG by June 2015.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Cost reduction measures<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">In their 3QFY15 press release, RPG
mentioned that it </span>has commenced a cost reduction programme covering
areas such as waste mining rates; heavy equipment requirements and fuel supply
arrangements. In my opinion, as the rates with their waste mining operator, PT
Cipta Kridatama (“CK”) were last adjusted and reduced in July 2013 (i.e. almost
approaching two years), there is scope for reduction in 2015. It is noteworthy
that waste mining costs comprised approximately 45% of the cost of goods sold. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Sales volume ramp up<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
With
reference to <b>Chart 3</b> below, sales volume surged 59% from 0.82MT in
9MFY14 to 1.30MT in 9MFY15. Barring unforeseen circumstances, it is likely that
company will further ramp up its sales volume in FY16F, albeit at a slower pace
(on a percentage basis).</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Chart
3: RPG’s sale volume since FY13<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<!--[if gte vml 1]><v:shape
id="_x0000_i1027" type="#_x0000_t75" style='width:260.5pt;height:180.5pt'>
<v:imagedata src="file:///C:\Users\Ernest\AppData\Local\Temp\msohtml1\01\clip_image005.emz"
o:title=""/>
</v:shape><![endif]--><!--[if !vml]--><img border="0" height="241" src="file:///C:/Users/Ernest/AppData/Local/Temp/msohtml1/01/clip_image006.gif" v:shapes="_x0000_i1027" width="347" /><!--[endif]--><o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10.0pt;">Source: Company (Year ends in Mar)<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Contracts from coal logistics
kicking in FY16F</span><o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">According to the company, RPG leases
its excess capacity in its coal logistics facilities, such as crushers,
conveyors, stockpile, jetty etc to nearby concession owners. This business
segment is lucrative and likely enjoys good margins. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Till date, RPG has signed contracts
with five concession owners. RPG priced such contracts on a “use per basis” and
by distance and tonnage. One concession owner already started to lease RPG’s
logistics facilities which contributed to RPG’s 9MFY15 facility usage revenue
of around US$1.7m. Barring unforeseen circumstances, it is likely that three
other concession owners may start to lease RPG’s logistics facilities in FY16F.
<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<b><span lang="EN-US" style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span></b>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Possibility of M&A</span><o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Besides
organic growth, company is also looking to accelerate growth through
acquisitions, joint ventures and/or strategic alliances. Acquisitions are
particularly interesting as the current depressed prices offer an opportunity
to make acquisitions at attractive prices. Company is interested in
projects that are located near their existing mine in order to achieve
synergies and also for ease of management. </div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">As of 9MFY15, RPG only has US$1.9m
of debt. Thus, there seems to be scope for the company to take on more debt to
finance the above inorganic growth. </span><o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">*Some noteworthy points<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Concentration risk<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">RPG has concentration risk on a
couple of aspects. Firstly, it only has one mine thus any problems in the mine
will have an adverse impact on RPG. Secondly, due to its current small sales
volume, it only has one customer, namely PT Anugerah Bara Kemilau (“ABK”). It
is noteworthy that RPG signed the offtake agreement with ABK in Jun 2013 and this
agreement will expire on Jun 2015. According to RPG, </span><st1:stockticker><span lang="EN-US">ABK</span></st1:stockticker><span lang="EN-US"> has offered a 2 year extension at RPG’s
option. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Notwithstanding the above, management
is cognizant of the customer concentration risk and plans to diversify its
customer base when they further ramp up their production.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Dependent on coal price<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Any drop in coal price due to an increase
in supply or a drop in demand may have an adverse impact on RPG’s operations. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Regulatory risks in </span></b><st1:country-region><st1:place><b><span lang="EN-US">Indonesia</span></b></st1:place></st1:country-region><b><span lang="EN-US"><o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">RPG’s Rinjani mine is in </span><st1:country-region><st1:place><span lang="EN-US">Indonesia</span></st1:place></st1:country-region><span lang="EN-US">. Any adverse change in regulations
may affect their approval for the “borrow-use” permit for the remaining 1,624
ha of total mining concession area and their existing business.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">*For the full range of risks,
readers should download Skyone’s circular to its shareholders (available on SGX)
and the UOB Kayhian analyst reports.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Conclusion </span><o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">This is just a brief introduction on
RPG. Readers should be cognizant of RPG’s volatile share price, concentration
risk and its dependence on coal price. However, the bullish chart formation,
and my view that most negatives have been priced into the share price, coupled
with the aforementioned company developments should make it an interesting stock
to keep it on the watchlist. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">P.S. Readers should refer to the
company website <a href="http://resourcesprima.com.sg/">http://resourcesprima.com.sg/</a>
for more information and can email me at <a href="mailto:crclk@yahoo.com.sg">crclk@yahoo.com.sg</a>
for the UOB Kayhian rated research reports. I can also forward the above writeup in pdf form (which includes the charts as I am unable to attach the charts herein.)<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<span lang="EN-US" style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Disclaimer<br />
The information contained herein is the writer's personal opinion and provided
to you for information only, and is not intended to, or nor will it
create/induce the creation of any binding legal relations. The information or
opinions provided herein do not constitute an investment advice, an offer or
solicitation to subscribe for, purchase or sell the investment product(s)
mentioned herein. It does not have any regard to your specific investment
objectives, financial situation and any of your particular needs. Accordingly,
no warranty whatsoever is given and no liability whatsoever is accepted for any
loss arising whether directly or indirectly as a result of this information.
Investments are subject to investment risks including possible loss of the
principal amount invested. The value of the product and the income from them
may fall as well as rise. You may wish to seek advice from an independent
financial adviser before making a commitment to purchase or invest in the
investment product(s) mentioned herein. In the event that you choose not to do
so, you should consider whether the investment product(s) mentioned herein are
suitable for you. The writer will not, in any event, be liable to you for any
direct/indirect or any other damages of any kind arising from or in connection
with your reliance on any information in and/or materials appended herein. The
information and/or materials are provided “as is” without warranty of any kind,
either express or implied. In particular, no warranty regarding accuracy or
fitness for a purpose is given in connection with such information and materials.<span lang="EN-US"><o:p></o:p></span></div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-23457835303503745882015-03-01T21:21:00.002+08:002015-03-02T15:59:46.622+08:00ISOTeam – surged 55% since my last writeup, any more upside?<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">With reference to my introductory
writeup on ISOTeam dated </span><st1:date day="17" month="1" year="2014"><span lang="EN-US">17 Jan 2014</span></st1:date><span lang="EN-US"> (see article <a href="http://www.sharesinv.com/articles/2014/01/21/isoteam-%E2%80%93-defensive-recurring-business/">http://www.sharesinv.com/articles/2014/01/21/isoteam-%E2%80%93-defensive-recurring-business/</a>),
</span><span style="background: white;">ISOTeam has soared 51% from $0.390 on </span><st1:date day="17" month="1" year="2014"><span style="background: white;">17 Jan 2014</span></st1:date><span style="background: white;"> to $0.590 on </span><st1:date day="27" month="2" year="2015"><span style="background: white;">27 Feb 2015</span></st1:date><span style="background: white;">. Inclusive of the dividend of S$0.01 / share payable
on </span><st1:date day="14" month="11" year="2014"><span style="background: white;">14 Nov 2014</span></st1:date><span style="background: white;">, ISOTeam
has appreciated a total of 55%.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="background: white;">Having jumped significantly in the course of 13
months, the next question which naturally comes to mind is whether ISOTeam is
overvalued. Let’s take a look at the company’s developments since my last
writeup. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Record
1HFY15 results <o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
ISOTeam
released a sterling set of 1HFY15 results on <st1:date day="12" month="2" year="2015">12 Feb 2015</st1:date>. 1HFY15 revenue and net profit rose 22% and
92% respectively to S$39.0m and S$4.1m respectively. Gross margins improved
sharply from 16.8% in 1HFY14 to 22.1% in 1HFY15 due to better profit margin of
R&R completed projects. Management believes that gross margins are likely
to be around these levels in the near term. (See <b>Table 1</b> below)</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Table
1: ISOTeam’s financial highlights<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10.0pt;">Source: Company, financial year ends in June<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>2HFY15
results likely stronger than 1HFY15<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Historically,
2HFY15 results contributed about 55% - 65% for the past two financial years. In
addition, ISOTeam has completed four acquisitions in Jan 2015 which are likely
to post their maiden contributions to their 2HFY15F results. According to UOB
Kayhian, these four acquisitions have a total adjusted net profit of about
S$1.5m/year at the time of acquisition.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Strong
order books and positive outlook<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
As
of <st1:date day="8" month="1" year="2015">8 Jan 2015</st1:date>, ISOTeam has an
order book of S$70.4m, to be progressively delivered over the next two years.
It is currently the lowest tenderer for four other projects collectively worth
a total of S$30.9m. </div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Positive
outlook<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Outlook
continues to be bright as there seems to be more projects to be awarded. For
example, according to a Straits Time article dated <st1:date day="10" month="1" year="2015">10 Jan 2015</st1:date>, the Ministry of National Development (MND)
will set aside $20m to upgrade another 9 private estates under its Estate
Upgrading Programme (EUP). EUP includes landscaping, construction of ramps for
wheel chair uses and enhancing parks and playgrounds etc.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="background: white; margin-bottom: .25in; mso-line-height-alt: 6.75pt; text-align: justify; text-justify: inter-ideograph; vertical-align: baseline;">
According to another Straits Time article dated <st1:date day="11" month="9" year="2014">11 Sep 2014</st1:date>, the government will expand its
neighbourhood renewal program (“NRP”) to include HDB blocks built between 1990
and 1995. Previously, only HDB blocks built in and before 1989 are entitled for
NRP. In other words, another 100,000 households in more than 1,300 blocks will
benefit from the programme. There will also be more features included in <span class="NormalJustifiedChar">the NRP
such as block repainting and other repairs.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: .25in; mso-line-height-alt: 6.75pt; text-align: justify; text-justify: inter-ideograph; vertical-align: baseline;">
<span class="NormalJustifiedChar">The
above measures should bode well for ISOTeam’s business prospects.</span></div>
<div style="text-align: justify;">
<b><span lang="EN-US" style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span></b>
</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Potential beneficiary of general
election</span><o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Most market watchers are expecting
our </span><st1:country-region><st1:place><span lang="EN-US">Singapore</span></st1:place></st1:country-region><span lang="EN-US">’s general election may be held around late 2015
to 1H2016. In view of the preparations to the general election, it is not
unreasonable to assume that there may be more of the aforementioned projects (i.e.
NRP, EUP, upgrading of hawker centers etc) to be rolled out in the near term
which should benefit ISOTeam to a certain extent. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>A
greater following & emergence of anchor shareholders <o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
ISOTeam
has come a long way since my first writeup in Jan 2014. Besides UOB Kayhian, it
has since attracted DMG coverage. In addition, it has been featured more
frequently in the media with the latest media release dated <st1:date day="23" month="2" year="2015">23 Feb 2015</st1:date> (See <a href="http://business.asiaone.com/news/diy-expert-builds-successful-firm">http://business.asiaone.com/news/diy-expert-builds-successful-firm</a>)
<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Besides
a greater following from the media and analysts, some reputable names have
emerged as substantial shareholders of ISOTeam after my writeup. For example,
Nippon Paint (<st1:country-region>Singapore</st1:country-region>)
has increased their stake from 2.6% to 5.9% in Dec 2014. It is noteworthy that
ISOTeam is the exclusive applicator for Nippon Paint (<st1:country-region>Singapore</st1:country-region>).
(You may have read that Mr Goh Cheng
Liang, founder of Nippon Paint South-East Asia Group (Nipsea), is <st1:country-region>Singapore</st1:country-region>’s
richest man with a US$8.2b fortune, ahead of Mr Wee Cho Yaw, second richest man
in <st1:country-region>Singapore</st1:country-region>
with a US$6.9b fortune.)</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Besides
Nippon Paint (Singapore), Singapore Tong Teik (Private) Limited, a natural
rubber trading company, founded in 1964 and based in Singapore, took a 6.4%
stake in ISOTeam in May 2014. For those readers who have followed the news on
UE E&C, a construction / property developer, they should be familiar with Singapore
Tong Teik (Private) Limited which has acquired a significant stake in UE
E&C. Thus, acquisition of a substantial stake in ISOTeam is likely to be in
line with Singapore Tong Teik (Private) Limited’s long term business interests.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Synergistic
acquisitions <o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
ISOTeam
has completed the following acquisitions in Jan 2015. With reference to <b>Figure
1</b> below, through the four acquisitions, ISOTeam has gained access to 200
sets of gondolas, 200 sets of boom lift / scissors lifts and increased their
painter headcount to 400 painters. In addition, ISOTeam also expanded their capabilities
into specialist areas in landscaping and architectural coatings. As a result,
this is likely to open doors to new clients and sectors.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Figure
1: Four *acquisitions completed in Jan 2015<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10.0pt;">Source: Company<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10.0pt;">* In the latest announcement dated </span><st1:date day="27" month="2" year="2015"><span style="font-size: 10.0pt;">27 Feb 2015</span></st1:date><span style="font-size: 10.0pt;">, Accom, Accom International and Rong Shun have been
renamed as ISOTeam C&P Pte. Ltd, ISOTeam Access Pte. Ltd and ISO-Landscape
Pte. Ltd.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Online
handyman service portal rollout in 3Q CY2015<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
ISOTeam
is rolling out their online handyman service portal in 3Q CY2015 which should
provide a one stop solution portal for plumbing, air conditioning, general
repairs, tile works etc. This is a step forward to their vision of being a
complete building and maintenance team.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><i>Besides
the usual risks which you can find in my previous writeup and ISOTeam’s
prospectus, here are some of the risks which I deem to be more likely and
noteworthy.<o:p></o:p></i></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><br />
Risks</u></b> <br />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Illiquidity
is still an issue<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br />
Based on its latest annual report 2014 which did not take into account of the
recent placement and share issuance, the top 20 shareholders have about 90.4%
of ISOTeam’s outstanding shares. Ave 30D and 100D volume amounted to around
285,000 and 212,000 shares respectively. This is not a liquid company where
investors can enter or exit quickly.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
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<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Rising
costs</b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
Rising
costs, attributed mainly to labour costs, are likely to rise in the medium to
long term as our labour market is likely to be tight. However, in the recently
announced budget, the foreign workers’ levies will be held off to next year.
This eases rising costs in the short term. Notwithstanding the rising labour
costs in the medium to long term, ISOTeam should be able to maintain their
gross margins at around 21% due in part to their recent acquisitions and
economies of scale. Furthermore, their R&R projects are typically short <span style="mso-ansi-language: EN-US;">term in nature around 9-14 months where they
should not be too adversely impacted by rising labour costs. </span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<b>Seemingly
high valuations vs. their construction counterparts</b></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
ISOTeam
trades at an annualised FY15F PE of around 9.6x. This seems pretty high
vis-à-vis some of the construction companies. However, ISOTeam’s core business
is in building refurbishment and upgrading whereas some of their construction
peers focus more on new build construction. Thus, this is not an “apple to
apple” comparison. Furthermore, the business demand for building refurbishment
and upgrading is also different from new build construction.</div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
According
to UOB Kayhian’s estimates, after accounting for the recent acquisitions and
placement, ISOTeam is likely to have a strong net cash position of around
S$13-15m. Stripping out the net cash position of S$13m, ISOTeam trades at an
annualised FY15F PE of around 8.1x. </div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="font-family: "Times New Roman"; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: SimSun; mso-fareast-language: ZH-CN;">It is noteworthy
that ISOTeam’s financial year end is in June, thus FY15F ends in June 2015. In
addition, if ISOTeam continues to register earnings growth in FY16, coupled
with a full year contribution of its aforementioned acquisitions (i.e. Accom
etc), its PE should trend lower over time.</span></div>
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<![endif]--><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span style="background: white;">Technical outlook<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="background: white;">ISOTeam with the last closing price of S$0.590, is
near to its record intraday high of S$0.605 on 18 Feb. Based on <b>Chart 1 </b>below,
ISOTeam exhibits a clear uptrend as depicted by its rising exponential moving
averages. It has spent the month of February consolidating its gains between
S$0.565 – 0.605. Any breakout to the upside / downside with volume expansion
has an eventual measured technical target of S$0.645 / 0.525 respectively. As
the prevailing trend is up, the probability of an eventual upside breakout
outweighs that of a downside break. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="background: white;">Supports: $0.575 / 0.565 / 0.55 – 0.555<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="background: white;">Resistances: $0.605 – 0.610 / 0.645 – 0.650<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div style="text-align: justify;">
<b><span style="background: white; font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span></b>
</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="background: white;">Chart 1: ISOTeam – consolidating after its strong gains<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-ansi-language: EN-US;">Source: CIMB chart
as of 27 Feb 15<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u>Conclusion <o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Although ISOTeam has appreciated 55%
since my last writeup, its defensive and recurring business (mentioned in my
previous writeup), potential record FY15F results, more contract wins and
analyst coverage may be some of the possible catalysts for its share
price. Nevertheless, its lack of
liquidity, seemingly high valuations relative to construction companies and
sharp share price performance over the course of 13 months may be some
noteworthy factors for readers to consider.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span lang="EN-US" style="font-size: 12pt;"><br /></span>
</div>
<div style="text-align: justify;">
<span lang="EN-US"><i>*Due to some technical errors, I am not able to post the images of Table 1, Figure 1 and Chart 1 on my blog. U can email me at crclk@yahoo.com.sg for the complete pdf writeup.</i></span></div>
<span lang="EN-US" style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span>Disclaimer<br />
<div style="text-align: justify;">
The information contained herein is the writer's personal opinion and provided
to you for information only, and is not intended to, or nor will it
create/induce the creation of any binding legal relations. The information or
opinions provided herein do not constitute an investment advice, an offer or
solicitation to subscribe for, purchase or sell the investment product(s)
mentioned herein. It does not have any regard to your specific investment
objectives, financial situation and any of your particular needs. Accordingly,
no warranty whatsoever is given and no liability whatsoever is accepted for any
loss arising whether directly or indirectly as a result of this information.
Investments are subject to investment risks including possible loss of the
principal amount invested. The value of the product and the income from them
may fall as well as rise. You may wish to seek advice from an independent
financial adviser before making a commitment to purchase or invest in the investment
product(s) mentioned herein. In the event that you choose not to do so, you
should consider whether the investment product(s) mentioned herein are suitable
for you. The writer will not, in any event, be liable to you for any
direct/indirect or any other damages of any kind arising from or in connection
with your reliance on any information in and/or materials appended herein. The
information and/or materials are provided “as is” without warranty of any kind,
either express or implied. In particular, no warranty regarding accuracy or
fitness for a purpose is given in connection with such information and
materials.</div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-40366235354925817512015-02-14T15:40:00.001+08:002015-02-14T15:40:31.404+08:00GSS Energy – unique and interesting business model <div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Pursuant to my writeup on GSS Energy
(formerly known as Giken Sakata) on </span><st1:date day="1" month="10" year="2014"><span lang="EN-US">1 Oct 2014</span></st1:date><span lang="EN-US"> (see writeup here <a href="http://www.sharesinv.com/articles/2014/10/06/giken-potential-oil/">http://www.sharesinv.com/articles/2014/10/06/giken-potential-oil/</a>),
GSS Energy has weakened from $0.315 to a low of $0.245 in mid January before
closing at $0.270 on </span><st1:date day="27" month="1" year="2015"><span lang="EN-US">27 January 2015</span></st1:date><span lang="EN-US">. This was down 14% as compared to </span><st1:date day="1" month="10" year="2014"><span lang="EN-US">1
October 2014</span></st1:date><span lang="EN-US">.
To put into perspective, Rex and RH Petrogas have fallen about 33% and 44%
respectively over the same period. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">At the time of doing this writeup, GSS
Energy has been suspended from trading due to its </span>proposed restructuring
by way of a scheme of arrangement. It will resume trading under the name of<span lang="EN-US"> GSS Energy Limited. It closed at
$0.270 on </span><st1:date day="27" month="1" year="2015"><span lang="EN-US">27 January 2015</span></st1:date><span lang="EN-US"> before the suspension.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">As one of GSS Energy’s main
businesses is oil production, the >50% slump in oil price has led many
investors to reconsider its business prospects.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Impact on oil price slump manageable<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">GSS Energy sells their oil to
Pertamina and the selling price is fixed for a year, subject to an annual
review by Pertamina. According to management, if Pertamina wishes to change the
selling price, it also has to change the USD/</span><st1:stockticker><span lang="EN-US">IDR</span></st1:stockticker><span lang="EN-US"> FX rate. In other words, Pertamina
can either keep the selling price unchanged, or change both the selling price
as well as the USD/</span><st1:stockticker><span lang="EN-US">IDR</span></st1:stockticker><span lang="EN-US"> FX rate. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">USD/</span><st1:stockticker><span lang="EN-US">IDR</span></st1:stockticker><span lang="EN-US"> has appreciated approximately 41%
from USD/</span><st1:stockticker><span lang="EN-US">IDR</span></st1:stockticker><span lang="EN-US"> 9,000 (their last contracted rate) to 12,700. Thus, the favourable move
in USD/</span><st1:stockticker><span lang="EN-US">IDR</span></st1:stockticker><span lang="EN-US"> is likely to mitigate the possible
fall in their selling price to some extent.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Senergy report on three oil fields – a near term catalyst<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Senergy is likely to release the
valuation report on GSS Energy’s three fields (Kawengan, Trembul and Gabus) in
1Q 2015. For their first two fields, namely D&W and Tunggul oil fields, Senergy
valued them on the </span>best scenario net present value of US$195m, or <span lang="EN-US">S$263m</span> based on a 10%
discount rate. (See <b>Table 1</b> below)<span lang="EN-US"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Table 1: Projected net present value
of D&W and Tungkul fields using a 10% discount rate<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-ansi-language: EN-US;">Source: Senergy
report dated 26 May 14</span><span lang="EN-US"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Kawengan,
Trembul and Gabus fields have at least 161 oil wells vs the 131 wells from the
D&W and Tungkul fields. In addition, according to management, Trembul and
Gabus fields have deeper oil wells than the other fields, providing greater
potential for the production of oil. Thus, it<span lang="EN-US"> is likely that the three fields should fetch a higher valuation
(notwithstanding the drop in the oil price) than D&W and Tunggul oil
fields. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">With both valuation reports on GSS Energy’s
five fields, this should shed some light on its reserves valuation and reflect
the stark difference between reserves valuation and its market capitalization currently
valued at S$128m as of </span><st1:date day="27" month="1" year="2015"><span lang="EN-US">27 Jan 2015</span></st1:date><span lang="EN-US">. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<b><span lang="EN-US" style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span></b>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Takes delivery of three more rigs this year<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">As of end Nov 2014, GSS Energy
produced about 1,070 barrels of oil per day. According to DMG report dated Jan
2015, GSS Energy has one land rig in operation and is expected to take delivery
of three land rigs in 2015. This should increase their oil production in the
months ahead. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Precision engineering business performed
well in 2014<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Giken’s FY14 revenue from its precision
engineering business dropped 46% from S$126.8m in FY13 to S$69.0m in FY14.
However, net profit soared 475% from S$446K in FY13 to S$2.1m in FY14. According
to their FY14 results press release, management is positive on its contract
manufacturing business which should bode well for their FY15F results. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">1HFY15F and FY15F results likely to be strong <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Besides the positive outlook on GSS
Energy’s precision engineering business, there will be maiden contribution from
its oil business in 1HFY15F results onwards. Ceteris paribus, FY15F should be a
better year for GSS. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Valuation<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">After my writeup on GSS Energy on </span><st1:date day="1" month="10" year="2014"><span lang="EN-US">1
Oct 2014</span></st1:date><span lang="EN-US">,
DMG Securities and Religare have initiated coverage with target prices of $0.650
and $0.510 respectively (See <b>Table 1</b>
below). Personally, it would be good if Senergy release the valuation report on
the other three fields. This would serve as an alternative independent
valuation yard stick for the investors.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Table 1: GSS analysts’ target price<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgdIQsb6OI0n6zQ4B5tDiOHsv0tsNhfMAohuDfL99T4qDyLTGplpNU8l3JWMQaKNoGzr7VdVyAmeLKFhlZ46JKdGtBZSu7UcGxst1fvncjMlVmlKcFjZ2ekPpxxaTfj6MCPtOUleDou0Bg/s1600/GSS+analyst+target+price+11+Feb+15.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgdIQsb6OI0n6zQ4B5tDiOHsv0tsNhfMAohuDfL99T4qDyLTGplpNU8l3JWMQaKNoGzr7VdVyAmeLKFhlZ46JKdGtBZSu7UcGxst1fvncjMlVmlKcFjZ2ekPpxxaTfj6MCPtOUleDou0Bg/s1600/GSS+analyst+target+price+11+Feb+15.gif" height="458" width="640" /></a></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-ansi-language: EN-US;">Source: Bloomberg </span><st1:date day="11" month="2" year="2015"><span lang="EN-US" style="font-size: 10.0pt; mso-ansi-language: EN-US;">11 Feb 2015</span></st1:date><span lang="EN-US" style="font-size: 10.0pt; mso-ansi-language: EN-US;"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<b><u>Giken’s
chart analysis <o:p></o:p></u></b></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
Based
on <b>Chart 1</b> below, GSS Energy has been entrenched in a downtrend since
Jun 2014. It has to breach the strong resistance around $0.290 – 0.300 with
volume expansion for the chart to turn positive. <o:p></o:p></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
Near
term supports and resistances are at $0.260 – 0.265 / 0.245 & $0.280 /
0.290 - 0.300 respectively.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Chart 1: GSS entrenched in a strong downtrend<o:p></o:p></span></b></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<br /><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-ansi-language: EN-US;">Source: CIMB chart
as of </span><st1:date day="11" month="2" year="2015"><span lang="EN-US" style="font-size: 10.0pt; mso-ansi-language: EN-US;">11 Feb 2015</span></st1:date><span lang="EN-US" style="font-size: 10.0pt; mso-ansi-language: EN-US;"><o:p></o:p></span></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u>Conclusion – Unique business model, less
affected by swings in oil price<o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
In a
nutshell, although one of GSS Energy business segments (i.e. oil production) is
the least favoured sector now, there is some merit in GSS Energy oil business
model. It is noteworthy that t<span lang="EN-US">he
>50% slump in oil price may not affect GSS Energy to such a large extent.
However, in order for GSS Energy share price to re-rate, it depends on the
company’s FY15F results, Senergy’s report on its three fields and management’s
communication of their unique business model to the investment community.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Readers
who are interested should take a look at their website for more information. You
can also email me at <a href="mailto:crclk@yahoo.com.sg">crclk@yahoo.com.sg</a> for the analyst reports on GSS. </div>
<span style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Disclaimer<br />
The information contained herein is the writer's personal opinion and provided
to you for information only, and is not intended to, or nor will it create/induce
the creation of any binding legal relations. The information or opinions
provided herein do not constitute an investment advice, an offer or
solicitation to subscribe for, purchase or sell the investment product(s)
mentioned herein. It does not have any regard to your specific investment
objectives, financial situation and any of your particular needs. Accordingly,
no warranty whatsoever is given and no liability whatsoever is accepted for any
loss arising whether directly or indirectly as a result of this information.
Investments are subject to investment risks including possible loss of the
principal amount invested. The value of the product and the income from them
may fall as well as rise. You may wish to seek advice from an independent
financial adviser before making a commitment to purchase or invest in the
investment product(s) mentioned herein. In the event that you choose not to do
so, you should consider whether the investment product(s) mentioned herein are
suitable for you. The writer will not, in any event, be liable to you for any
direct/indirect or any other damages of any kind arising from or in connection
with your reliance on any information in and/or materials appended herein. The
information and/or materials are provided “as is” without warranty of any kind,
either express or implied. In particular, no warranty regarding accuracy or
fitness for a purpose is given in connection with such information and
materials.<span lang="EN-US"><o:p></o:p></span></div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-75295350781430859962014-12-22T15:14:00.000+08:002014-12-22T15:14:03.495+08:00QT Vascular – an overlooked potential health care play?<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="background: white; mso-ansi-language: EN-US;">In one of the
articles by Channelnewsasia dated <st1:date day="18" month="12" w:st="on" year="2014">18 Dec 2014</st1:date>, it was reported that the general healthcare
sector has performed well this year and prospects likely remain bright next
year. The healthcare index, as measured by the </span><span style="background: white;">SGX Healthcare Index, registered a year to date return of approximately 9-10%
vs the 2% from STI. Factors such as the aging demographics and rising demand
for quality healthcare etc. continue to bode well for the overall healthcare
sector.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="background: white;">One of the stocks which has underperformed on a year
to date basis is QT Vascular. Average analyst target is $0.665. Its price chart seems to be in the midst of a
base formation, hence I decide to take a closer look in this stock. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span style="background: white;">Description of </span></u></b><b><u><span lang="EN-US">QT Vascular</span><span style="background: white;"><o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
QT
Vascular’s value proposition to its customers is that’s its products (i.e. balloon
catheters) are less invasive for the treatment of vascular disease without the
use of permanent implants (stents). QT Vascular manufactures and sells two
types of balloon catheters. They are used to treat either peripheral artery
diseases or coronary artery diseases. The catheters are marketed under the
Glider and Chocolate brands.<span style="background: white;"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="background: white;">Readers can refer to the company website <a href="http://www.hi-p.com/"><span style="color: windowtext;">http://www.qtvascular.com/</span></a> for more
information.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><br />
Investment merits<o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Industry
prospects remain sanguine<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
According
to QT Vascular’s prospectus, the market size for peripheral vascular devices is
estimated to grow at a compound annual growth rate of 7.1% from US$4.8b in 2011
to US$7.8b in 2018. The coronary market is arguably larger than the peripheral
market. With the aging population and change in healthcare coverage and amount
spent etc, these factors are likely to underpin the demand for QT Vascular’s
products.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>4QFY14F
results may be strong <o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
4QFY14F
results are likely to be buoyed by the ramp up of GliderXtreme PTA products in <st1:place w:st="on">Asia</st1:place> as new shipment orders of Glider products from <st1:country-region w:st="on">China</st1:country-region> and <st1:country-region w:st="on">Japan</st1:country-region> in 4Q14
are expected to contribute to top-line growth. Secondly, QT Vascular announced
on <st1:date day="15" month="10" w:st="on" year="2014">15 Oct 2014</st1:date>
that it has signed distribution agreements for the sales of its Chocolate PTA® balloon
catheter in <st1:country-region w:st="on">Italy</st1:country-region>,
<st1:country-region w:st="on">Austria</st1:country-region>,
<st1:country-region w:st="on">Turkey</st1:country-region>,
and <st1:country-region w:st="on">Australia</st1:country-region>.
This should bode well for its results in 4QFY14F and beyond. Thirdly, QT
Vascular’s existing products, such as Chocolate PTA continue to grow as a
result of a 300% year on year increase in <st1:country-region w:st="on">U.S.</st1:country-region> hospital accounts. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Approvals
from regulators provide another catalyst<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Firstly,
QT Vascular has applied for CE marking approval for its Drug Coated Chocolate
Touch in Jul 2014. This approval, if obtained, is expected to be in the next 12
– 18 months. Secondly, QT Vascular may also secure the approvals for its
Chocolate PTA from China CFDA and Japan Shonin in 2015. Such approvals, if
materialise, bode well for QT Vascular. See <b>Table 1</b> for its product
portfolio and approvals.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Table
1: Product portfolio and approvals <o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /><o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Possible
takeover target<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
In
QT Vascular’s industry, it is a norm where established medical companies
acquire smaller groups for their new and upcoming products. With reference to <b>Table
2</b>, QT Vascular has more products than the other firms which were acquired
in the past four years. It is noteworthy that CVingenuity and Lutonix have not
generated any revenue at the time of their takeover. As QT Vascular progresses
on their products development and sales, it is likely that it may be able to
command a higher valuation due to lower business risk and better earnings visibility.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Table
2: Peers who have been sold in the past few years<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10.0pt;">Source: Company<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
In
addition, I will like to highlight QT Vascular’s CEO Eitan Konstantino’s past
work experiences (See <b>Table 3</b>). Among his career history, he was the Founder
& President, AngioScore, Inc and CEO & COO, Advanced Stent Technologies
which were both acquired. Thus, this may a sign of his inclination to develop
the company and subsequently sell it off. Nevertheless, I hasten to add that
this is just my own personal (gut feel) observation. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Table
3: QT Vascular’s CEO Eitan’s past work history<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10.0pt;">Source: Company<o:p></o:p></span></div>
<b><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; mso-ansi-language: EN-SG; mso-bidi-language: AR-SA; mso-fareast-font-family: SimSun; mso-fareast-language: ZH-CN;"><br clear="all" style="page-break-before: always;" />
</span></b>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Stepping
up on investor communication<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
According
to a CIMB 18 Nov 14 report, it was reported that management is aware that
investors require timely information so that they can track the company’s
performance better. Management will be making more timely updates to keep
investors apprised of the company’s development. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><i>Notwithstanding
the above, there are multiple risks that readers have to be aware of. For a
comprehensive list of the risk factors, readers can refer to pg 37 of QT
Vascular’s prospectus. Below are just some risks (out of the many risks) which
I highlight for your reference.<o:p></o:p></i></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><br />
Risks</u></b> <br />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--><o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Loss
making company since 2010<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br />
QT Vascular has been making losses since 2010 and it is likely that FY2015F may
still be loss making. In an interview with the Edge in Sep 2014, management
pointed out that company is focused on spending on research and development (“R&D”)
so as to build up its pipeline of products. Management believes that such
spending increases the intrinsic value of the company over time. In addition,
management mentioned that QT Vascular can become profitable quickly if they
reduce their R&D expenses and focus on distribution. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Share
moratorium<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
QT
Vascular’s share moratorium ended in late Oct 2014 where the pre ipo investors,
which own 77.4m shares, can sell a maximum of 50% of their shareholding. According
to QT Vascular’s prospectus pg 76, these pre-ipo investors can sell the balance
of their shares (if they wish) around 2Q2015. QT Vascular has dropped about 21%
from $0.355 on 3 Nov to $0.280 on 19 Dec. It is likely that at least some of
the pre-ipo investors have exited during this period. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Not
familiar with QT Vascular’s products<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
I
hasten to add that I am not fully familiar with QT Vascular’s products and the
scientific data from trials which support the usage of its products. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Failure
to obtain regulatory approval & / or obtain market acceptance<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
There
is no guarantee that QT Vascular’s upcoming products will be able to obtain
regulatory approval (e.g. FDA, CE Mark approval etc). Furthermore, after obtaining
approval, market acceptance is not a done deal as QT Vascular will need to
convince the hospitals and distributors to buy its products.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Limited
operating history<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
QT
Vascular has a limited operating history and does not have long-term data
regarding the safety and efficacy of their products. Positive results from
earlier trials may be negated by regulatory authorities or by later stage
clinical trials.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span style="background: white;">Technical outlook<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="background: white;">Based on <b>Chart 1</b>, the prevailing medium term
trend for QT Vascular is down as depicted by the red line. However, for the
past three weeks, QT Vascular seems to be in the midst of a base formation. A
bullish double bottom formation will be formed if it can break the neckline at
$0.295 with volume expansion. Measured technical target price is likely to be
around $0.325. This formation is invalidated if it breaks $0.265 with volume
expansion. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<span style="background: white; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-ansi-language: EN-SG; mso-bidi-language: AR-SA; mso-fareast-font-family: SimSun; mso-fareast-language: ZH-CN;"><br clear="all" style="page-break-before: always;" />
</span>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="background: white;">Supports: $0.275 / 0.265<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="background: white;">Resistances: $0.295 / 0.315<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="background: white;">Chart 1: QT Vascular chart
may be in the midst of base formation<o:p></o:p></span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US" style="font-size: 10.0pt; mso-ansi-language: EN-US;">Source: CIMB chart as of 19 Dec 14<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u>Conclusion <o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
QT
Vascular seems to be a promising company with exciting products. Approvals from
regulators, improved 4QFY14F and FY15F results and improved investor
communication etc are likely to be some of the factors for re-rating. However,
it is noteworthy that the lack of operating history, its loss making results
since 2010, share moratorium and market acceptance are some of the factors to
watch out for.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">P.S: This is just an introduction to
QT Vascular. Readers are encouraged to visit QT Vascular’s website </span><span style="background: white;"><a href="http://www.hi-p.com/"><span style="color: windowtext;">http://www.qtvascular.com/</span></a> and refer to the analyst
reports for more information.</span><span lang="EN-US"><o:p></o:p></span></div>
<span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: SimSun; mso-fareast-language: ZH-CN;"><br clear="all" style="page-break-before: always;" />
</span>
<br />
<span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: SimSun; mso-fareast-language: ZH-CN;"><i>Lastly, readers can email me at crclk@yahoo.com.sg for my pdf writeup, complete with charts and tables which i am unable to post here due to technical constraints.</i></span><br />
<span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: SimSun; mso-fareast-language: ZH-CN;"><br /></span>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Disclaimer<br />
The information contained herein is the writer's personal opinion and provided
to you for information only, and is not intended to, or nor will it
create/induce the creation of any binding legal relations. The information or
opinions provided herein do not constitute an investment advice, an offer or solicitation
to subscribe for, purchase or sell the investment product(s) mentioned herein.
It does not have any regard to your specific investment objectives, financial
situation and any of your particular needs. Accordingly, no warranty whatsoever
is given and no liability whatsoever is accepted for any loss arising whether
directly or indirectly as a result of this information. Investments are subject
to investment risks including possible loss of the principal amount invested.
The value of the product and the income from them may fall as well as rise. You
may wish to seek advice from an independent financial adviser before making a
commitment to purchase or invest in the investment product(s) mentioned herein.
In the event that you choose not to do so, you should consider whether the
investment product(s) mentioned herein are suitable for you. The writer will
not, in any event, be liable to you for any direct/indirect or any other
damages of any kind arising from or in connection with your reliance on any information
in and/or materials appended herein. The information and/or materials are
provided “as is” without warranty of any kind, either express or implied. In
particular, no warranty regarding accuracy or fitness for a purpose is given in
connection with such information and materials.<span lang="EN-US"><o:p></o:p></span></div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-39543235704922200792014-12-08T21:33:00.000+08:002014-12-08T21:33:50.862+08:00Hi-P – a proxy to Apple and Xiaomi? <div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: inherit; font-size: x-small;"><span style="background: white;">Hi-P recently caught my attention as it has been
conducting several share buybacks in the past one month. Secondly, Hi-P’s chart
formed a bullish double bottom formation with the breakout of the neckline at
$0.690 on 24 Nov. Thirdly, Apple’s (Hi-P’s customer) market capitalisation hit
US$700b on </span><st1:date day="25" month="11" year="2014"><span style="background: white;">25 Nov 2014</span></st1:date><span style="background: white;"> on optimism over iPhone 6 sales and new Apple products. Fourthly, an
article dated 7 Nov 2014 on Financial Times reportedly cited that Xiaomi (Hi-P’s
customer) is seeking to raise US$<span lang="EN-US">1.5 billion in new capital at a valuation set to exceed US$40 billion. </span><span lang="EN-US"> </span>The above factors
prompted me to take a closer look into Hi-P.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Description of Hi-P<o:p></o:p></span></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: inherit; font-size: x-small;"><span style="background: white;">Hi-P is an integrated contract manufacturer to
customers in mobile phones, tablets, household & personal care appliances.
It has 14 manufacturing plants globally located across five locations in </span><st1:country-region><st1:place><span style="background: white;">China</span></st1:place></st1:country-region><span style="background: white;"> (</span><st1:city><st1:place><span style="background: white;">Shanghai</span></st1:place></st1:city><span style="background: white;">,
</span><st1:city><st1:place><span style="background: white;">Chengdu</span></st1:place></st1:city><span style="background: white;">, </span><st1:city><st1:place><span style="background: white;">Tianjin</span></st1:place></st1:city><span style="background: white;">, </span><st1:city><st1:place><span style="background: white;">Xiamen</span></st1:place></st1:city><span style="background: white;"> and </span><st1:city><st1:place><span style="background: white;">Suzhou</span></st1:place></st1:city><span style="background: white;">), and in </span><st1:country-region><st1:place><span style="background: white;">Poland</span></st1:place></st1:country-region><span style="background: white;">, </span><st1:country-region><st1:place><span style="background: white;">Singapore</span></st1:place></st1:country-region><span style="background: white;"> and </span><st1:country-region><st1:place><span style="background: white;">Thailand</span></st1:place></st1:country-region><span style="background: white;">.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Readers can refer to the company website <a href="http://www.hi-p.com/"><span style="color: windowtext;">http://www.hi-p.com/</span></a>
for more information.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal">
<b><u><span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Investment merits<o:p></o:p></span></span></u></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="background: white;"><span style="font-family: inherit; font-size: x-small;">4QFY14F results may be strong<o:p></o:p></span></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Hi-P 3QFY14 net profit was S$10.8m, up 243% from
S$3.1m a year ago. However, due to their weak 1HFY14, 9MFY14 registered a net
loss of S$4.5m. Analysts are expecting that Hi-P’s FY14F net profit would be
around S$12.3m – 12.5m. This suggested a strong turnaround in 4QFY14F net
profit to be around S$17.0m, up 57% quarter on quarter (“qoq”). <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Riding the coattails of Apple and Xiaomi<o:p></o:p></span></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Although the smart phone industry is challenging where
product life cycles are short, the entire industry is growing. According to Strategy
Analytics, a total of 320.4m smartphones were shipped in 3Q2014, up 27% on a
year on year comparison. Out of these 320.4m smartphones, Apple and Xiaomi
shipped a total of 57.3m smartphones, up 47% from last year. This is likely to
benefit Hi-P to some extent. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="background: white;"><span style="font-family: inherit; font-size: x-small;">In addition, Hi-P is one of the two approved suppliers
for the stainless steel body frame for Xiaomi’s Mi4. According to UOB Kayhian
writeup on 4 Dec, Hi-P’s production yield for <span lang="EN-US">Xiaomi’s Mi4 has increased from 20-30% to the
current yield of more than 60%. The successful ramp up is likely to gradually
reverse the operating loss from manufacture of </span>the stainless steel body
frame for <span lang="EN-US">Xiaomi’s Mi4.
Furthermore, it is likely to open more doors to new customers and business
opportunities.</span><o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Other customers also gaining traction<o:p></o:p></span></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: inherit; font-size: x-small;"><span style="background: white;">Russian President Vladimir Putin gave </span><st1:country-region><st1:place><span style="background: white;">China</span></st1:place></st1:country-region><span style="background: white;">’s President Xi Jinping a dual-screen YotaPhone 2.
What is significant is that Hi-P is the </span>original design manufacturer
(ODM) of YotaPhone 1 & YotaPhone 2. YotaPhone 2 was officially launched on
3 Dec in <st1:city>London</st1:city>. YotaPhone 2 will
also be scheduled for launch in <st1:country-region>China</st1:country-region>
& other Asian countries (in early 2015) and in 20 European countries by end
2015. If YotaPhone gains traction, this is likely to be another growth driver
for Hi-P.<span style="background: white;"><o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Share buybacks at
increasingly higher prices <o:p></o:p></span></span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Hi-P has been doing several share buybacks since last
month. Based on <b>Table 1</b> below, total shares accumulated since last month
amounted to 903,000 shares at an average price of $0.691 (including fees). The
latest three purchases occurred in the last two weeks with average prices
ranging from $0.702 – 0.714. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<span style="font-family: inherit; font-size: x-small;"><span style="background: white;"><br clear="all" style="page-break-before: always;" />
</span>
</span><br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Table 1: Hi-P’s share buybacks since Nov 2014<o:p></o:p></span></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<table border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; margin-left: 5.15pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-table-layout-alt: fixed;">
<tbody>
<tr style="height: 12.5pt; mso-yfti-irow: 0;">
<td nowrap="" style="border: solid windowtext 1.0pt; height: 12.5pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.25pt;" valign="bottom" width="121"><span style="font-family: inherit; font-size: x-small;"><span style="background: white;"><br clear="all" style="page-break-before: always;" />
</span>
</span><div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">Date<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="bottom" width="144">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">No of shares<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.0pt;" valign="bottom" width="120">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">Amt (S$)<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="bottom" width="144">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">*Ave Px (S$)<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.5pt; mso-yfti-irow: 1;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.25pt;" valign="bottom" width="121">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;"><st1:date day="3" month="12" year="2014">3-Dec-14</st1:date><o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="bottom" width="144">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">100,000<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.0pt;" valign="bottom" width="120">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">71,170<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="bottom" width="144">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">0.712<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.5pt; mso-yfti-irow: 2;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.25pt;" valign="bottom" width="121">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;"><st1:date day="1" month="12" year="2014">1-Dec-14</st1:date><o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="bottom" width="144">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">241,000<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.0pt;" valign="bottom" width="120">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">169,129<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="bottom" width="144">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">0.702<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.5pt; mso-yfti-irow: 3;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.25pt;" valign="bottom" width="121">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;"><st1:date day="27" month="11" year="2014">27-Nov-14</st1:date><o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="bottom" width="144">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">316,000<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.0pt;" valign="bottom" width="120">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">225,526<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="bottom" width="144">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">0.714<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.5pt; mso-yfti-irow: 4;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.25pt;" valign="bottom" width="121">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;"><st1:date day="19" month="11" year="2014">19-Nov-14</st1:date><o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="bottom" width="144">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">138,000<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.0pt;" valign="bottom" width="120">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">90,061<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="bottom" width="144">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">0.653<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.5pt; mso-yfti-irow: 5;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.25pt;" valign="bottom" width="121">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;"><st1:date day="17" month="11" year="2014">17-Nov-14</st1:date><o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="bottom" width="144">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">108,000<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.0pt;" valign="bottom" width="120">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">67,912<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="bottom" width="144">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">0.629<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.5pt; mso-yfti-irow: 6;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.25pt;" valign="bottom" width="121">
<div align="center" class="MsoNormal" style="text-align: center;">
<br /></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="bottom" width="144">
<div align="center" class="MsoNormal" style="text-align: center;">
<br /></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.0pt;" valign="bottom" width="120">
<div align="center" class="MsoNormal" style="text-align: center;">
<br /></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="bottom" width="144">
<div align="center" class="MsoNormal" style="text-align: center;">
<br /></div>
</td>
</tr>
<tr style="height: 12.5pt; mso-yfti-irow: 7; mso-yfti-lastrow: yes;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.25pt;" valign="bottom" width="121">
<div align="center" class="MsoNormal" style="text-align: center;">
<br /></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="bottom" width="144">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">903,000<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.0pt;" valign="bottom" width="120">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">623,798<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.5pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="bottom" width="144">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: inherit; font-size: x-small;">0.691<o:p></o:p></span></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal">
<span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Source: SGX,
Ernest’s compilations<o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><u><span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Investment risks<o:p></o:p></span></span></u></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Competition<o:p></o:p></span></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Contract manufacturing industry is an industry with stiff
competition where competitors compete on scale and cost. Hi-P has to constantly
upgrade their manufacturing capabilities and increase efficiency and production
yield in order to stay ahead of competition. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Smartphone industry - Fast changing industry<o:p></o:p></span></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="background: white;"><span style="font-family: inherit; font-size: x-small;">The smartphone industry is ever changing and
customers’ preferences may change abruptly. Research In Motion’s (“RIM”) Blackberry
smartphones was a case in point. It was very popular in mid / late 2000s before
customers change their preferences to other smartphones. At that time, RIM
comprised of around 25% of Hi-P’s revenue and as a result, Hi-P was affected by
the dwindling demand for RIM’s blackberry smartphones.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Dependence on key customers / industries<o:p></o:p></span></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="background: white;"><span style="font-family: inherit; font-size: x-small;">In terms of revenue contribution, the smartphone
segment contributed about 50-60% of Hi-P’s overall revenue for the past three
years. Any adverse changes in the smartphone segment, especially to their large
customers, will be negative to Hi-P.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: inherit; font-size: x-small;">Production
yield for Xiaomi Mi-4 is key<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: inherit; font-size: x-small;"><span style="background: white;">According to UOB Kayhian writeup on 4 Dec, Hi-P’s
production yield for <span lang="EN-US">Xiaomi’s
Mi4 has increased from 20-30% to the current yield of more than 60% which is
probably at or near breakeven levels for Hi-P.</span></span><span lang="EN-US"> </span>In
order for Hi-P to register strong profits in 2015F, Hi-P has to increase the
production yield further. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: inherit; font-size: x-small;"><br />
There are also other risks such as raw material cost or manufacturing costs
which may crimp Hi-P’s margins. In addition, based on <b>Chart 1</b> below, it
is evident that Hi-P’s share price is pretty volatile and may not be applicable
to everybody. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Technical outlook<o:p></o:p></span></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Based on <b>Chart 1</b>, Hi-P seemed to have formed a
bullish double bottom formation with the breakout of the neckline at $0.690 on
24 Nov. Measured technical target price was S$0.765 which was attained on 4
Dec. All the EMAs (21D, 50D, 100D & 200D) are trending higher with 21D EMA
forming golden crosses with the rest. Although there seems to be some profit
taking at this time, the overall chart outlook seems bullish. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Supports: $0.690 – 0.700 / 0.680<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Resistances: $0.720 / 0.760-0.765<o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<span style="font-family: inherit; font-size: x-small;"><b><span style="background: white;"><br clear="all" style="page-break-before: always;" />
</span></b>
</span><br />
<div class="MsoNormal">
<b><span style="background: white;"><span style="font-family: inherit; font-size: x-small;">Chart 1: Hi-P chart looks
bullish after the double bottom formation, coupled with golden crosses (not able to attach here)<o:p></o:p></span></span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US"><span style="font-family: inherit; font-size: x-small;">Source: CIMB chart as of 5 Dec 14<o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span style="font-family: inherit; font-size: x-small;">Conclusion <o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: inherit; font-size: x-small;">Hi-P
seems to be on the verge of a turnaround, fuelled by the popularity of Apple
and Xiaomi products. Analysts are pretty positive on Hi-P’s 4QFY14F results.
Successful delivery of a good set of results in 4QFY14F and bullish guidance in
FY15F are likely to be the factors for re-rating. However, it is noteworthy
that the fast changing industry, Hi-P’s dependence on key customers, stiff
competition and production yield for Xiaomi Mi4 are factors to watch out for. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: inherit; font-size: x-small;"><span lang="EN-US">P.S: This is just an introduction to
Hi-P. Readers are encouraged to visit Hi-P’s website </span><span style="background: white;"><a href="http://www.hi-p.com/"><span style="color: windowtext;">http://www.hi-p.com/</span></a> and refer to the analyst reports for
more information.</span><span lang="EN-US"><o:p></o:p></span></span></div>
<span style="font-family: inherit; font-size: x-small;"><span lang="EN-US"><br clear="all" style="page-break-before: always;" />
</span>Disclaimer</span><br />
<div style="text-align: justify;">
<span style="font-family: inherit; font-size: x-small;"><span style="font-family: inherit;">The information contained herein is the writer's personal opinion and provided
to you for information only, and is not intended to, or nor will it
create/induce the creation of any binding legal relations. The information or
opinions provided herein do not constitute an investment advice, an offer or solicitation
to subscribe for, purchase or sell the investment product(s) mentioned herein.
It does not have any regard to your specific investment objectives, financial
situation and any of your particular needs. Accordingly, no warranty whatsoever
is given and no liability whatsoever is accepted for any loss arising whether
directly or indirectly as a result of this information. Investments are subject
to investment risks including possible loss of the principal amount invested.
The value of the product and the income from them may fall as well as rise. You
may wish to seek advice from an independent financial adviser before making a
commitment to purchase or invest in the investment product(s) mentioned herein.
In the event that you choose not to do so, you should consider whether the
investment product(s) mentioned herein are suitable for you. The writer will
not, in any event, be liable to you for any direct/indirect or any other
damages of any kind arising from or in connection with your reliance on any information
in and/or materials appended herein. The information and/or materials are
provided “as is” without warranty of any kind, either express or implied. In
particular, no warranty regarding accuracy or fitness for a purpose is given in
connection with such information and materials.</span></span></div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-86878783795849905622014-10-13T23:12:00.001+08:002014-10-13T23:12:59.097+08:00Vallianz – An emerging OSV play<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
The first time that I came into
direct contact with Vallianz Holdings (“Vallianz”) was in early Aug 2014 where
Mr Ling Yong Wah, Executive Director of Vallianz did a presentation at CIMB
Securities. My first impression of him was pretty positive as he went to great
lengths to explain his company’s business and prospects. He was also candid and
shared with us some of the potential investors’ concerns about his company. A
week later, I met him on a 1-1 chat over coffee on his company to understand
more about the company and also to clarify some of my queries.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Vallianz has fallen approximately 32%
from its intraday high of $0.135 on </span><st1:date day="22" month="8" year="2014"><span lang="EN-US">22 Aug 2014</span></st1:date><span lang="EN-US"> to $0.092 on </span><st1:date day="13" month="10" year="2014"><span lang="EN-US">13
Oct 2014</span></st1:date><span lang="EN-US">. With
the sharp decline in its share price, it seems to be time to take a closer look
in this stock.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Description<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Vallianz is a provider of offshore
support vessels (“OSV”) and integrated offshore marine solutions to the oil and
gas industry. They own a young fleet of over 29 offshore support vessels with
an average fleet age of 2.3 years. Their fleet comprises of 19 anchor handling
tugs (“AHTs”), six platform supply vessels (“PSVs”), two towing tugs and two
other vessels. They cover markets in Asia Pacific, the </span><st1:place><span lang="EN-US">Middle East</span></st1:place><span lang="EN-US"> and </span><st1:place><span lang="EN-US">Latin America</span></st1:place><span lang="EN-US"> with their headquarters in </span><st1:country-region><st1:place><span lang="EN-US">Singapore</span></st1:place></st1:country-region><span lang="EN-US">. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Vallianz is listed on the SGX
Catalist with a market capitalization of S$281m as of </span><st1:date day="13" month="10" year="2014"><span lang="EN-US">13
Oct 2014</span></st1:date><span lang="EN-US">. Please
visit their </span>website <a href="http://www.giken.com.sg/"><span style="color: windowtext; text-decoration: none; text-underline: none;"> </span>http://www.vallianzholdings.com/corporate-profile.html#</a>
for more information.<span lang="EN-US"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Investment merits <o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Industry dynamics seem positive<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Industry dynamics seem positive for
Vallianz. Firstly, amid the delivery of new rigs in 2014 & 2015, the supply
of rigs is expected to increase. This is likely to underpin demand for OSVs.
Based on <b>Figure 1</b> below, the OSV – rig ratio is likely to decline to
4.25x in 2015 (lower than that of 2013) and may decline to below 4x beyond
2015. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Figure 1: OSV – rig ratio<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><!--[if gte vml 1]><v:shapetype
id="_x0000_t75" coordsize="21600,21600" o:spt="75" o:preferrelative="t"
path="m@4@5l@4@11@9@11@9@5xe" filled="f" stroked="f">
<v:stroke joinstyle="miter"/>
<v:formulas>
<v:f eqn="if lineDrawn pixelLineWidth 0"/>
<v:f eqn="sum @0 1 0"/>
<v:f eqn="sum 0 0 @1"/>
<v:f eqn="prod @2 1 2"/>
<v:f eqn="prod @3 21600 pixelWidth"/>
<v:f eqn="prod @3 21600 pixelHeight"/>
<v:f eqn="sum @0 0 1"/>
<v:f eqn="prod @6 1 2"/>
<v:f eqn="prod @7 21600 pixelWidth"/>
<v:f eqn="sum @8 21600 0"/>
<v:f eqn="prod @7 21600 pixelHeight"/>
<v:f eqn="sum @10 21600 0"/>
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<v:path o:extrusionok="f" gradientshapeok="t" o:connecttype="rect"/>
<o:lock v:ext="edit" aspectratio="t"/>
</v:shapetype><v:shape id="_x0000_i1027" type="#_x0000_t75" style='width:5in;
height:246pt'>
<v:imagedata src="file:///C:\Users\Ernest\AppData\Local\Temp\msohtml1\01\clip_image001.emz"
o:title=""/>
</v:shape><![endif]--><!--[if !vml]--><img border="0" height="328" src="file:///C:/Users/Ernest/AppData/Local/Temp/msohtml1/01/clip_image002.gif" v:shapes="_x0000_i1027" width="480" /><!--[endif]--><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Secondly, according to Tidewater and
Gulfmark, customers are placing more emphasis on younger vessels as these
vessels typically have higher specifications such as dynamic positioning technology
and better fuel efficiency. Based on <b>Figure 2</b> below, more than 25% of
the OSV fleet is more than 25 years old and likely to be less competitive vis-à-vis
OSV owners with younger fleet. It is noteworthy that the average age of
Vallianz’s fleet is about 2.3 years old. This compares favourably with the global
average of about 11 years for AHTS and 18 years for PSVs. Furthermore,
according to Vallianz, 17 out of 19 of their AHTs and all their six PSVs have
dynamic positioning technology, which is increasing a pre-requisite for most
offshore projects.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Figure
2: Age of OSV fleet</b><span lang="EN-US"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><!--[if gte vml 1]><v:shape id="_x0000_i1025"
type="#_x0000_t75" style='width:5in;height:244.5pt'>
<v:imagedata src="file:///C:\Users\Ernest\AppData\Local\Temp\msohtml1\01\clip_image003.emz"
o:title=""/>
</v:shape><![endif]--><!--[if !vml]--><img border="0" height="326" src="file:///C:/Users/Ernest/AppData/Local/Temp/msohtml1/01/clip_image004.gif" v:shapes="_x0000_i1025" width="480" /><!--[endif]--><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">With reference to <b>Figure 2</b>
above and <b>Figure 3</b> below, although there is an overbuilding of OSVs
prior to 2008 where the AHTs and PSVs order book to fleet soared above 30%, this
ratio has dropped to an average 8% for AHTs and 27% for PSVs. It is noteworthy
that all of Vallianz’s vessels are below 7,999 BHP where the order book to
fleet ratio is around 5%.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Figure
3: AHTs order book to fleet ratio</b><span lang="EN-US"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><!--[if gte vml 1]><v:shape id="_x0000_i1028"
type="#_x0000_t75" style='width:5in;height:124.5pt'>
<v:imagedata src="file:///C:\Users\Ernest\AppData\Local\Temp\msohtml1\01\clip_image005.emz"
o:title=""/>
</v:shape><![endif]--><!--[if !vml]--><img border="0" height="166" src="file:///C:/Users/Ernest/AppData/Local/Temp/msohtml1/01/clip_image006.gif" v:shapes="_x0000_i1028" width="480" /><!--[endif]--><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Vallianz’s order book of US$494m
stretches to 2018 provides visibility<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">As of </span><st1:date day="30" month="6" year="2014"><span lang="EN-US">30 Jun
2014</span></st1:date><span lang="EN-US">,
Vallianz has an order book of US$494m and is tendering for projects valued at
around US$1.2b. According to the company, around 50% of the order book is
likely to be recognized in 2HFY14F and FY15F. (See <b>Figure 4</b> below) <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<b><span style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span></b>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Figure
4: Vallianz’s order book</b><span lang="EN-US"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<!--[if gte vml 1]><v:shape
id="_x0000_i1029" type="#_x0000_t75" style='width:5in;height:248.5pt'>
<v:imagedata src="file:///C:\Users\Ernest\AppData\Local\Temp\msohtml1\01\clip_image007.emz"
o:title=""/>
</v:shape><![endif]--><!--[if !vml]--><img border="0" height="331" src="file:///C:/Users/Ernest/AppData/Local/Temp/msohtml1/01/clip_image008.gif" v:shapes="_x0000_i1029" width="480" /><!--[endif]--><o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-ansi-language: EN-US;">Source: Company<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Vallianz has executed several
noteworthy initiatives in 2014<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Firstly, Vallianz announced on </span><st1:date day="12" month="4" year="2014"><span lang="EN-US">12
Apr 2014</span></st1:date><span lang="EN-US">
that they have entered into a collaboration arrangement with a first class
Chinese shipyard to build Vallianz – designed vessels. Vallianz has the right
of refusal for up to 200 vessels. This is a strategic step to manage their
asset base and fleet renewal. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Secondly, Vallianz announced on 22
Sep 2014 that they were acquiring a </span><st1:country-region><st1:place><span lang="EN-US">Singapore</span></st1:place></st1:country-region><span lang="EN-US"> incorporated Jetlee Shipbuilding
and Engineering Pte Ltd so as to establish their own marine base for docking
and maintenance operations. According to the company, this should result in
cost savings and enhance operational efficiencies. The purchase of Jetlee would
be settled by issuance of 143.3m Vallianz shares at an issue price of $0.138
per share. It is noteworthy that the issue price of $0.138 was at a 24% premium
to Vallianz’s volume weighted average price (“VWAP”) of $0.1116 per share. The
owners of Jetlee Group are industry veterans and comprise of Mr Chan Kwan Bian
(co-founder of Labroy Marine), Mr Teo Guo Ping (previously working at
Pan-United Corp) and Mr Ng Chee Keong (founder of Jetlee through a joint
venture with Pan-United Marine Limited.) As the consideration will be entirely
settled via Vallianz shares, priced at a significant premium to the current
price (then), it is likely that the Jetlee owners are confident in Vallianz’s
business and growth prospects.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Thirdly, Vallianz announced on </span><st1:date day="30" month="9" year="2014"><span lang="EN-US">30
Sep 2014</span></st1:date><span lang="EN-US">
that they are acquiring OER Holdings Pte Ltd, a provider of manpower services
to the offshore industry for US$27.7m. OER Holdings’ 2013 earnings before
interest, tax, depreciation and amortization (“EBITDA”) was around US$5.6m.
Thus, it was priced at approximately 5x 2013 EBITDA. According to management, this
acquisition not only brings an additional source of revenue and income but is
likely to open doors to new customers and geographical market, especially in </span><st1:place><span lang="EN-US">Asia</span></st1:place><span lang="EN-US">. It is noteworthy that this
acquisition would also be settled solely by the issuance of 250m shares at an
issue price of $0.140 per share. This is at a 27% premium to Vallianz VWAP of
$0.1101 per share which undermines OER Holdings’ confidence in Vallianz.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">All of the above initiatives seem to
be part of Vallianz strategic move to grow its business over the medium to long
term.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">As with any company, there are
noteworthy points to consider<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<b><u><span lang="EN-US" style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span></u></b>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Risks<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Possibility of a delay in fleet
expansion <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">As of </span><st1:date day="30" month="6" year="2014"><span lang="EN-US">30 Jun 2014</span></st1:date><span lang="EN-US">, Vallianz plans to increase their
fleet by 72% to 50 vessels by end 2016. Their
current vessels are built by 3<sup>rd</sup> party shipyards. Any delay by the
shipyards to deliver the vessels to Vallianz may have an adverse impact on
Vallianz.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Contracts cancellation is possible
in dire circumstances<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Some investors fear that if the oil
prices continue its decline, charter contracts may be cancelled. Despite
Vallianz’s long term charter contracts, their customers are allowed to give a
one month notice to Vallianz before they cancel their charter contracts.
However, this practice is an industry norm for all players. A noteworthy point
to note is that Vallianz’s vessels operate in shallow water, hence oil price
may have to tumble below US$40 before their customers decide it is not
worthwhile to continue drilling for oil. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Order book replenishment <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Since the company’s announcement on </span><st1:date day="12" month="4" year="2014"><span lang="EN-US">12
Apr 2014</span></st1:date><span lang="EN-US">
that they were bidding for US$1.2b worth of contracts, they have only announced
one </span><st1:place><span lang="EN-US">Latin
America</span></st1:place><span lang="EN-US">
contract worth US$82m on </span><st1:date day="15" month="5" year="2014"><span lang="EN-US">15 May 2014</span></st1:date><span lang="EN-US">. I understand from management that the
contract award for some of their contracts is typically in 4Q which may explain
the hiatus in the contracts being awarded.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Significant gearing is a sticky
point for most investors<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">As of </span><st1:date day="30" month="6" year="2014"><span lang="EN-US">30 Jun 2014</span></st1:date><span lang="EN-US">, short term and long term totaled
US$508m. This is significant vs. its total equity of US$169m. Vallianz’s loans
are mainly USD denominated with floating rate obligations. This naturally
brings up two issues especially with the strengthening USD and talk of rising
interest rate environment. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">According to management, although
its loans are mainly USD denominated, its assets are also USD denominated.
Furthermore, both earnings and expenses are USD denominated hence there is a
natural hedge to a certain extent. It reports results in USD terms too. Thus,
an appreciating USD is likely to have an overall muted impact on Vallianz. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">As a corollary of its large debt
obligations, Vallianz, in their 1HFY14 results, posted finance costs of around US$7.5m.
This is significant as compared to its 1HFY14 net profit of around US$10.1m. It
is logical that if interest rate rises in the next 1-3 years, (assuming that
Vallianz’s debt quantum remains unchanged), its finance costs will rise
further. However, if all the above initiatives and Vallianz’s confidence in
securing contracts bear fruit, Vallianz earnings and cash flow should improve
over time. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Chart outlook – All time oversold<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Based on <b>Chart 1</b> below,
Vallianz has fallen approximately 32% from its intraday high of $0.135 on </span><st1:date day="22" month="8" year="2014"><span lang="EN-US">22
Aug 2014</span></st1:date><span lang="EN-US"> to
$0.092 on </span><st1:date day="10" month="10" year="2014"><span lang="EN-US">10 Oct 2014</span></st1:date><span lang="EN-US">. Both Pacific Radiance and POSH have also
dropped 26% and 28% respectively during the period. Thus, the sharp drop in
Vallianz may be due largely to the weakened sentiment in the OSV operators. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Based on today’s close, Vallianz
seems to have formed a *doji which may potentially be the start of a reversal. RSI
closed at 14.6 last Fri. This is the lowest level since its trading history dating
back to May 2001. The extreme oversold pressures are likely to limit any near
term decline. Support is likely around $0.088 with strong support at around
$0.085. Resistance is at $0.099 / 0.108 / 0.115.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<i><span lang="EN-US">*For doji to form, it is ideal but
not necessary for the open and close to be the same price. In my opinion (chart
interpretation is subjective), the candlestick formed on 13 Oct seems to fulfil
a doji’s requirements.<o:p></o:p></span></i></div>
<b><span lang="EN-US" style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span></b>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Chart 1: Vallianz – all time
oversold<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><!--[if gte vml 1]><v:shape id="_x0000_i1026"
type="#_x0000_t75" style='width:6in;height:228pt'>
<v:imagedata src="file:///C:\Users\Ernest\AppData\Local\Temp\msohtml1\01\clip_image009.png"
o:title=""/>
</v:shape><![endif]--><!--[if !vml]--><img border="0" height="304" src="file:///C:/Users/Ernest/AppData/Local/Temp/msohtml1/01/clip_image010.jpg" v:shapes="_x0000_i1026" width="576" /><!--[endif]--><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-ansi-language: EN-US;">Source: CIMB itrade
as of </span><st1:date day="13" month="10" year="2014"><span lang="EN-US" style="font-size: 10.0pt; mso-ansi-language: EN-US;">13 Oct 2014</span></st1:date><span lang="EN-US" style="font-size: 10.0pt; mso-ansi-language: EN-US;"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u>Conclusion – This is just an
introduction<o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
In a
nutshell, Vallianz seems to be in the right industry with bright prospects and
they have executed several initiatives in 2014. If these are executed well, it
should pave the way for continual growth in the medium to long term. However,
it is noteworthy that contract replenishment, significant <st1:country-region>U.S.</st1:country-region>
debt and finance costs, etc are some factors which readers should be aware of.
If Vallianz continues to deliver on their earnings, contracts and their plans,
it is likely that they may re-rate over time.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Readers
who are interested should take a look at their website <a href="http://www.giken.com.sg/"><span style="color: windowtext; text-decoration: none; text-underline: none;"> </span>http://www.vallianzholdings.com/corporate-profile.html#</a>
for more information. You can also email me at <a href="mailto:crclk@yahoo.com.sg">crclk@yahoo.com.sg</a> for the unrated analyst report on Vallianz
(there is no rated report on Vallianz) and the informative industry reports. As I am not able to put in the above figures and chart, you can also drop me a note and I will forward a pdf writeup to you.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<span style="font-size: 12pt;">Disclaimer</span><br />
<div style="text-align: justify;">
<span style="font-size: 12pt;">The information contained herein is the writer's personal opinion and provided
to you for information only, and is not intended to, or nor will it
create/induce the creation of any binding legal relations. The information or
opinions provided herein do not constitute an investment advice, an offer or
solicitation to subscribe for, purchase or sell the investment product(s)
mentioned herein. It does not have any regard to your specific investment
objectives, financial situation and any of your particular needs. Accordingly,
no warranty whatsoever is given and no liability whatsoever is accepted for any
loss arising whether directly or indirectly as a result of this information.
Investments are subject to investment risks including possible loss of the
principal amount invested. The value of the product and the income from them
may fall as well as rise. You may wish to seek advice from an independent
financial adviser before making a commitment to purchase or invest in the
investment product(s) mentioned herein. In the event that you choose not to do
so, you should consider whether the investment product(s) mentioned herein are
suitable for you. The writer will not, in any event, be liable to you for any
direct/indirect or any other damages of any kind arising from or in connection
with your reliance on any information in and/or materials appended herein. The
information and/or materials are provided “as is” without warranty of any kind,
either express or implied. In particular, no warranty regarding accuracy or
fitness for a purpose is given in connection with such information and
materials.</span></div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-19006172265477008632014-10-08T15:04:00.001+08:002014-10-08T15:04:05.316+08:00Midas – all time oversold<span style="text-align: justify;">With
the recent market weakness, as per my usual practice, I will screen out
oversold stocks listed on our </span><st1:country-region style="text-align: justify;" w:st="on">Singapore</st1:country-region><span style="text-align: justify;">
bourse.</span><br />
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<div class="MsoNormal" style="-ms-text-justify: inter-ideograph; margin: 0cm 0cm 0pt; text-align: justify;">
<div class="MsoNormal">
Here
is the list of the top ten most oversold stocks using CIMB’s stock filter as of
yesterday, 7 Oct.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<table border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; margin-left: 4.75pt; mso-padding-alt: 0cm 5.4pt 0cm 5.4pt; width: 671px;">
<tbody>
<tr style="height: 15.0pt; mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td style="border: solid windowtext 1.0pt; height: 15.0pt; mso-border-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 176.0pt;" width="293">
<div align="center" class="MsoNormal" style="text-align: center;">
<b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Company<o:p></o:p></span></b></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 170.0pt;" width="283">
<div align="center" class="MsoNormal" style="text-align: center;">
<b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Sector<o:p></o:p></span></b></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 56.65pt;" width="94">
<div align="center" class="MsoNormal" style="text-align: center;">
<b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">RSI <=30<o:p></o:p></span></b></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 1;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 176.0pt;" width="293">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Yongmao Holdings
Limited<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 170.0pt;" width="283">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Construction /
Agricultural Machinery<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 56.65pt;" width="94">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">6.7<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 2;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 176.0pt;" width="293">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">VGO Corp Ltd<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 170.0pt;" width="283">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Retail - Apparel /
Accessories<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 56.65pt;" width="94">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">8.7<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 3;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 176.0pt;" width="293">
<div align="center" class="MsoNormal" style="text-align: center;">
<st1:country-region w:st="on"><st1:place w:st="on"><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Nam</span></st1:place></st1:country-region><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;"> Lee Pressed Metal
Industries Ltd<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 170.0pt;" width="283">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Construction -
Supplies / Fixtures<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 56.65pt;" width="94">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">10.4<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 4;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 176.0pt;" width="293">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Midas Holdings Ltd<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 170.0pt;" width="283">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Aluminum<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 56.65pt;" width="94">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">11.9<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 5;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 176.0pt;" width="293">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Junma Tyre Cord
Company Limited<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 170.0pt;" width="283">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Chemicals -
Specialty<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 56.65pt;" width="94">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">12.5<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 6;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 176.0pt;" width="293">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Full Apex
(Holdings) Ltd<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 170.0pt;" width="283">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Non-Paper
Containers / Packaging<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 56.65pt;" width="94">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">13.4<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 7;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 176.0pt;" width="293">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Jacks International
Limited<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 170.0pt;" width="283">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Retail - Drugs<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 56.65pt;" width="94">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">14.8<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 8;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 176.0pt;" width="293">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">St. James Holdings
Limited<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 170.0pt;" width="283">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Leisure /
Recreation<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 56.65pt;" width="94">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">15.8<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 9;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 176.0pt;" width="293">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">JES International
Holdings Limited<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 170.0pt;" width="283">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Shipbuilding - NEC<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 56.65pt;" width="94">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">15.9<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 10; mso-yfti-lastrow: yes;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 176.0pt;" width="293">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Chew S Group Ltd<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 170.0pt;" width="283">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Fishing / Farming<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 56.65pt;" width="94">
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">16.7<o:p></o:p></span></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal">
<span style="font-size: 10.0pt;">Source: CIMB itrade 7 Oct 14<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-US">One of the stocks in the above list
caught my attention. Midas is the </span>4<sup>th</sup> most oversold stock in
the SGX by RSI level as of yesterday. It has<span lang="EN-US"> a </span>market capitalisation of S$402m and has dropped 25% from
$0.440 on 30 Jul 14 to close $0.330 on 7 Oct 14. Part of the decline may be
attributed to its weaker than expected 2QFY14 results announced on 14 Aug 14. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Against
the backdrop of 25% drop in Midas’ share price, Midas is the most oversold
since its IPO with a RSI of 11.9 as of last Fri. ADX closed at an unsustainable
high level at 57.0, indicating that the recent sharp downtrend is likely to
ease. It trades at 0.67x P / BV with <st1:stockticker w:st="on">NAV</st1:stockticker>
of $0.491. Average analyst target is $0.533. <span lang="EN-US"><o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b>Chart 1: </b><b><span lang="EN-US">Midas dropped 25% since 30 Jul 14; all
time oversold by RSI</span><o:p></o:p></b></div>
<div class="MsoNormal">
<br /></div>
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgF0CHpdwg15dMhvB9dytBjIhyphenhyphenjv7Q7d8EMrec98Oh13u28lk0BQnAoKknjsvocJ98AMvHMUr-R78elDHu8wXWMlSks7B2ggmonxpGWhvaZDoeaksUsacqTqtkOzXJLgz-vnnWJ5GNhSwc/s1600/Midas+shareinvestor+chart+8+Oct+14.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em; text-align: center;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgF0CHpdwg15dMhvB9dytBjIhyphenhyphenjv7Q7d8EMrec98Oh13u28lk0BQnAoKknjsvocJ98AMvHMUr-R78elDHu8wXWMlSks7B2ggmonxpGWhvaZDoeaksUsacqTqtkOzXJLgz-vnnWJ5GNhSwc/s1600/Midas+shareinvestor+chart+8+Oct+14.png" height="512" width="640" /></a><br /><div class="MsoNormal" style="background: white;">
<span style="font-size: 10.0pt;">Source: Shareinvestor chart (8 Oct 14)</span><o:p></o:p></div>
<div class="MsoNormal" style="background: white;">
<br /></div>
<br />
<div class="MsoNormal">
<b><u>Conclusion – likely to have a technical rebound<o:p></o:p></u></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
At
the time of writing this, Midas is trading down half a cent to $0.325. Its RSI
is even lower today at 10.7. If the general markets were to rebound, based on
chart, to a certain extent, Midas is likely to participate in the technical
rebound. Resistances are around $0.350 – 0.360 / $0.380. Supports are at $0.325
– 0.330 / $0.315. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><i>P.S: Do
note that the basis of this writeup is based mainly on technical analysis. It
is entirely possible that there may be some fundamentally negative information
on the company (which I am not aware of) that results in its persistent weakness.<o:p></o:p></i></b></div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
Disclaimer<br />
The information contained herein is the writer's personal opinion and provided
to you for information only, and is not intended to, or nor will it
create/induce the creation of any binding legal relations. The information or
opinions provided herein do not constitute an investment advice, an offer or
solicitation to subscribe for, purchase or sell the investment product(s)
mentioned herein. It does not have any regard to your specific investment
objectives, financial situation and any of your particular needs. Accordingly,
no warranty whatsoever is given and no liability whatsoever is accepted for any
loss arising whether directly or indirectly as a result of this information.
Investments are subject to investment risks including possible loss of the
principal amount invested. The value of the product and the income from them
may fall as well as rise. You may wish to seek advice from an independent
financial adviser before making a commitment to purchase or invest in the
investment product(s) mentioned herein. In the event that you choose not to do
so, you should consider whether the investment product(s) mentioned herein are
suitable for you. The writer will not, in any event, be liable to you for any
direct/indirect or any other damages of any kind arising from or in connection
with your reliance on any information in and/or materials appended herein. The
information and/or materials are provided “as is” without warranty of any kind,
either express or implied. In particular, no warranty regarding accuracy or
fitness for a purpose is given in connection with such information and
materials.<o:p></o:p></div>
</div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-18965678464062787492014-10-01T22:49:00.000+08:002014-10-01T22:49:00.764+08:00Giken – A potential Indonesia onshore oil field play<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Giken – A potential </span></u></b><st1:country-region><st1:place><b><u><span lang="EN-US">Indonesia</span></u></b></st1:place></st1:country-region><b><u><span lang="EN-US"> onshore oil field play<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Most people would have shunned the
following stock, given that it has skyrocketed 800% from $0.035 on 18 Feb 14 to
$0.315 on 1 Oct 14. This is notwithstanding the series of shares placement
which Giken has done since Feb. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<div class="separator" style="clear: both; text-align: center;">
</div>
<b><span lang="EN-US">Chart 1: Giken has skyrocketed 800%
since 18 Feb 14</span></b><br />
<b><span lang="EN-US"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><!--[if gte vml 1]><v:shapetype
id="_x0000_t75" coordsize="21600,21600" o:spt="75" o:preferrelative="t"
path="m@4@5l@4@11@9@11@9@5xe" filled="f" stroked="f">
<v:stroke joinstyle="miter"/>
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<v:f eqn="if lineDrawn pixelLineWidth 0"/>
<v:f eqn="sum @0 1 0"/>
<v:f eqn="sum 0 0 @1"/>
<v:f eqn="prod @2 1 2"/>
<v:f eqn="prod @3 21600 pixelWidth"/>
<v:f eqn="prod @3 21600 pixelHeight"/>
<v:f eqn="sum @0 0 1"/>
<v:f eqn="prod @6 1 2"/>
<v:f eqn="prod @7 21600 pixelWidth"/>
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<v:path o:extrusionok="f" gradientshapeok="t" o:connecttype="rect"/>
<o:lock v:ext="edit" aspectratio="t"/>
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height:228pt'>
<v:imagedata src="file:///C:\Users\Ernest\AppData\Local\Temp\msohtml1\01\clip_image001.png"
o:title=""/>
</v:shape><![endif]--><!--[if !vml]--><!--[endif]--><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-ansi-language: EN-US;">Source: CIMB chart
as of 1 Oct 14 (not able to put here due to chart incompatibility with my blog. Readers who are keen can email me at crclk@yahoo.com.sg for my pdf version.) <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">What piques my interest?<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Giken seems to be a potential
onshore </span><st1:country-region><st1:place><span lang="EN-US">Indonesia</span></st1:place></st1:country-region><span lang="EN-US"> oil play. After doing some research
on Giken, armed with my queries, I decided to connect with Giken’s management
to understand more about their company and their prospects. Mr Sydney Yeung,
CEO of Giken (“Management”) promptly agreed to meet me for an exclusive chat
over coffee. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Key takeaways from the 1-1 meeting<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Interesting business model – old wells
programme<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">For their onshore oil production
business, Giken, through PT Cepu operates through the following manner:<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l0 level1 lfo1; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span lang="EN-US">a)<span style="font-size: 7pt;">
</span></span><!--[endif]--><st1:place><st1:city>Pertamina</st1:city>, <st1:country-region>Indonesia</st1:country-region></st1:place>’s
state-owned oil and gas company signs a Mother Agreement with the local
co-operatives (e.g. KUD / BUMD);<span lang="EN-US">
<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l0 level1 lfo1; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]-->b)<span style="font-size: 7pt;"> </span><!--[endif]--><span dir="LTR">The local co-operatives will sign a Cooperative Agreement with PT Cepu
(i.e. Giken) to produce oil<span lang="EN-US">. </span>The
revenue split for this cooperative arrangement is typically 20% (local
co-operatives) and 80% (PT Cepu).</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
According
to Management, Giken is the only player in this old wells programme for the
whole of <st1:country-region>Indonesia</st1:country-region>.
They believe that the above arrangement is beneficial to all three parties. Firstly,
the o<span lang="EN-US">il produced from the old
wells must be sold to Pertamina at approximately 70% of Indonesian crude price
(“ICP”). Without this arrangement, Pertamina would have to source the oil from
other parties, which is likely to be on less favourable prices. </span><o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Secondly, the local co-operatives
which are the local governments would stand to benefit from the arrangement.
Their villagers would be able to enjoy a higher standard of living, as some of
them would be employed by Giken. The local governments would also be able to
enjoy 20% of the revenue obtained from the sale of oil to Pertamina. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Thirdly, for Giken, they have
nothing to lose. Their production cost is about US$20 / barrel of oil, thus the
profit margin is still considerable, despite the revenue split between local
co-operatives and Giken and the discounted selling price of the oil to Pertamina.
In addition, Giken has less business risk as they have a guaranteed buyer i.e.
Pertamina. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Extremely limited exploration risk<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Giken utilizes “twinning” strategy
where they drill new wells beside the old wells. These new wells are sturdier,
more operation friendly and can be deeper than the old wells to increase the
yield on each well. As the new wells are drilled beside the old wells which
were previously producing, exploration risk is minimal.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Short payback period, cash flow
generative operations<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">According to management, their
business model and strategy offer a short payback period of approximately 5-6
months. Once the oil wells start producing, it generates cash flow immediately.
Capex is low for each well as these are simple onshore wells. Management
estimates the capex for each well to be approximately </span>US$120,000-160,000<span lang="EN-US">. Part of the drilling capex can be
funded by its existing production. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Highly scaleable model – likely
growth in the next couple of years<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">With reference to Giken’s announcement
on 22 Sep 14, Giken stated that it has increased its production from its </span>Dandingilo-Wonocolo
(“<span lang="EN-US">D&W”) and Tungkul fields
by 31% from (14 wells) 670 </span>barrels of crude oil per day (“bopd”) in June
14 to (15 wells) 880 bopd in Sep 14. There are two noteworthy points on the
above figures. </div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l2 level1 lfo2; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span lang="EN-US">a)<span style="font-size: 7pt;">
</span></span><!--[endif]--><span dir="LTR">The above production update only
pertains to 15 wells from <span lang="EN-US">D&W
and Tungkul fields. D&W and Tungkul fields have a total of 139 wells. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l2 level1 lfo2; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]-->b)<span style="font-size: 7pt;"> </span><!--[endif]--><span dir="LTR">As mentioned above, the production update pertains to <span lang="EN-US">D&W and Tungkul fields. Giken has a total
of five fields now with a combined number of 300 wells. Even without new
expansion, there is likely to be enough work for Giken for several years.</span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Going forward, management expects to
drill three to four wells each month. This should speed up production and
subsequently their profitability. Management added that they may consider building
tank farms once their production hit a significant level. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Selling price to Pertamina fixed
yearly<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Pertamina fixes the selling price of
the oil at approximately 70% of ICP. According to management, this price is
reset annually. Naturally, there are both positive and negative aspects to such
an arrangement. However, my personal view is that with this arrangement, there
is some stability to Giken’s business operations, unlike other oil & gas
plays which may be extremely vulnerable to short term swings in oil prices.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Senergy commissioned to prepare
reserve report on Kawengan, Trembul and Gabus fields <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
There
was a valuation report prepared by Senergy Oil & Gas (<st1:country-region>Singapore</st1:country-region>)
Pte Ltd (“Senergy”) which valued the D&W and Tungkul fields to be worth a
(best scenario) net present value of US$195m based on a 10% discount rate (See <b>Table
1</b> below). </div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Table 1: Projected net present value
of D&W and Tungkul fields using a 10% discount rate<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><!--[if gte vml 1]><v:shape id="_x0000_i1026"
type="#_x0000_t75" style='width:489.5pt;height:112pt'>
<v:imagedata src="file:///C:\Users\Ernest\AppData\Local\Temp\msohtml1\01\clip_image003.emz"
o:title=""/>
</v:shape><![endif]--><!--[if !vml]--><!--[endif]--><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-ansi-language: EN-US;">Source: Senergy
report dated 26 May 14<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
With
reference to Giken’s announcement today, Giken has commissioned Senergy to
prepare a reserve report on Kawengan, Trembul and Gabus fields. It is
noteworthy that Kawengan, Trembul and Gabus fields have a total of 161 wells vs
the 131 wells from the D&W and Tungkul fields. Furthermore, according to
management, their data showed that Trembul and Gabus fields have deeper oil
wells than the other fields, providing greater potential for the production of
oil. </div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Thus,
based on my (purely) layman perspective, the Senergy reserve report on Kawengan,
Trembul and Gabus fields may likely yield a figure comparable to US$195m,
similar to that of D&W and Tungkul fields. This is likely to (at least) add
some assurance to Giken’s shareholders and may raise the overall valuation of
Giken. </div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<st1:country-region><st1:place><b>Indonesia</b></st1:place></st1:country-region><b>
– committed to increase domestic oil production <o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<st1:country-region>Indonesia</st1:country-region>,
a former OPEC member, has been a net exporter of oil till 2008 where they
became a net importer. Falling oil production has hit <st1:country-region>Indonesia</st1:country-region>
hard. Thus, they are likely to continue their push towards increasing domestic
oil production which should bode well for Giken. It is noteworthy that <st1:country-region>Indonesia</st1:country-region>
has more than 10,000 old wells, thus the growth opportunity for Giken is
significant.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Existing contract manufacturing
business likely to do better <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Giken’s 1HFY14 rev and net profit
from the contract manufacturing business were S$38.5m and S$708K respectively.
Although their contract manufacturing business environment is likely to continue
to be competitive, management expects their results to gradually improve in the
next two years.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Jokowi to suspend operations at
Pertamina unit </span></b><b><span lang="EN-US" style="font-family: Wingdings; mso-ansi-language: EN-US; mso-ascii-font-family: "Times New Roman"; mso-char-type: symbol; mso-hansi-font-family: "Times New Roman"; mso-symbol-font-family: Wingdings;">à</span><span lang="EN-US"> no impact to Giken<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">With reference to a Business Times article
on 24 Sep, it was reported that Mr </span>Joko Widodo plans to halt operations
at Pertamina's energy trading unit Petral. However, <span lang="EN-US">according to management, this has no impact to
Giken as they do not deal with Petral. They sell their oil only directly to
Pertamina and not its subsidiaries. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u>Investment
risks <o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Customer
concentration risk<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
For the oil produced, Giken can only sell to
Pertamina who has the right to set the selling price and the exchange rate. Although
there seems to be a large customer concentration risk on Giken’s aspect, I will
like to draw readers’ attention to the following points which may alleviate the
risk to a certain extent: <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l1 level1 lfo3; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span lang="EN-US">a)<span style="font-size: 7pt;">
</span></span><!--[endif]--><span dir="LTR">Pertamina is buying a minuscule
portion of the oil it requires from Giken<span lang="EN-US">. Even if Pertamina prices the oil at 70% discount to ICP, it is
unlikely to result in meaningful cost savings for Pertamina. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l1 level1 lfo3; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]-->b)<span style="font-size: 7pt;"> </span><!--[endif]--><span dir="LTR">Giken is the only player in this old wells programme for the whole of </span><st1:country-region>Indonesia</st1:country-region>.
Furthermore, <st1:country-region>Indonesia</st1:country-region>
has more than 10,000 old wells, and as <st1:country-region>Indonesia</st1:country-region>
is looking to increase their domestic production, it is likely that Pertamina wants
a cordial working relationship with Giken.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Ability
to extend agreements<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
The ability for Giken to extend the
Cooperative Agreement with the local co-operatives and to sign new Cooperative
Agreement are key factors for Giken’s long term growth. Furthermore, the ability
for the renewal of the Mother Agreement between Pertamina and the local
co-operatives is important too. It is noteworthy that Giken is currently
producing oil from 15 wells out of their 300 wells.<span lang="EN-US"> Even without new Cooperative Agreements, there
is likely to be enough work for Giken for several years.</span><o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Limited
track record in producing oil<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Based on limited published figures, Giken’s
oil production has risen from 300 bopd to 880 bopd in less than six
months. However, there is limited data (we need more data over time) to
ascertain management’s track record in oil production. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Foreign
country risk<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Giken’s
onshore oil business operates in <st1:country-region>Indonesia</st1:country-region>
hence they are subject to <st1:country-region>Indonesia</st1:country-region>’s
politics, laws and regulations. Any adverse change in the above factors is
likely to have a negative impact to Giken.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Senergy report<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Based
on <b>Table 1</b> above, although Senergy estimated that D&W and Tungkul
fields are worth a (best scenario) net present value of US$195m based on a 10%
discount rate, it is noteworthy that the actual stake Giken has in the fields
are likely to be worth less than US$195m. See <b>Figure 1</b> below on the
corporate structure. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Figure 1: Giken’s corporate structure<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><br /></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
*Not able to show here due to technical constraints</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><br /></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Limited analyst coverage</b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Only Voyage Research covers Giken
with a potential price of $0.450. I.e. there is limited </span>analyst
coverage. It is reasonable to say that the investment community is still not
familiar with Giken, especially to its foray into the onshore oilfield in <st1:country-region>Indonesia</st1:country-region>.
Management is cognizant and is doing their best to raise the awareness of the
investment community on Giken.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<b><u>Giken’s
chart analysis <o:p></o:p></u></b></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
Based
on <b>Chart 1</b> above, Giken has been trading within the range of $0.315 -
$0.360 since 9 Jun 14. It seems to be testing the support of $0.315-0.320. A sustained
break below $0.315 points to a measured technical target price of around $0.275.
However, there are multiple levels of support from $0.300 – 0.310 due to the
placement price at $0.300, Fibonacci level and 100D EMA. Resistances are at
$0.330 – 0.335 / $0.350 – 0.360. A break above $0.360 negates the slight
negative bias of the chart.<o:p></o:p></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u>Conclusion – This is just an
introduction<o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
In
short, Giken seems to be a budding <st1:country-region>Indonesia</st1:country-region>
onshore oil play. Short payback period, cash flow generative operations,
guaranteed customer and favourable <st1:country-region>Indonesia</st1:country-region>
dynamics etc. are points which interest me. However, it is noteworthy that customer
concentration risk, ability to extend agreements and limited track record are
some factors which readers should be aware of.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Readers
who are interested should take a look at their website <a href="http://www.giken.com.sg/">http://www.giken.com.sg/</a> for more
information. You can also email me at <a href="mailto:crclk@yahoo.com.sg">crclk@yahoo.com.sg</a> for the analyst report on Giken.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<span style="font-size: 12pt;">Disclaimer</span><br />
<div style="text-align: justify;">
<a href="https://www.blogger.com/blogger.g?blogID=3041396702339237068" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"></a><a href="https://www.blogger.com/blogger.g?blogID=3041396702339237068" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"></a><span style="font-size: 12pt;">The information contained herein is the writer's personal opinion and provided
to you for information only, and is not intended to, or nor will it
create/induce the creation of any binding legal relations. The information or
opinions provided herein do not constitute an investment advice, an offer or
solicitation to subscribe for, purchase or sell the investment product(s)
mentioned herein. It does not have any regard to your specific investment
objectives, financial situation and any of your particular needs. Accordingly,
no warranty whatsoever is given and no liability whatsoever is accepted for any
loss arising whether directly or indirectly as a result of this information.
Investments are subject to investment risks including possible loss of the
principal amount invested. The value of the product and the income from them
may fall as well as rise. You may wish to seek advice from an independent
financial adviser before making a commitment to purchase or invest in the
investment product(s) mentioned herein. In the event that you choose not to do
so, you should consider whether the investment product(s) mentioned herein are
suitable for you. The writer will not, in any event, be liable to you for any
direct/indirect or any other damages of any kind arising from or in connection
with your reliance on any information in and/or materials appended herein. The
information and/or materials are provided “as is” without warranty of any kind,
either express or implied. In particular, no warranty regarding accuracy or
fitness for a purpose is given in connection with such information and
materials.</span></div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-33340734760357276092014-09-01T20:40:00.000+08:002014-09-01T20:40:43.310+08:00China Sunsine – Recovery in play<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">On 21 Feb, I have done a writeup on
China Sunsine pointing that they may</span> be on the cusp of a recovery <a href="http://www.sharesinv.com/articles/2014/02/25/sunshine-michelin-tyres/">http://www.sharesinv.com/articles/2014/02/25/sunshine-michelin-tyres/</a>.
Since my writeup (Sunsine closed at $0.255 on 21 Feb), it has surged 36.7% (inclusive
of a dividend of $0.01 during the period) to touch an intraday high of $0.335.
It closed at $0.310 on last Friday.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u>Sunsine’s
1HFY14 net profit exceeds the entire net profit earned in FY13<o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Based
on <b>Table 1</b> below, Sunsine seems to be turning around with 2QFY14 sales
and net profit up significantly from the previous few quarters and on a year on
year comparison. What is interesting is that 1HFY14 net profit has exceeded the
net profit earned in the entire 2013. This good set of results is on the back
of the increase in ASP, as well as, sales volume.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Table 1: Sunsine’s results snapshot (Not able to post here due to formatting problems)<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10pt;">Source: Company & Ernest’s compilations</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10.0pt;">*ASP may differ slightly with company’s reports due to
rounding<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">3QFY14F looks bright on several aspects<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">The upcoming 3QFY14F looks bright on
several aspects. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Firstly, according to brokerage </span><span lang="ZH-CN" style="font-family: SimSun; mso-ansi-language: EN-US; mso-ascii-font-family: "Times New Roman"; mso-hansi-font-family: "Times New Roman";">中信建投证券</span><span lang="EN-US">, the supply of MBT, an intermediate
product necessary for the production of MBT based accelerators dropped more
than 30% as some of the MBT producers were forced to close down or suspend
production due to their inability to meet the environment standards set up by
the Chinese authorities. As MBT prices rise, so does the MBT based
accelerators. Although China Sunsine has their own factory for production of
MBT, they have been compliant with the environment standards hence their
production is not affected. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Secondly, the accelerators’
inventory levels in </span><st1:country-region><st1:place><span lang="EN-US">China</span></st1:place></st1:country-region><span lang="EN-US"> have been reduced due to an
increase in export of accelerators to overseas. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">The above trend of relatively high
prices of accelerators is unlikely to ease in the near term as companies take
time to rebuild / improve their production facilities and comply with the
environment standards. In addition, </span><st1:country-region><st1:place><span lang="EN-US">China</span></st1:place></st1:country-region><span lang="EN-US"> is likely to maintain their resolve
in reducing pollution especially with the upcoming APEC meeting in November. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Thirdly, raw material prices continue
to be stable hence it is unlikely to have a significant adverse impact on its
upcoming 3QFY14F results.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Sunsine has paid $0.01 / share as dividends for seven consecutive years<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
For
seven consecutive years, Sunsine has paid $0.01 / share as dividends. At
Friday’s closing price of $0.310, this represents a dividend yield of 3.2%.
There may be scope for higher dividends as Sunsine 1HFY14 net profit eclipses
that of FY13.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Stark discount to its Chinese peers<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Sunsine
trades at 0.8x P/BV and annualised 2014F PE of around 4.3x. Net asset value per
share is around $0.380. On a historical basis, Sunsine trades at an average
P/BV and P/E of around 1.0x and 7.3x respectively. </div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
With
reference to <b>Figure 1</b> below, it is noteworthy that its peer Shandong
Yanggu Huatai Chemical (“YGHT”) trades at 35x FY14F PE and 4.6x FY14F P/BV. Furthermore,
YGHT’s estimated FY14F revenue and net profit are lower than Sunsine’s 1HFY14
figures.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Figure
1: Analysts’ estimates of YGHT’s financials in the next 3 years<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEha9gvCPOpI00SgEEITf2j8yHhq58xqaE8PzcjuZ6dh7VaFUIJ3KoSIoYCgKAKr_HiPV1Y5g_rjBLO9rjC9xZO5c6A7niAYFgIxwGT5FMZL6yRLI3S5paoFVvGbh0fGGt-4m2j8lc5ekf4/s1600/300121+eeo+dated+25+Aug+14.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEha9gvCPOpI00SgEEITf2j8yHhq58xqaE8PzcjuZ6dh7VaFUIJ3KoSIoYCgKAKr_HiPV1Y5g_rjBLO9rjC9xZO5c6A7niAYFgIxwGT5FMZL6yRLI3S5paoFVvGbh0fGGt-4m2j8lc5ekf4/s1600/300121+eeo+dated+25+Aug+14.gif" height="458" width="640" /></a></div>
<span style="font-size: 10pt; text-align: justify;">Source: Bloomberg as of 25 Aug 14</span><br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
As
with all investments, there are naturally risks and noteworthy points to be
aware of. </div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u>Investment
risks <o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Illiquidity<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Average
30D and 100D volume amount to 1.3m and 557K shares respectively. Although this
is still pretty illiquid, it has improved from my last writeup where the average
30D and 100D volumes amount to 1.19m shares and 422K shares respectively. Based
on its annual report 2013, the top twenty shareholders have about 83.7% of Sunsine’s
outstanding shares. Thus, there is little free float which results in its illiquidity.
This is not a liquid company where investors can enter or exit quickly.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>S chip risk<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
This
is a Chinese company helmed by Chinese management hence the usual S chip risk
applies.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<b><span style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span></b>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>No analyst coverage<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">According to Bloomberg, t</span>here
is currently no rated analyst coverage on this stock. It is reasonable to say
that the investment community is not familiar with Sunsine yet. However, there
seems to be more interest in this counter as I have started seeing unrated
reports on Sunsine and online forums where they talk more about Sunsine than before.
<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Exposed to the vagaries of the automotive industry
cycle<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
As
Sunsine’s products are used mainly by the tyre manufacturers, Sunsine is
exposed to the vagaries of the automotive industry cycle in <st1:country-region>China</st1:country-region>.
For 1H2014, <st1:country-region>China</st1:country-region>’s
auto sales rose 11% on a year on year comparison to 9.1m. A significant
slowdown in the <st1:country-region>China</st1:country-region>’s
automotive market is likely to have an adverse impact on Sunsine.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Margins dependent on raw material cost<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Most
of its cost of sales came from direct raw material costs, namely Aniline. According
to Sunsine’s AR2013, ceteris paribus, every 10% increase / decrease in the
prices for Aniline would have the effect of decreasing / increasing the net
profit by RMB30.1m in FY13. As such, raw material costs do play a significant
aspect in Sunsine’s profitability. As mentioned above, Aniline prices have
remained pretty stable since the start of the year.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u>Other developments<o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Sunsine
is on track to complete its new heating plant by 3QFY2014. This may incur some additional
costs but it is likely to be an interesting cash flow generating investment
over the medium term. See my previous writeup for more information on this.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<b><u>Sunsine’s
chart analysis <o:p></o:p></u></b></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
Since my writeup (Sunsine
closed at $0.255 on 21 Feb), it has surged 36.7% (inclusive of a dividend of
$0.01 during the period) to touch an intraday high of $0.335. It closed at
$0.310 on last Friday. Based on <b>Chart 1</b> below,
Sunsine has closed the gap around $0.290 – 0.310 as it weakens from $0.335 on 7
Aug. It seems to have just formed an upside break in the flag formation.
However, we have to monitor how the price performs in the next few days. A sustainable upside breakout above $0.305
with volume points to a measured eventual technical target of around $0.365. <o:p></o:p></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
Supports
and resistances are as follows<o:p></o:p></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
Supports:
$0.300 / 0.290 / 0.275<o:p></o:p></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
Resistances:
$0.320 / 0.330 - 0.335 / 0.350<o:p></o:p></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<b><span style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span></b>
<br />
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<b>Chart 1: Seems to have staged a flag breakout
on the upside<o:p></o:p></b></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<b><br /></b></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDQgJVj0I5k0yTIeyFUoFADiYy52pAZaPMI-oRn5I21r2wmjySbClgB0l-y9EY4iCLTr0j0acAegl_VkQqVcDfCt8Wc-nugL5S5PLoJ2p1qMucr15JVghcrUcIj74sJmGqhzscFpA5mTo/s1600/China+sunsine+chart+as+of+29+Aug+14.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDQgJVj0I5k0yTIeyFUoFADiYy52pAZaPMI-oRn5I21r2wmjySbClgB0l-y9EY4iCLTr0j0acAegl_VkQqVcDfCt8Wc-nugL5S5PLoJ2p1qMucr15JVghcrUcIj74sJmGqhzscFpA5mTo/s1600/China+sunsine+chart+as+of+29+Aug+14.gif" height="426" width="640" /></a></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10.0pt;">Source: CIMB chart as of </span><st1:date day="28" month="8" year="2014"><span style="font-size: 10.0pt;">28 Aug 2014</span></st1:date><span style="font-size: 10.0pt;"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br />
<b><u>Conclusion – FY14F likely to be a record
year for Sunsine<o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Sunsine
seems to be in a sweet spot at the moment and FY14F may well be a record year
for Sunsine. Nevertheless, as there is no rated analyst coverage on this stock,
it may take time for the market to appreciate it. Notwithstanding the potential
positive points about Sunsine, readers should note that this is an S chip which
is subject to S chip risk, fluctuations in raw material prices and the vagaries
of the automotive industry cycle in <st1:country-region>China</st1:country-region>.
Readers who are interested should take a look at their website <a href="http://www.chinasunsine.com/" target="_blank">http://www.chinasunsine.com/</a>
and they can email me at <a href="mailto:crclk@yahoo.com.sg">crclk@yahoo.com.sg</a>
for the unrated reports on Sunsine. </div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<span style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Disclaimer<br />
The information contained herein is the writer's personal opinion and provided
to you for information only, and is not intended to, or nor will it
create/induce the creation of any binding legal relations. The information or
opinions provided herein do not constitute an investment advice, an offer or
solicitation to subscribe for, purchase or sell the investment product(s)
mentioned herein. It does not have any regard to your specific investment
objectives, financial situation and any of your particular needs. Accordingly,
no warranty whatsoever is given and no liability whatsoever is accepted for any
loss arising whether directly or indirectly as a result of this information.
Investments are subject to investment risks including possible loss of the
principal amount invested. The value of the product and the income from them
may fall as well as rise. You may wish to seek advice from an independent
financial adviser before making a commitment to purchase or invest in the
investment product(s) mentioned herein. In the event that you choose not to do
so, you should consider whether the investment product(s) mentioned herein are
suitable for you. The writer will not, in any event, be liable to you for any
direct/indirect or any other damages of any kind arising from or in connection
with your reliance on any information in and/or materials appended herein. The
information and/or materials are provided “as is” without warranty of any kind,
either express or implied. In particular, no warranty regarding accuracy or
fitness for a purpose is given in connection with such information and
materials.<span lang="EN-US"><o:p></o:p></span></div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-68682278885262390102014-07-27T21:49:00.000+08:002014-07-27T21:49:00.135+08:00GP Batteries – Potential turnaround play<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Since
my write-up on Gallant Venture in late Apr / early May, I have been looking at
several companies. One of the companies which caught my eye was GP Batteries
due mainly to the following factors:<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l3 level1 lfo1; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]-->1.<span style="font-size: 7pt;"> </span><!--[endif]--><span dir="LTR">It trades at an approximate 0.5x Price to book. NAV / share is 1.506.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l3 level1 lfo1; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]-->2.<span style="font-size: 7pt;"> </span><span dir="LTR">GP Industries, a major shareholder of GP Batteries, bought an
additional 1.764m shares from 18 Jun to 25 Jul. For the month of July alone, GP
Industries has purchased 1.39m shares at an average gross price of $0.742
(excluding brokerage and stamp duty)<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l3 level1 lfo1; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]-->3.<span style="font-size: 7pt;"> </span><!--[endif]--><span dir="LTR">GP Batteries reported its 4QFY14 results on 29 May (year end Mar) with
a net loss of S$52m vs 16m loss the previous year. Its stock price did not
weaken much after the results but quickly rebounded approximately 49% from
$0.535 in end May to $0.795 on 25 Jul. This might be an indication that FY15
may be a better year. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u>Description
of GP Batteries<o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
GP
Batteries manufactures and sells primary and rechargeable batteries. For more
information, please refer to the link<a href="http://www.gallantventure.com/"><span style="color: windowtext; text-decoration: none; text-underline: none;"> </span>http://www.gpbatteries.com.sg/</a><o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br />
<b><u>Likely turnaround play because<o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
GP
Batteries may be turning around based on the following observations<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l2 level1 lfo2; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]-->a)<span style="font-size: 7pt;"> </span><span dir="LTR">Absence of loss making ventures. (See excerpt from GP Batteries 4QFY14
statement below). According to the 4QFY14 financials, GP Batteries indicated
that before the impairment provisions against Vectirx and the rechargeable
Lithium plant in Taiwan, the Group would have posted a profit before tax of
about S$20m;<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<i>Excerpt
from GP Batteries’ 4QFY14 financials (not able to paste here due to IT issues but please refer to pg 15 of </i><i>4QFY14 financials</i><i>)</i></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l2 level1 lfo2; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]-->b)<span style="font-size: 7pt;"> </span><span dir="LTR">Savings from interest expense as a result of reduced loans: Based on my
personal observations on the FY14 statements, long term and short term bank
loans have reduced from S$190m in FY13 to S$152m in FY14. Thus, there should be
some savings from interest expense. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l2 level1 lfo2; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]-->c)<span style="font-size: 7pt;"> </span><span dir="LTR">Revenues have been pretty stable but quarterly gross margins in FY14
have been higher on a year on year comparison for four consecutive quarters.
Gross margins have been above 22% for the past four quarters in FY14, compared
to 20.1% to 21.9% gross margins in FY13.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l2 level1 lfo2; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]-->d)<span style="font-size: 7pt;"> </span><!--[endif]--><span dir="LTR">GP Batteries is likely to book a disposal gain on the disposal of its
property at </span><st1:street>97 Pioneer Road</st1:street>
in 1HFY15. Estimated disposal gain is approximately S$9m.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u>GP
Industries has been buying GP Batteries, latest purchase price $0.795<o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br />
A most interesting factor on GP Batteries is that GP Industries has been
actively purchasing shares of GP Batteries. GP Industries bought an additional
1.764m shares from 18 Jun to 25 Jul such that it has 90.5m shares, or 54.92% in
GP Batteries. For the month of July alone, GP Industries has purchased 1.39m
shares at an average gross price of $0.742 (excluding brokerage and stamp
duty). (See <b>Table 1</b> below)<o:p></o:p></div>
<div style="text-align: justify; text-justify: inter-ideograph;">
<b><br /></b></div>
<div style="text-align: justify; text-justify: inter-ideograph;">
<b>Table 1: GP
Industries purchase price of GP Batteries for the month of July 2014<o:p></o:p></b></div>
<div style="text-align: justify; text-justify: inter-ideograph;">
<b><br /></b></div>
<table border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; margin-left: 5.4pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; width: 425px;">
<tbody>
<tr style="height: 13.2pt; mso-yfti-irow: 0;">
<td nowrap="" style="border: solid windowtext 1.0pt; height: 13.2pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 75.4pt;" valign="bottom" width="126">
<div align="center" class="MsoNormal" style="text-align: center;">
Purchase date<o:p></o:p></div>
</td>
<td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
Qty<o:p></o:p></div>
</td>
<td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
Amt<o:p></o:p></div>
</td>
<td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 69.0pt;" valign="bottom" width="115">
<div align="center" class="MsoNormal" style="text-align: center;">
Price per unit<o:p></o:p></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 1;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 75.4pt;" valign="bottom" width="126">
<div align="center" class="MsoNormal" style="text-align: center;">
<st1:date day="25" month="7" year="2014">25-Jul-14</st1:date><o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
40,000<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
31,800<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 69.0pt;" valign="bottom" width="115">
<div align="center" class="MsoNormal" style="text-align: center;">
0.795<o:p></o:p></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 2;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 75.4pt;" valign="bottom" width="126">
<div align="center" class="MsoNormal" style="text-align: center;">
<st1:date day="24" month="7" year="2014">24-Jul-14</st1:date><o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
50,000<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
37,250<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 69.0pt;" valign="bottom" width="115">
<div align="center" class="MsoNormal" style="text-align: center;">
0.745<o:p></o:p></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 3;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 75.4pt;" valign="bottom" width="126">
<div align="center" class="MsoNormal" style="text-align: center;">
<st1:date day="23" month="7" year="2014">23-Jul-14</st1:date><o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
287,000<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
213,815<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 69.0pt;" valign="bottom" width="115">
<div align="center" class="MsoNormal" style="text-align: center;">
0.745<o:p></o:p></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 4;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 75.4pt;" valign="bottom" width="126">
<div align="center" class="MsoNormal" style="text-align: center;">
<st1:date day="18" month="7" year="2014">18-Jul-14</st1:date><o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
115,000<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
86,150<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 69.0pt;" valign="bottom" width="115">
<div align="center" class="MsoNormal" style="text-align: center;">
0.749<o:p></o:p></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 5;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 75.4pt;" valign="bottom" width="126">
<div align="center" class="MsoNormal" style="text-align: center;">
<st1:date day="17" month="7" year="2014">17-Jul-14</st1:date><o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
516,000<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
380,782<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 69.0pt;" valign="bottom" width="115">
<div align="center" class="MsoNormal" style="text-align: center;">
0.738<o:p></o:p></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 6;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 75.4pt;" valign="bottom" width="126">
<div align="center" class="MsoNormal" style="text-align: center;">
<st1:date day="11" month="7" year="2014">11-Jul-14</st1:date><o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
44,000<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
32,950<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 69.0pt;" valign="bottom" width="115">
<div align="center" class="MsoNormal" style="text-align: center;">
0.749<o:p></o:p></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 7;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 75.4pt;" valign="bottom" width="126">
<div align="center" class="MsoNormal" style="text-align: center;">
<st1:date day="9" month="7" year="2014">9-Jul-14</st1:date><o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
171,000<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
127,660<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 69.0pt;" valign="bottom" width="115">
<div align="center" class="MsoNormal" style="text-align: center;">
0.747<o:p></o:p></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 8;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 75.4pt;" valign="bottom" width="126">
<div align="center" class="MsoNormal" style="text-align: center;">
<st1:date day="7" month="7" year="2014">7-Jul-14</st1:date><o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
51,000<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
37,485<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 69.0pt;" valign="bottom" width="115">
<div align="center" class="MsoNormal" style="text-align: center;">
0.735<o:p></o:p></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 9;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 75.4pt;" valign="bottom" width="126">
<div align="center" class="MsoNormal" style="text-align: center;">
<st1:date day="4" month="7" year="2014">4-Jul-14</st1:date><o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
85,000<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
62,265<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 69.0pt;" valign="bottom" width="115">
<div align="center" class="MsoNormal" style="text-align: center;">
0.733<o:p></o:p></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 10;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 75.4pt;" valign="bottom" width="126">
<div align="center" class="MsoNormal" style="text-align: center;">
<st1:date day="1" month="7" year="2014">1-Jul-14</st1:date><o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
31,000<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
21,700<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 69.0pt;" valign="bottom" width="115">
<div align="center" class="MsoNormal" style="text-align: center;">
0.700<o:p></o:p></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 11;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 75.4pt;" valign="bottom" width="126">
<div align="center" class="MsoNormal" style="text-align: center;">
<br /></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
<br /></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
<br /></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 69.0pt;" valign="bottom" width="115">
<div align="center" class="MsoNormal" style="text-align: center;">
<br /></div>
</td>
</tr>
<tr style="height: 13.2pt; mso-yfti-irow: 12; mso-yfti-lastrow: yes;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 75.4pt;" valign="bottom" width="126">
<div align="center" class="MsoNormal" style="text-align: center;">
Jul purchases<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
1,390,000<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 55.3pt;" valign="bottom" width="92">
<div align="center" class="MsoNormal" style="text-align: center;">
1,031,857<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 13.2pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 69.0pt;" valign="bottom" width="115">
<div align="center" class="MsoNormal" style="text-align: center;">
0.742<o:p></o:p></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10.0pt;">Source: SGX, Ernest’s compilations<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10.0pt;">*Please refer to GP Industries’ SGX announcements for
more info</span><o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br />
GP Batteries is hosting its AGM on 30 Jul. It is going ex-div on 19 Aug 14.
Dividend per share is S$0.01.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br />
<b><u>Some noteworthy points<o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l1 level1 lfo4; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]-->1.<span style="font-size: 7pt;"> </span><!--[endif]--><span dir="LTR">Time is required to observe whether </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l0 level1 lfo3; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]-->a)<span style="font-size: 7pt;"> </span><!--[endif]--><span dir="LTR">The impairment provisions or “any losses” relating to Vectirx and the
rechargeable Lithium plant in Taiwan are once off and will not be repeated in
FY15F;</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l0 level1 lfo3; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]-->b)<span style="font-size: 7pt;"> </span><!--[endif]--><span dir="LTR">There is any growth in their core business and its effect on its bottom
line<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l1 level1 lfo4; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]-->2.<span style="font-size: 7pt;"> </span><!--[endif]--><span dir="LTR">Stock is pretty illiquid with average 30D and 100D volumes of around 342
lots and 240 lots respectively. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l1 level1 lfo4; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]-->3.<span style="font-size: 7pt;"> </span><!--[endif]--><span dir="LTR">With reference to <b>Chart 1</b> below, GP Batteries has appreciated
approximately 49% from $0.535 in end May to $0.795 on 25 Jul. RSI is at 75.3 on
last Fri. It is a tad overbought but it is noteworthy that GP Batteries’ all
time high RSI is around 89.7. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Supports:
0.775 / 0.740-0.755<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Resistances:
0.820 – 0.830 / 0.850</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Chart
1: GP Batteries has rebounded approximately 49% since end May<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhTv4v6wo2Zw3eBcC2oCtr8OcUAqe2dezsWwvd_jZH6Bd4qCPaHhmlSG1p_liOttjCDggWxMKrWe1OBPopcV2TjT1bTxCCCbZ9WB_yr9jhQL6KGD_DdiWNmx52J4UtJ4kJ0sQBOyzjwM4E/s1600/GP+Batteries+chart+as+of+25+Jul+14.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhTv4v6wo2Zw3eBcC2oCtr8OcUAqe2dezsWwvd_jZH6Bd4qCPaHhmlSG1p_liOttjCDggWxMKrWe1OBPopcV2TjT1bTxCCCbZ9WB_yr9jhQL6KGD_DdiWNmx52J4UtJ4kJ0sQBOyzjwM4E/s1600/GP+Batteries+chart+as+of+25+Jul+14.gif" height="426" width="640" /></a></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10.0pt;">Source: CIMB itrade complimentary chart (25 Jul 14)<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l1 level1 lfo4; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]-->4.<span style="font-size: 7pt;"> </span><!--[endif]--><span dir="LTR">There is no rated analyst coverage. Even if GP Batteries starts to
turnaround in 1QFY15, it may take some time before the Market believes that its
turnaround is sustainable. Without analyst coverage to raise the awareness of
the stock, it may take even more time. However, if the turnaround is true and
sustainable, <span lang="EN-US">investors who
understand and believe GP Batteries are likely to purchase GP Batteries with a good
margin of safety.</span><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u>Conclusion:
Next few quarters’ results may be the re-rating catalyst<o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Whether
GP Batteries will be a turnaround play depends on its results in the next few
quarters. Based on its past year results’ release date, 1QFY15F results should
be announced approximately around the week of 11 Aug. If GP Batteries can
release respectable results in the next few quarters, it may just be the
re-rating catalysts for this company.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
The
above is just a short introduction on GP Batteries. Please visit the company
website <a href="http://www.gallantventure.com/"><span style="color: windowtext; text-decoration: none; text-underline: none;"> </span>http://www.gpbatteries.com.sg/</a><span class="MsoHyperlink"> </span><span class="MsoHyperlink">and SGX website for more information.</span> <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<span style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span>
<br />
<div class="MsoNormal">
</div>
<div style="text-align: justify;">
Disclaimer</div>
<div style="text-align: justify;">
The information contained herein is the writer's personal opinion and provided
to you for information only, and is not intended to, or nor will it
create/induce the creation of any binding legal relations. The information or
opinions provided herein do not constitute an investment advice, an offer or
solicitation to subscribe for, purchase or sell the investment product(s)
mentioned herein. It does not have any regard to your specific investment
objectives, financial situation and any of your particular needs. Accordingly,
no warranty whatsoever is given and no liability whatsoever is accepted for any
loss arising whether directly or indirectly as a result of this information.
Investments are subject to investment risks including possible loss of the
principal amount invested. The value of the product and the income from them
may fall as well as rise. You may wish to seek advice from an independent
financial adviser before making a commitment to purchase or invest in the
investment product(s) mentioned herein. In the event that you choose not to do
so, you should consider whether the investment product(s) mentioned herein are
suitable for you. The writer will not, in any event, be liable to you for any
direct/indirect or any other damages of any kind arising from or in connection
with your reliance on any information in and/or materials appended herein. The
information and/or materials are provided “as is” without warranty of any kind,
either express or implied. In particular, no warranty regarding accuracy or
fitness for a purpose is given in connection with such information and
materials.</div>
<o:p></o:p>Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-72947894338232405332014-05-19T20:55:00.001+08:002014-05-19T20:55:53.023+08:00ISOTeam – On the verge of chart breakout<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">ISOTeam has been testing the
resistance of $0.400 – 0.405 on six occasions since </span><st1:date day="20" month="1" year="2014"><span lang="EN-US">20 Jan 2014</span></st1:date><span lang="EN-US">. There was a spike in RSI and ADX
levels as the share price tested $0.400 – 0.405 on 9 & 12 May. RSI went to
an all time high of 77.4 on 9 May. For the next four trading days (14 – 19
May), the share price consolidated around $0.380 – 0.405 and closed at $0.385 today
(Monday). Due to this consolidation, ADX and RSI have fallen to more
comfortable levels. RSI closed at 52.0 today.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Based on <b>Chart 1</b> below, ISOTeam
remains on an uptrend, supported by the rising moving averages and the rising trend
line. Based on my personal observation on chart and price movement, it seems to
be on the verge of a potential break out. Measured technical target price on a
successful breakout (if accompanied with follow through buying and volume
expansion) is around $0.450 which also coincided with the 52 week high.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Support: 0.375 – 0.380 / 0.370 /
0.360 – 0.365<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Resistance: 0.400-0.405 / 0.415 / 0.430
/ 0.440 / 0.450<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Chart 1: ISOTeam remains on an
uptrend, on the verge of a potential break out<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhPsMumXhJC6EaWRIYT0GPLWFh2fJiIDfmxabKJPhwRGhkA7Tld9gRPHBMdCrcdN7DuiaXj3HbCqlZEIzLhoFkTE5O8FYUVSpNLPDPxeBLgczm8zHAAyztzqS-mrMpqQpE_KqF-DYmjeTg/s1600/ISOTeam+chart+as+of+19+May+14.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhPsMumXhJC6EaWRIYT0GPLWFh2fJiIDfmxabKJPhwRGhkA7Tld9gRPHBMdCrcdN7DuiaXj3HbCqlZEIzLhoFkTE5O8FYUVSpNLPDPxeBLgczm8zHAAyztzqS-mrMpqQpE_KqF-DYmjeTg/s1600/ISOTeam+chart+as+of+19+May+14.gif" height="426" width="640" /></a></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt; mso-ansi-language: EN-US;">Source: CIMB itrade
19 May 14<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u>Interesting
developments in April and May<o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
ISOTeam
ended their moratorium in January. In April and May 2014, based on my manual
observation, there were two days (namely, 16 Apr and 9 May) where there were
married trades. These married trades were significant on two fronts. Firstly,
the married trades were mostly done at prices which were higher than the last
prevailing price. For example, on 9 May, married trades amounting to about 9m
shares changed hands with the bulk of it being done at $0.410 – 0.420. As a
result of these transactions on 9 May, Singapore Tong Teik (Private) Limited emerged
as a substantial shareholder holding 7.5m ISOTeam shares (cost is $0.420), or
6.4% of ISOTeam. Secondly, the volume of the married trades was significant as
the total volume of shares transacted on 16 Apr and 9 May amounted to 6.0m and
10.5m respectively. It was noteworthy that the average 30D and 100D volume for
ISOTeam only amounted to 868,000 and 478,000 shares respectively. </div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Conclusion<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Against
the backdrop of a (likely) positive chart setup and coupled with the above
interesting developments, odds are higher of a chart breakout above its six
times tested resistance <span lang="EN-US">0.400
– 0.405. Measured technical target price on a successful breakout (if
accompanied with follow through buying and volume expansion) is around $0.450
which also coincided with the 52 week high.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Disclaimer<br />
The information contained herein is the writer's personal opinion and provided
to you for information only, and is not intended to, or nor will it
create/induce the creation of any binding legal relations. The information or
opinions provided herein do not constitute an investment advice, an offer or
solicitation to subscribe for, purchase or sell the investment product(s)
mentioned herein. It does not have any regard to your specific investment
objectives, financial situation and any of your particular needs. Accordingly,
no warranty whatsoever is given and no liability whatsoever is accepted for any
loss arising whether directly or indirectly as a result of this information.
Investments are subject to investment risks including possible loss of the
principal amount invested. The value of the product and the income from them
may fall as well as rise. You may wish to seek advice from an independent
financial adviser before making a commitment to purchase or invest in the
investment product(s) mentioned herein. In the event that you choose not to do
so, you should consider whether the investment product(s) mentioned herein are
suitable for you. The writer will not, in any event, be liable to you for any
direct/indirect or any other damages of any kind arising from or in connection
with your reliance on any information in and/or materials appended herein. The
information and/or materials are provided “as is” without warranty of any kind,
either express or implied. In particular, no warranty regarding accuracy or
fitness for a purpose is given in connection with such information and
materials.<span lang="EN-US"><o:p></o:p></span></div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-19700224154627157262014-05-01T11:52:00.000+08:002014-05-01T11:52:27.266+08:00Gallant Venture – Huge land bank @Bintan may be re-rating factor<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Gallant Venture is a commercial developer, integrated master planner
and manager for industrial parks and resorts in Batam and Bintan. Based on its
annual report 2013, it has the backing of key shareholders such as Salim
(74.5%) and Sembcorp Industries (12.0%). As of 30 Apr 14 closing price at $0.300,
Gallant’s market cap is S$1.45b. Notwithstanding its large market
capitalization, there is no analyst coverage.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">There are some key factors which cause me to take a closer look at
Gallant now. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l0 level1 lfo1; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><span lang="EN-US">1.<span style="font-size: 7pt; font-weight: normal;">
</span></span></b><!--[endif]--><b><span lang="EN-US">Huge land bank in Bintan totaling 18,000 hectares<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Gallant has significant land bank in Bintan totaling approximately 18,000
hectares. According to Gallant’s company website, the land was acquired at a very
attractive rate of </span>$3 psm<span lang="EN-US">. With the recent interest coming into undervalued property stocks,
Gallant may be worth a closer look. It
recently caught my attention and may catch the market attention too. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Although, I am not a property expert in assessing the worth of their
land in Bintan, I would guess that it is likely to worth more than before. Its
net asset value per share is approximately around $0.415.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l0 level1 lfo1; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><span lang="EN-US">2.<span style="font-size: 7pt; font-weight: normal;">
</span></span></b><!--[endif]--><b><span lang="EN-US">Property development business to gain traction <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Gallant started to recognize land sales of S$55.5 million
contributing net margin of approximately S$34.7 million in FY13. (FY13 net
profit was S$47.5m). According to Gallant, three out of the five new hotels
already under construction are scheduled to open in 2014. Another three additional
hotels have announced to break ground in 2013. As these new properties come
online, Gallant expects incremental revenues from their complementary lines of
business, such as utilities, ferries and dormitory rentals.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l0 level1 lfo1; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><span lang="EN-US">3.<span style="font-size: 7pt; font-weight: normal;">
</span></span></b><!--[endif]--><b><span lang="EN-US">Automotive sector - full year contribution in FY14<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">As of Jul 2013, Gallant has increased its stake in PT Indomobil
Sukses Internasional Tbk (“IMAS”) to 71.49%. In 2013, IMAS’ revenues exceeded
S$2.45 billion and generated after-tax profit of almost S$79 million,
contributing S$25.8 million profit to Gallant.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Indonesia’s automotive sector has been on an uptrend over the last
five years. Total annual vehicle sales have doubled in the last five years from
approximately 600,000 units to approximately 1.2 million units in 2013. On the
back of <st1:country-region w:st="on"><st1:place w:st="on">Indonesia</st1:place></st1:country-region>’s
increasing consumption power, management remains positive on the automotive
sector. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l0 level1 lfo1; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><span lang="EN-US">4.<span style="font-size: 7pt; font-weight: normal;">
</span></span></b><!--[endif]--><b><span lang="EN-US">Chart – consolidation mode<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Based on <b>Chart 1</b> below, Gallant
seems to be in a consolidation mode after reaching eight month high at $0.360
on 19 Feb 2014. Based on my personal observation, there seems to be some
accumulation at current levels.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Strong support: $0.290 – 0.300 / 0.280 </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Resistance: $0.315 / 0.335 / 0.350</span></div>
<b><span lang="EN-US" style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span></b>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Chart 1: Gallant seems to
be consolidating around 0.280-0.315<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjMpKvlNDGqLfoJEphoAYGimduGfvZJ3TkqTBqGFEgYIB2guMC3IzYEftSW79aVOg7X8jw9Qovt-dptGcuZ0wm5C8YiW6oNM9qkk0NMROITy41UrVczKzQaulXQe3BOFKpRPE7PCNmjkSQ/s1600/Gallant+chart+as+of+30+Apr+14.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjMpKvlNDGqLfoJEphoAYGimduGfvZJ3TkqTBqGFEgYIB2guMC3IzYEftSW79aVOg7X8jw9Qovt-dptGcuZ0wm5C8YiW6oNM9qkk0NMROITy41UrVczKzQaulXQe3BOFKpRPE7PCNmjkSQ/s1600/Gallant+chart+as+of+30+Apr+14.gif" height="426" width="640" /></a></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /><!--[endif]--></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt;">Source: CIMB itrade 30 Apr 14<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Risks<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l1 level1 lfo2; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><span lang="EN-US">1.<span style="font-size: 7pt; font-weight: normal;">
</span></span></b><!--[endif]--><b><span lang="EN-US">May stay undervalued for some time if there is no analyst / media
coverage.<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">It is not new that Gallant’s land bank is (very likely) undervalued
in their books. However, what has changed is that they have started to
recognize resorts land sales and have secured land sales contracts stretching
till 2015. Thus, this seems to be a good step forward to monetize their land
bank. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Having said the above, if there is no analyst or media coverage, it
may still take time for the market to recognize the initiatives that Gallant is
doing. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l1 level1 lfo2; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><b><span lang="EN-US">2.<span style="font-size: 7pt; font-weight: normal;">
</span></span></b><!--[endif]--><b><span lang="EN-US">Land sales - lumpy in nature.<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">As their land sales are lumpy in nature, quarterly results may not
be a good gauge of company performance</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">In addition to the above, there are likely to be other risks
involved. As this is just a short introduction on Gallant, please visit the
company website <a href="http://www.gallantventure.com/">http://www.gallantventure.com/</a>
for more information.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<span lang="EN-US" style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Disclaimer<br />
The information contained herein is the writer's personal opinion and provided
to you for information only, and is not intended to, or nor will it
create/induce the creation of any binding legal relations. The information or
opinions provided herein do not constitute an investment advice, an offer or
solicitation to subscribe for, purchase or sell the investment product(s)
mentioned herein. It does not have any regard to your specific investment
objectives, financial situation and any of your particular needs. Accordingly,
no warranty whatsoever is given and no liability whatsoever is accepted for any
loss arising whether directly or indirectly as a result of this information.
Investments are subject to investment risks including possible loss of the
principal amount invested. The value of the product and the income from them
may fall as well as rise. You may wish to seek advice from an independent
financial adviser before making a commitment to purchase or invest in the
investment product(s) mentioned herein. In the event that you choose not to do
so, you should consider whether the investment product(s) mentioned herein are
suitable for you. The writer will not, in any event, be liable to you for any
direct/indirect or any other damages of any kind arising from or in connection
with your reliance on any information in and/or materials appended herein. The
information and/or materials are provided “as is” without warranty of any kind,
either express or implied. In particular, no warranty regarding accuracy or
fitness for a purpose is given in connection with such information and
materials.</span></div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-84456893267587063472014-02-23T15:21:00.000+08:002014-02-23T15:21:13.222+08:00China Sunsine - Small market cap… Yet backed by top tier customers<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">I have taken a look at China Sunsine
(“Sunsine”) around 4Q2012 but decided to give it a miss at that time due to
weak operating business conditions. One savvy investor friend of mine recently
suggested to me to take another look on Sunsine. Below is my short writeup /
introduction on Sunsine. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Description of Sunsine<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
According
to its annual report 2012 (“AR2012”), Sunsine is the largest producer of rubber
accelerators in <st1:country-region w:st="on">China</st1:country-region>
and, probably, the world. It serves all the global top 10 tyre manufacturers
such as Bridgestone, Michelin etc and top local tire companies such as Hangzhou
Zhongce, GITI Tire etc. In fact, out of the top 75 tyre manufacturers in the
world, about 55% are Sunsine's customers.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Please refer to Sunsine’s website <a href="http://www.chinasunsine.com/index.php?option=com_content&task=view&id=17&Itemid=34">http://www.chinasunsine.com/index.php?option=com_content&task=view&id=17&Itemid=34</a>
for an overview of their products. </div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br />
<b><u>Investment merits<o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br />
<b>Likely turnaround play<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
With
reference to <b>Table 1</b>, Sunsine has
been reporting improving results for the past three quarters. In fact, 9MFY13
net profit was RMB59.2m which was 85% higher than the entire FY12 net profit of
RMB32.0m. In its latest 3QFY13 press release, Mr Xu Cheng Qiu, Executive
Chairman said that they are confident of the Group’s growth and outlook for the
next 12 months. This is the strongest statement among the past few quarters.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Table 1: Sunsine’s quarterly results since
1QFY12<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<table border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; margin-left: 4.75pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; width: 594px;">
<tbody>
<tr style="height: 12.75pt; mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td nowrap="" style="border: solid windowtext 1.0pt; height: 12.75pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 107.0pt;" valign="bottom" width="143">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
</td>
<td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="64">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
3QFY13</div>
</td>
<td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="64">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
2QFY13</div>
</td>
<td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="64">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
1QFY13</div>
</td>
<td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="64">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
4QFY12</div>
</td>
<td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.0pt;" valign="bottom" width="65">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
3QFY12</div>
</td>
<td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.0pt;" valign="bottom" width="65">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
2QFY12</div>
</td>
<td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="64">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
1QFY12</div>
</td>
</tr>
<tr style="height: 12.75pt; mso-yfti-irow: 1;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 107.0pt;" valign="bottom" width="143">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Revenue
(RMB m)</div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="64">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
440.3</div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="64">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
426.5</div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="64">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
384.0</div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="64">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
361.0</div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.0pt;" valign="bottom" width="65">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
368.9</div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.0pt;" valign="bottom" width="65">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
363.3</div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="64">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
324.0</div>
</td>
</tr>
<tr style="height: 12.75pt; mso-yfti-irow: 2;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 107.0pt;" valign="bottom" width="143">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Gross
Profit </div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
(RMB
m)</div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="64">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
84.4</div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="64">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
79.3</div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="64">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
56.0</div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="64">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
51.1</div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.0pt;" valign="bottom" width="65">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
62.4</div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.0pt;" valign="bottom" width="65">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
72.7</div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="64">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
57.5</div>
</td>
</tr>
<tr style="height: 12.75pt; mso-yfti-irow: 3; mso-yfti-lastrow: yes;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 107.0pt;" valign="bottom" width="143">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Net
Profit </div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
(RMB
m)</div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="64">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
27.1</div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="64">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
20.5</div>
</td>
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<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
11.7</div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="64">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
-0.9</div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.0pt;" valign="bottom" width="65">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
5.7</div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 49.0pt;" valign="bottom" width="65">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
11.2</div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 12.75pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.05pt;" valign="bottom" width="64">
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
15.9</div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Source:
Company & Ernest’s compilations </div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>FY14F results may be better due to<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Firstly,
Sunsine’s 4,000 ton DPG plant (accelerator) at Weifang has started commercial
production in Sep 2013. Secondly, Phase 1 of 10,000 ton insoluble sulphur is
likely to be completed in end 2013. These should contribute in 2014. Thirdly, any
increase in average selling price, or sales volume, or reduction in raw
material costs in 2014 is likely to bode well for Sunsine too.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Dividend yield of approximate 4%<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Company
has been giving dividend per share of $0.01 for the past four consecutive
years, even in years with poor performance. Hence it is likely to continue this
practice. At Friday’s closing price of $0.255, this represents a dividend yield
of around 3.9%. Sunsine expects to report 4QFY13F results on 26 Feb 14.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br />
<b>Decent valuations<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Sunsine
trades at 0.7x P/BV and annualised 2013F PE of around 7.5x. Net asset value per
share is around $0.350.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u>Investment
risks <o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Illiquidity<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
With
reference to <b>Figure 1</b> below, the top
twenty shareholders have about 83.5% of Sunsine’s outstanding shares. Thus,
there is little free float which results in its illiquidity. Average 30D and
100D volume amount to 1.19m shares and 422K shares respectively. This is not a
liquid company where investors can enter or exit quickly.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Figure 1: Top twenty shareholders hold about
83.5% of company’s shares<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /><!--[endif]--></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10.0pt;">Source: Company’s AR2012<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>S chip risk<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
This
is a Chinese company helmed by Chinese management hence the usual S chip risk
applies.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>No analyst coverage<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">According to Bloomberg, t</span>here
is currently no rated analyst coverage on this stock. It is reasonable to say
that the investment community is not familiar with Sunsine. In addition, its
small market capitalization of S$119m precludes some funds from taking a
position in them.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Exposed to the vagaries of the automotive industry
cycle<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
As
Sunsine’s products are used mainly by the tyre manufacturers, Sunsine is
exposed to the vagaries of the automotive industry cycle in <st1:country-region w:st="on">China</st1:country-region>. <st1:country-region w:st="on">China</st1:country-region> auto
sales rose 13.9% in 2013 vis-à-vis 4.3% in 2012. According to a China Association of Automobile Manufacturers (“CAAM”)
estimate released in January, they expect the auto sales to grow at the same
pace in 2014. However, it is noteworthy that car sales in <st1:country-region w:st="on">China</st1:country-region> inched up
6% in January 2014 compared to January 2013.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b>Margins dependent on raw material cost<o:p></o:p></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Most
of its cost of sales came from direct raw material costs, namely Aniline. According
to Sunsine’s AR2012, ceteris paribus, every 10% increase in the prices for
Aniline would have the effect of decreasing the net profit by RMB24.3m in FY12.
As such, raw material costs do play a significant aspect in Sunsine’s
profitability. </div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u>Other developments<o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
There
were two announcements in Dec 2013. Firstly, Sunsine announced on <st1:date day="17" month="12" w:st="on" year="2013">17 Dec 2013</st1:date> that they have
formed a new subsidiary called Shanxian Sunsine Hotel Management Co., Ltd to
make a strategic long term investment in the hospitality sector in <st1:place w:st="on"><st1:placename w:st="on">Heze</st1:placename> <st1:placetype w:st="on">City</st1:placetype></st1:place>.
Management emphasised that they do not intend to manage the Property on their
own and will appoint a suitable hotel management company to manage this
investment. </div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Secondly,
Sunsine announced on 30 Dec 2013 that they have formed a new subsidiary called
Shanxian Guangshun Heating Co., Ltd to set up a centralised heating company
(“CHC”) to produce steam for internal usage and to supply to all the companies
in the Shanxian Chemical Industrial Zone (“SCIZ”) at market rate (It is
noteworthy that users of steam pay the charges upfront before usage). For the electricity
which is the by product from steam generation, the State Grid will purchase it from
the CHC. Sunsine’s decision to set up the CHC arises because the Local
Government has indicated to Shandong Sunsine (Shandong Sunsine accounts of more
than 50% of the total consumption by all companies in the SCIZ) that either it
sets up and operates the CHC, or provides financial assistance and/or guarantee
to any third party which undertakes the operation of the CHC. Thus, after a
feasibility study, management believes that it is in the best interest for the
company to set up the CHC on their own. Personally, pending more information
from the company, this seems to be an interesting cash flow generating
investment over the medium term.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Management
will provide more details on the above developments in due course. For more
details, please view the above announcements on SGX website.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<b><u>Sunsine’s
chart analysis <o:p></o:p></u></b></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
Sunsine
has appreciated about 49% from $0.205 on <st1:date day="23" month="12" w:st="on" year="2013">23 Dec 2013</st1:date> to an intraday high of $0.305 on <st1:date day="22" month="1" w:st="on" year="2014">22 Jan 2014</st1:date> on the back of
an increased in volume. The recent profit taking which saw it drop to a low of
$0.225 on <st1:date day="13" month="2" w:st="on" year="2014">13 Feb 2014</st1:date>
was accompanied with low volume. It closed last Friday at $0.255.<o:p></o:p></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
The
trend seems to be up as evidenced from the rising moving averages. In addition,
the moving averages have made golden crosses in Jan 2014 which further support
the uptrend observation. <o:p></o:p></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
Supports
and resistances are as follows<o:p></o:p></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
Supports:
$0.245 / 0.235 / 0.225 – 0.230<o:p></o:p></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
Resistances:
$0.265 / 0.275 – 0.285 / 0.305<o:p></o:p></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<b><span style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span></b>
<br />
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<b>Chart 1: Seems to be on an uptrend<o:p></o:p></b></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEisMNlkJ_upNkiP2K2_GgSeh8IpK2-ZYBziGVHfs-MLwkx9Q7UCx63pRhpFhUNHfIP1Bo5l8UAIhJP7_8Izpq-meH3iOIU-A9o4_WtFq-b2GK4ILBIigYF-Ve9yL9v0sfdDWv5viBKnZEc/s1600/China+Sunsine+chart+as+of+21+Feb+14.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEisMNlkJ_upNkiP2K2_GgSeh8IpK2-ZYBziGVHfs-MLwkx9Q7UCx63pRhpFhUNHfIP1Bo5l8UAIhJP7_8Izpq-meH3iOIU-A9o4_WtFq-b2GK4ILBIigYF-Ve9yL9v0sfdDWv5viBKnZEc/s1600/China+Sunsine+chart+as+of+21+Feb+14.gif" height="426" width="640" /></a></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /><!--[endif]--></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10.0pt;">Source: CIMB chart as of <st1:date day="21" month="2" w:st="on" year="2014">21 Feb 2014</st1:date><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br />
<b><u>Conclusion – This is just an
introduction<o:p></o:p></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Sunsine
seems to be on the cusp of a recovery based on its results from the preceding
three quarters, coupled with decent valuations (NAV / share is $0.350) and
dividend yields amounting to around 4%. Nevertheless, this is an S chip which
is subject to S chip risk, fluctuations in raw material prices and the vagaries
of the automotive industry cycle in <st1:country-region w:st="on">China</st1:country-region>. Readers who are interested
should take a look at their website <a href="http://www.chinasunsine.com/" target="_blank">http://www.chinasunsine.com/</a> and their AR2012 <a href="http://infopub.sgx.com/FileOpen/China%20Sunsine%20AR2012.ashx?App=Prospectus&FileID=15126" target="_blank">http://infopub.sgx.com/FileOpen/China%20Sunsine%20AR2012.ashx?App=Prospectus&FileID=15126</a>
for more information. </div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
China
Sunsine reports 4QFY13F results on 26 Feb. A results briefing will be held on
27 Feb.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<span style="font-family: inherit;">P.S: I have sent a short email to clients to summarise the gist of the
above writeup a few days ago.</span><br />
<span style="font-family: inherit;"><br /></span>
<br />
<div style="text-align: justify;">
<span style="font-family: inherit;">Disclaimer</span></div>
<div style="text-align: justify;">
<span style="font-family: inherit;">The information contained herein is the writer's personal opinion and provided
to you for information only, and is not intended to, or nor will it
create/induce the creation of any binding legal relations. The information or
opinions provided herein do not constitute an investment advice, an offer or
solicitation to subscribe for, purchase or sell the investment product(s)
mentioned herein. It does not have any regard to your specific investment
objectives, financial situation and any of your particular needs. Accordingly,
no warranty whatsoever is given and no liability whatsoever is accepted for any
loss arising whether directly or indirectly as a result of this information.
Investments are subject to investment risks including possible loss of the
principal amount invested. The value of the product and the income from them
may fall as well as rise. You may wish to seek advice from an independent
financial adviser before making a commitment to purchase or invest in the
investment product(s) mentioned herein. In the event that you choose not to do
so, you should consider whether the investment product(s) mentioned herein are
suitable for you. The writer will not, in any event, be liable to you for any
direct/indirect or any other damages of any kind arising from or in connection
with your reliance on any information in and/or materials appended herein. The
information and/or materials are provided “as is” without warranty of any kind,
either express or implied. In particular, no warranty regarding accuracy or fitness
for a purpose is given in connection with such information and materials.</span></div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com1tag:blogger.com,1999:blog-3041396702339237068.post-21893155108522111922014-01-20T11:05:00.000+08:002014-01-20T11:05:20.436+08:00ISOTeam – Defensive & recurring business
It
had been a while since I last posted a company writeup on my blog (the previous
one was Nam Cheong in late Nov 2013). I had been doing some regular informal
email writeups to my clients but due to time constraints, I was not able to do
a formal writeup and post on my blog. Finally, I managed to set aside some time
to do a writeup on this company below. <o:p></o:p><br />
<div class="Section1">
<div class="MsoNormal" style="margin: 0in 0in 0pt; text-align: justify; text-justify: inter-ideograph;">
<o:p> </o:p></div>
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<b><u><span lang="EN-US" style="color: black;">Description of ISOTeam<o:p></o:p></span></u></b></div>
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<o:p> </o:p></div>
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ISOTeam
has a 15 year track record in Repair & Redecoration works (“R&R”) and
Addition & Alteration works (“A&A). It has undertaken over 200 R&R
and A&A projects involving more than 1,500 buildings. See <b style="mso-bidi-font-weight: normal;">Figure 1</b> on the description of its
business segments below.<o:p></o:p></div>
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<o:p> </o:p></div>
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<b style="mso-bidi-font-weight: normal;">Figure 1: </b><b style="mso-bidi-font-weight: normal;">ISOTeam business model</b><b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
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<o:p> </o:p></div>
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<span lang="EN-US" style="color: black;"><v:shapetype coordsize="21600,21600" filled="f" id="_x0000_t75" o:preferrelative="t" o:spt="75" path="m@4@5l@4@11@9@11@9@5xe" stroked="f">
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</v:f></v:f></v:f></v:f></v:f></v:f></v:f></v:f></v:f></v:f></v:f></v:f></v:formulas>
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</o:lock></v:path></v:stroke></v:shapetype></span><span style="font-size: 10pt;">Source: Company</span><span style="font-size: 10pt;">
Annual Report FY13 (financial year ends in June)</span><span style="font-size: 10pt;"><o:p></o:p></span></div>
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<o:p> </o:p></div>
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<b style="mso-bidi-font-weight: normal;"><u><span lang="EN-US">What’s so interesting
on ISOTeam? <o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black;"><o:p> </o:p></span></b></div>
<div class="MsoNormal" style="margin: 0in 0in 0pt 0.25in; mso-layout-grid-align: none; mso-list: l1 level1 lfo1; tab-stops: list .25in; text-align: justify; text-indent: -0.25in; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">1.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><span dir="LTR"><b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black;">Recurring business (i.e. R&R) comprises approx 50% of </span></b></span><b style="mso-bidi-font-weight: normal;"><span style="color: black;">revenue and gross
profit<span lang="EN-US"><o:p></o:p></span></span></b></div>
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: black;"><o:p> </o:p></span></div>
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: black;">Based on <b style="mso-bidi-font-weight: normal;">Figure 2</b>
below, ISOTeam’s R&R segment comprises of approx 50% of FY12 & FY13 </span><span style="color: black;">revenue and gross profit</span><span style="color: black;">.
This is comforting to investors as this segment is recurring in nature. It is
also supported by government regulations. U</span><span style="color: black;">nless
the Commissioner of Buildings approves otherwise</span><span style="color: black;">,
the exterior walls of buildings are mandated to be repainted </span><span style="color: black;">at intervals of not more than five years</span><span style="color: black;">. This creates recurring demand for ISOTeam’s R&R
business segment. <span lang="EN-US"><o:p></o:p></span></span></div>
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<span lang="EN-US" style="color: black;"><o:p> </o:p></span></div>
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<b style="mso-bidi-font-weight: normal;">Figure </b><b style="mso-bidi-font-weight: normal;">2</b><b style="mso-bidi-font-weight: normal;">: </b><b style="mso-bidi-font-weight: normal;">ISOTeam’s revenue and gross profit breakdowns</b><b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
</div>
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman"; font-size: 12pt; mso-bidi-language: AR-SA; mso-fareast-font-family: SimSun; mso-fareast-language: ZH-CN;"><br clear="all" style="mso-break-type: section-break; page-break-before: auto;" />
</span></b><span style="font-size: 10pt;">Source:
Company</span><span style="font-size: 10pt;"> FY13 Presentation Slides </span><span lang="EN-US" style="color: black;"><o:p></o:p></span><br />
<div class="Section2">
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<span lang="EN-US" style="color: black;"><o:p></o:p></span><br /></div>
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<span style="font-size: 10pt;">Source: Company</span><span style="font-size: 10pt;">
FY13 Presentation Slides</span><span style="font-size: 10pt;"><o:p></o:p></span></div>
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: black;"><br style="mso-special-character: line-break;" />
</span><span style="font-size: 10pt;">Source:
Company</span><span style="font-size: 10pt;"> FY13 Presentation Slides</span></div>
</div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt 0.25in; mso-layout-grid-align: none; mso-list: l1 level1 lfo1; tab-stops: list .25in; text-align: justify; text-indent: -0.25in; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">2.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><span dir="LTR"><b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black;">Strong order books amid regular contract wins</span></b></span></div>
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<span lang="EN-US" style="color: black;">During their announcement of their FY13 results, ISOTeam
mentioned that its order books as of </span><st1:date day="14" month="8" year="2013"><span lang="EN-US" style="color: black;">14 Aug 2013</span></st1:date><span lang="EN-US" style="color: black;"> stood at S$81.0m to be recognized over the next
24 months. This order book of S$81.0m took into account of their contract wins
of S$10.9m which was announced on </span><st1:date day="14" month="8" year="2013"><span lang="EN-US" style="color: black;">14 Aug 2013</span></st1:date><span lang="EN-US" style="color: black;">. It is noteworthy that ISOTeam’s FY13 revenue
was around S$48m. Hence this order book of S$81.0m to be recognized over the
next 24 months provides some earnings visibility in the next two years. In
addition, ISOTeam is the lowest bidder for several projects amounting to
S$27.0m. <o:p></o:p></span></div>
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<span lang="EN-US" style="color: black;">Subsequent to their FY13 results announcement, ISOTeam
announced on </span><st1:date day="26" month="10" year="2013"><span lang="EN-US" style="color: black;">26 Oct 2013</span></st1:date><span lang="EN-US" style="color: black;"> that it has won S$19.0m new contracts. Since their IPO on </span><st1:date day="12" month="7" year="2013"><span lang="EN-US" style="color: black;">12 July 2013</span></st1:date><span lang="EN-US" style="color: black;">, they have announced ten contract wins
amounting to S$29.9m.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">3.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><span dir="LTR"><b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black;">More growth opportunities ahead<o:p></o:p></span></b></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: black;">Firstly, there is scope for growth in new markets, new
customer networks, new related businesses etc as ISOTeam may embark on
potential acquisitions, joint venture and / or strategic alliances. Secondly,
ISOTeam plans to </span><span style="color: black;">diversify into the private
sector by establishing a private home renovation arm to provide retrofitting
services to customers living in landed properties to cater to the various maintenance
and property enhancement needs of these homeowners. <span lang="EN-US">For the
above plans, based on its prospectus, ISOTeam has set aside S$2.5m of its IPO
proceeds and has credit facilities of up to S$17.7m for potential business
opportunities. <o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span style="color: black;">Thirdly,
ISOTeam’s industry continues to be buoyed by government initiatives and
regulations. For example, the National Environment Agency planned to construct
ten new hawker centers by 2017. The Land Transport Authority aimed to construct
200 km of new sheltered linkways between 2014-2018. Also, land has been set
aside to build 700,000 new homes by 2030 to cope with a target 6.9m population
by then. Hence, ISOTeam’s industry continues to be underpinned by such
government initiatives and regulations. </span><span style="color: black;"><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: black;">Fourthly, ISOTeam continues to gain entry in untapped
sectors. According to its Annual Report 2013, ISOTeam</span><span lang="EN-US" style="color: black;"> </span><span style="color: black;">became SKK’s exclusive
applicator</span><span style="color: black;"> </span><span style="color: black;">for
JTC industrial projects, army</span><span style="color: black;"> </span><span style="color: black;">camps and HDB industrial projects</span><span style="color: black;"> </span><span style="color: black;">since August 2013.</span><span style="color: black;"> This is likely to open out a new chapter of growth for
ISOTeam.<span lang="EN-US"><o:p></o:p></span></span></div>
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;"></span></span></b><br />
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">4.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><span dir="LTR"><b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black;">Dividend stock in the making?<o:p></o:p></span></b></span><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: black;">ISOTeam has distributed a $0.01 dividend per share for its
FY13 </span><span style="color: black;">equivalent to a dividend payout ratio of</span><span style="color: black;"> approximately 20%. Based on a UOB research report, they
estimate that ISOTeam’s FY14F to be around S$6.3m. Assuming that ISOTeam’s
dividend payout ratio remains the same, investors are likely to get <span lang="EN-US">$0.01 dividend per share which works out to be around 2.6% dividend
yield. There may be scope of increasing the dividend payout ratio in the years
ahead.<o:p></o:p></span></span></div>
<span lang="EN-US" style="color: black;"><b style="mso-bidi-font-weight: normal;"><u></u></b></span><br />
<span lang="EN-US" style="color: black;"><b style="mso-bidi-font-weight: normal;"><u>Risks <o:p></o:p></u></b></span><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">1.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><span dir="LTR"><b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black;">Moratorium ends in January 2014<o:p></o:p></span></b></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">According to
ISOTeam’s <span style="color: black;">prospectus, the moratorium for ISOTeam’s
substantial shareholders, namely, </span></span><span style="color: black;">ADD
Investment, David Ng, Anthony Koh and Danny Foo</span><span style="color: black;">
ends in January. This means that they are free to dispose a portion of their
shares. Their total direct and indirect stake amounts to 79.4m shares or 67.6%
of ISOTeam’s total outstanding shares. It is noteworthy that ISOTeam share
price is up a whopping 77% since its IPO at $0.220 in July 2013. Potential
investors should take note of this aspect especially in view of its
illiquidity. <span lang="EN-US"><o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">2.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><span dir="LTR"><b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black;">Limited analyst coverage<o:p></o:p></span></b></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Only UOB
Kayhian covers ISOTeam with a target price of S$0.550. It is reasonable to say
that most investors are still unfamiliar with ISOTeam. In addition, its small
market capitalization of S$44m precludes some funds from taking a position in
them. </span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">3.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><span dir="LTR"><b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black;">Illiquid and small market cap of S$44m<o:p></o:p></span></b></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">With reference to <b style="mso-bidi-font-weight: normal;">Figure 3</b>
below, ISOTeam’s annual report 2013, the top twenty shareholders have about
89.6% of ISOTeam’s outstanding shares. Thus, there is little free float outside
which results in its illiquidity. Average 30D and 100D volume amounts to
588,000 shares and 842,000 shares respectively. This is not a liquid company where
investors can enter or exit quickly.</span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;">Figure </b><b style="mso-bidi-font-weight: normal;">3</b><b style="mso-bidi-font-weight: normal;">: </b><b style="mso-bidi-font-weight: normal;">ISOTeam’s top 20 shareholders as at </b><st1:date day="23" month="9" year="2013"><b style="mso-bidi-font-weight: normal;">23 Sep 2013</b></st1:date><b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10pt;">Source: Company</span><span style="font-size: 10pt;">
Annual Report FY13</span><span style="font-size: 10pt;"><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">4.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><span dir="LTR"><b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black;">Presence mainly in Spore - concentration risk<o:p></o:p></span></b></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: black;">As ISOTeam’s business exposure is solely in </span><st1:country-region><st1:place><span lang="EN-US" style="color: black;">Singapore</span></st1:place></st1:country-region><span lang="EN-US" style="color: black;"> with the bulk of its revenue coming from the
government, any adverse changes in the government’s budget or policies on </span><span style="color: black;">building</span><span style="color: black;"> </span><span style="color: black;">maintenance and estate upgrading</span><span style="color: black;"> may affect ISOTeam.</span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US" style="color: black;">ISOTeam chart analysis <o:p></o:p></span></u></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: black;">Stock has consolidated for 9 trading days before it gapped
up on </span><st1:date day="16" month="1" year="2014"><span lang="EN-US" style="color: black;">16 Jan 2014</span></st1:date><span lang="EN-US" style="color: black;">. It closed at $0.390 on last Friday. Supports and
resistances are as follows<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: black;">Supports: $0.365 - 0.375 / 0.345 – 0.355</span></div>
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: black;"><o:p> </o:p></span></div>
<span lang="EN-US" style="color: black;">Resistances: $0.395 – 0.400 / 0.410 - 0.415 / 0.440 – 0.450<o:p></o:p></span><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="color: black;">Based on <b style="mso-bidi-font-weight: normal;">Chart 1</b>
below, chart seems to be on an uptrend and looks set to break $0.395- 0.400.
Key resistances are around 0.410 - 0.415 / 0.440 – 0.450.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-layout-grid-align: none; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black;">Chart 1: Consolidated for 9
trading days before gapping up on </span></b><st1:date day="16" month="1" year="2014"><b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black;">16 Jan 2014</span></b></st1:date><b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black;"><o:p></o:p></span></b></div>
<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7ln8ZjkKANyaXhGWyx2Vbb9ULXmMMwCfhWlwrDM2uykrKgjIEw8zrwcpnscLPkff1LPcHgWRLcOyY-VZybGe8rPZvZM7shOaA2TQlSndZpMrnfY7_vxtVrOtftW6iUY1L4UfnhZ6hKUo/s1600/ISOTeam+chart+as+of+17+Jan+14.bmp" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7ln8ZjkKANyaXhGWyx2Vbb9ULXmMMwCfhWlwrDM2uykrKgjIEw8zrwcpnscLPkff1LPcHgWRLcOyY-VZybGe8rPZvZM7shOaA2TQlSndZpMrnfY7_vxtVrOtftW6iUY1L4UfnhZ6hKUo/s1600/ISOTeam+chart+as+of+17+Jan+14.bmp" height="426" width="640" /></a></div>
<div class="MsoNormal" style="margin: 0in 0in 0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><o:p></o:p></span><br /></div>
<span lang="EN-US">Source: CIMB chart as of </span><st1:date day="17" month="1" year="2014"><span lang="EN-US">17 Jan 2014</span></st1:date><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><u><span lang="EN-US">Conclusion – 1HFY14F
results, potential contract wins or M&A may be re-rating catalysts<o:p></o:p></span></u></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">ISOTeam generated an adjusted FY13 net profit (less off the disposal
gains of S$4.2m and add back S$1.1m in non recurring IPO expenses) of around
S$3.9m. UOB estimates its FY14F net profit to be around S$6.3m. If this
materializes, it would be a 62% increase in core profits. At S$6.3m, ISOTeam
would be trading at around 7.3x FY14F PE. Any potential M&As or higher than
expected contract wins may further boost ISOTeam’s profitability.</span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><u><span lang="EN-US">Lastly, this is just an
introduction to ISOTeam... <o:p></o:p></span></u></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">For readers who are interested, they should take a look at the
company website <a href="http://isoteam.com.sg/"><span style="color: blue;">http://isoteam.com.sg/</span></a> In
addition, as I am not able to reproduce some figures on my blog, readers who
are interested can drop me an email at <a href="mailto:crclk@yahoo.com.sg"><span style="color: blue;">crclk@yahoo.com.sg</span></a>
so that I can send them my writeup.</span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; text-align: justify; text-justify: inter-ideograph;">
<i style="mso-bidi-font-style: normal;"><span lang="EN-US">This
is an abridged version which I had sent to my clients a couple of days ago.<o:p></o:p></span></i></div>
<br />
<span lang="EN-US">Disclaimer<br />
The information contained herein is the writer's personal opinion and provided
to you for information only, and is not intended to, or nor will it
create/induce the creation of any binding legal relations. The information or
opinions provided herein do not constitute an investment advice, an offer or
solicitation to subscribe for, purchase or sell the investment product(s)
mentioned herein. It does not have any regard to your specific investment
objectives, financial situation and any of your particular needs. Accordingly,
no warranty whatsoever is given and no liability whatsoever is accepted for any
loss arising whether directly or indirectly as a result of this information.
Investments are subject to investment risks including possible loss of the
principal amount invested. The value of the product and the income from them
may fall as well as rise. You may wish to seek advice from an independent
financial adviser before making a commitment to purchase or invest in the
investment product(s) mentioned herein. In the event that you choose not to do
so, you should consider whether the investment product(s) mentioned herein are
suitable for you. The writer will not, in any event, be liable to you for any
direct/indirect or any other damages of any kind arising from or in connection
with your reliance on any information in and/or materials appended herein. The
information and/or materials are provided “as is” without warranty of any kind,
either express or implied. In particular, no warranty regarding accuracy or
fitness for a purpose is given in connection with such information and
materials.</span><br />
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com1tag:blogger.com,1999:blog-3041396702339237068.post-78682891505496619612013-11-11T15:13:00.000+08:002013-11-11T15:13:07.764+08:00Nam Cheong – will it breakout from its all time high?<!--[if !mso]>
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<div class="MsoNormal">
<br /></div>
October
is indeed a month to forget, especially for those who have bought the infamous
trio just before they crashed. Within a few sessions, the trio, namely
Asiasons, Blumont and LionGold lost an approximate S$8.7b in market value. As a
result of such colossal drop in their share prices, it inevitably caused
collateral damage to other small to mid cap stocks. However, there are
exceptions. An example is Nam Cheong which is trading at the upper end of its five
month trading range $0.260-0.295
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><u>Chart observations</u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
With
reference to <b style="mso-bidi-font-weight: normal;">Chart 1</b> below, it is
evident that Nam Cheong is on the verge of (once again) challenging the six
times tested resistance of $0.295. It has been trading within the range of $0.260
– 0.295 for more than five months. The moving averages (21D, 50D, 100D &
200D EMA) are moving higher with golden
crosses. Indicators such as OBV are trending higher towards its all time high.
ADX has turned higher since 21 Oct and was around 29 last Friday which was
indicative of a trend. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">Chart 1: Nam Cheong
approaches all time high</b></div>
<div class="MsoNormal">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1xxn4TZtd12S83RjGN_cbgnMUWfIT1IrsW9-5mqLH8sYyFHe6o8LVp900YY9l2rHjWrzLQCXxJHI8lnBphUunX0byzinpmBVaMgi8ladUKuUDhmlRxUPgwIpEJsC1gpsoOf1la1oIhnU/s1600/Nam+Cheong+CIMB+chart+8+Nov+13.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1xxn4TZtd12S83RjGN_cbgnMUWfIT1IrsW9-5mqLH8sYyFHe6o8LVp900YY9l2rHjWrzLQCXxJHI8lnBphUunX0byzinpmBVaMgi8ladUKuUDhmlRxUPgwIpEJsC1gpsoOf1la1oIhnU/s640/Nam+Cheong+CIMB+chart+8+Nov+13.gif" width="640" /></a></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10.0pt;">Source: CIMB itrade complimentary chart (8 Nov 13)</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><u>Results to be out
on 12 Nov morning</u></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Besides
the technical aspect, one factor which may increase the odds of a successful
breakout is its upcoming 3QFY13 results release. According to a DMG report
dated 8 Nov 2013, Nam Cheong will report results on 12 Nov, Tuesday morning.
DMG expects Nam Cheong to post a record quarterly profit in 3QFY13. DBS Vickers
postulates that there may be potential positive earnings surprise in 3Q /
2HFY13.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><u>Average analyst
target is around $0.360</u></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Based
on <b style="mso-bidi-font-weight: normal;">Figure 1</b> below, average analyst
target price polled by Bloomberg is around $0.360. This represents a potential
capital appreciation of around 24%. However, it is noteworthy that some
analysts are valuing Nam Cheong based on blended FY13-FY14F earnings. Hence as
we approach 2014, it is likely that the analysts may raise the target price by
rolling forward their valuations based on FY14F earnings. In addition, it is
likely that FY14F earnings are higher than that of FY13F earnings as Nam Cheong
has increased their shipbuilding program from 19 vessels in 2013 to 28 vessels
in 2014. <span style="mso-spacerun: yes;"> </span>Readers can refer to the
analyst reports on Nam Cheong <a href="http://www.namcheong.com.my/investor-relations/research.cfm">http://www.namcheong.com.my/investor-relations/research.cfm</a>,
SGX announcements and my writeup appended here <a href="http://www.sharesinv.com/articles/2013/07/22/nam-cheong-%E2%80%93-likely-beneficiary-of-malaysia%E2%80%99s-oil-and-gas-capex-plans/">http://www.sharesinv.com/articles/2013/07/22/nam-cheong-%E2%80%93-likely-beneficiary-of-malaysia%E2%80%99s-oil-and-gas-capex-plans/</a>
for more information. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;">Figure 1: Analysts’ target prices for </b><b style="mso-bidi-font-weight: normal;">Nam</b><b style="mso-bidi-font-weight: normal;"> Cheong</b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhzFWKQQg1RgMkG_1bdttIr5rIBmmx6DvEbZYyYbuT8bXp199LBs_yms_R83ayDNOaV8GBMZL_0bWFYN0RJMRXk_N1hxIQL1RNcIKzNacXmcOBKdh8hTbyoMIV6cjARL6Jrt2EI6RTCbdE/s1600/Nam+Cheong+anr+dated+11+Nov+13.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="458" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhzFWKQQg1RgMkG_1bdttIr5rIBmmx6DvEbZYyYbuT8bXp199LBs_yms_R83ayDNOaV8GBMZL_0bWFYN0RJMRXk_N1hxIQL1RNcIKzNacXmcOBKdh8hTbyoMIV6cjARL6Jrt2EI6RTCbdE/s640/Nam+Cheong+anr+dated+11+Nov+13.gif" width="640" /></a></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 10.0pt;">Source: Bloomberg (11 Nov 13)</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><u>Conclusion – 3Q results may be the
impetus for breakout</u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
If
Nam Cheong can break its six times tested resistance $0.295 with volume
expansion, an eventual technical target price is around $0.330. However, this
is an eventual technical target which may or may not be reached in the near
term. It is noteworthy that Nam Cheong’s upcoming 3Q results may provide the
impetus for it to move higher. </div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;">P.S:
Do note that chart reading is subjective in nature and different people may
have different interpretations on the same chart.</i></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
Disclaimer<br />
The information contained herein is the writer's personal opinion and provided
to you for information only, and is not intended to, or nor will it
create/induce the creation of any binding legal relations. The information or
opinions provided herein do not constitute an investment advice, an offer or
solicitation to subscribe for, purchase or sell the investment product(s)
mentioned herein. It does not have any regard to your specific investment
objectives, financial situation and any of your particular needs. Accordingly,
no warranty whatsoever is given and no liability whatsoever is accepted for any
loss arising whether directly or indirectly as a result of this information.
Investments are subject to investment risks including possible loss of the
principal amount invested. The value of the product and the income from them
may fall as well as rise. You may wish to seek advice from an independent
financial adviser before making a commitment to purchase or invest in the
investment product(s) mentioned herein. In the event that you choose not to do
so, you should consider whether the investment product(s) mentioned herein are
suitable for you. The writer will not, in any event, be liable to you for any
direct/indirect or any other damages of any kind arising from or in connection
with your reliance on any information in and/or materials appended herein. The
information and/or materials are provided “as is” without warranty of any kind,
either express or implied. In particular, no warranty regarding accuracy or
fitness for a purpose is given in connection with such information and
materials.</div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-38574741065777780892013-10-21T13:13:00.000+08:002013-10-21T13:13:22.391+08:00Sembmarine - potential multi month breakout of base formation<div class="MsoNormal">
<span lang="EN-US">With reference to <b>Chart 1</b>,
Sembmarine may be in the process of breaking out a multi month base formation, as
it has breached 4.60-4.61 with volume expansion. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span lang="EN-US">Chart 1: Sembmarine -
potential multi month breakout<o:p></o:p></span></b></div>
<div class="MsoNormal">
<span lang="EN-US"> </span> </div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEir3ccVMYTu3vt16jfhLybamwNz7QVqEtHQpAe-E4CuVt602t6Q7lA5QE72dZPpH94Sq1_1F1ymCzwTTncz1v1GXJYScE4nlaY7BrNT6ulo75JmBgBWogG2BOl5jTw_0iUi4XmVt_oKut8/s1600/Sembmarine+multi+month+breakout.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEir3ccVMYTu3vt16jfhLybamwNz7QVqEtHQpAe-E4CuVt602t6Q7lA5QE72dZPpH94Sq1_1F1ymCzwTTncz1v1GXJYScE4nlaY7BrNT6ulo75JmBgBWogG2BOl5jTw_0iUi4XmVt_oKut8/s640/Sembmarine+multi+month+breakout.gif" width="640" /></a></div>
<div class="MsoNormal">
<span lang="EN-US"><br /><!--[endif]--></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="font-size: 10.0pt;">Source: CIMB itrade complimentary chart (18
Oct 13)</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Chart observations<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l0 level1 lfo1; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span lang="EN-US">1.<span style="font-size: 7pt;">
</span></span><!--[endif]--><span lang="EN-US">Chart seems to be forming a
giant 6 month bottom formation. In addition, it seems to have broken from the
downtrend since Apr 2011. This line is significant as it has 5 – 6 anchor
points. Supports around 4.59 – 4.61 / 4.55-4.56 / 4.52. Resistances around 4.65
– 4.66 / 4.71 / 4.78.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="mso-layout-grid-align: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<b><span lang="EN-US">Chart 2: Sembmarine – Broke the downtrend since Apr
2011<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJCXsHVCVTxSX-UwMkehjeWl-xjxsV0_hgnSD2HF6Xs5QBkxkS9GLlNionQlNS-mbmv0y9AGCwMseZhEWeBk53xNPmmFWpmfC6Hr8u4_lEMlzqJLzQp6FFMCOCVAR7E0GWCLLdK1EbCBY/s1600/Sembmarine+breaks+out+Apr+2011+downtrend+line.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJCXsHVCVTxSX-UwMkehjeWl-xjxsV0_hgnSD2HF6Xs5QBkxkS9GLlNionQlNS-mbmv0y9AGCwMseZhEWeBk53xNPmmFWpmfC6Hr8u4_lEMlzqJLzQp6FFMCOCVAR7E0GWCLLdK1EbCBY/s640/Sembmarine+breaks+out+Apr+2011+downtrend+line.gif" width="640" /></a></div>
<span lang="EN-US"><!--[endif]--></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt;">Source: CIMB itrade complimentary chart (18
Oct 13)</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l0 level1 lfo1; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span lang="EN-US">2.<span style="font-size: 7pt;">
</span></span><!--[endif]--><span lang="EN-US">Analysts are slowly becoming
more positive on Singapore rig builders. The recent positive newsflow and
analysts reports on Keppel Corp are likely to bode well for rig builders and to
a certain extent Sembmarine. Ave analyst target is $5.00. Estimated dividend
yield is around 2.9%.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l0 level1 lfo1; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span lang="EN-US">3.<span style="font-size: 7pt;">
</span></span><!--[endif]--><span lang="EN-US">Volume seems to be picking up. OBV
has risen to more than a six month high.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l0 level1 lfo1; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span lang="EN-US">4.<span style="font-size: 7pt;">
</span></span><!--[endif]--><span lang="EN-US">All the moving averages are
turning upwards, indicative of interest in the stock.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l0 level1 lfo1; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span lang="EN-US">5.<span style="font-size: 7pt;">
</span></span><!--[endif]--><span lang="EN-US">There are heavy sell queues
from $4.62-4.65 amounting to 1-2m shares in total with comparatively very thin
buy queues. Despite the thin buy queue,
the price is quite stable. In fact, the large sell queue gives me comfort that
there may be smart money accumulating Sembmarine on weakness. Why do I say
that? If the sellers do have that many shares, they are likely to be
professionals and are unlikely to place so many shares on each level. This
would deter the potential buyers away. (P.S: Although I cannot quantify this
point and it is most likely not 100% accurate, it seems to be pretty accurate for
stocks such as Guocoleisure, Ezion, Nam Cheong, Sino Grandness, China Animal,
etc. They seem to be a prelude of some upwards movement (though it may take
some time to materialise. Readers of my writeup are likely to have taken note
of this point which I frequently raised. )</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin-left: .25in; mso-list: l0 level1 lfo1; tab-stops: list .25in; text-align: justify; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span lang="EN-US">6.<span style="font-size: 7pt;">
</span></span><!--[endif]--><span lang="EN-US">Sembmarine has breached
$4.60-4.61 with volume expansion. An eventual technical upside target is around
$<b>4.96-5.00</b>. This is an eventual target which may take months to reach.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br />
P.S: Lastly, I would want to emphasise that chart reading is very subjective. FYI,
I have previously emailed clients on 25 Sep to ask them to take a look at
Sembmarine’s chart and subsequently two emails to alert them on 11 Oct and 17
Oct that a breakout may be likely in the near term.</span></div>
<span lang="EN-US" style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<a href="http://www.blogger.com/blogger.g?blogID=3041396702339237068" name="OLE_LINK1"><span lang="EN-US">Disclaimer<br />
</span></a><span lang="EN-US">The information contained herein is the writer's
personal opinion and provided to you for information only, and is not intended
to, or nor will it create/induce the creation of any binding legal relations.
The information or opinions provided herein do not constitute an investment
advice, an offer or solicitation to subscribe for, purchase or sell the
investment product(s) mentioned herein. It does not have any regard to your
specific investment objectives, financial situation and any of your particular
needs. Accordingly, no warranty whatsoever is given and no liability whatsoever
is accepted for any loss arising whether directly or indirectly as a result of
this information. Investments are subject to investment risks including
possible loss of the principal amount invested. The value of the product and
the income from them may fall as well as rise. You may wish to seek advice from
an independent financial adviser before making a commitment to purchase or
invest in the investment product(s) mentioned herein. In the event that you
choose not to do so, you should consider whether the investment product(s)
mentioned herein are suitable for you. The writer will not, in any event, be
liable to you for any direct/indirect or any other damages of any kind arising
from or in connection with your reliance on any information in and/or materials
appended herein. The information and/or materials are provided “as is” without
warranty of any kind, either express or implied. In particular, no warranty
regarding accuracy or fitness for a purpose is given in connection with such
information and materials.</span></div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-35733036297827358752013-10-08T21:12:00.000+08:002013-10-08T21:12:04.950+08:00Sino Grandness – Asdew, Fidelity and CEO up stake. What gives?<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Since my writeup in Oct 2012 where Sino Grandness (“SFGI”) was
trading at $0.23 (post split basis), it has more than tripled to an intraday
high of $0.800 on 28 May 2013 before retracing to the current price of $0.640.
In addition to share purchases made by Asdew and SGFI’s CEO Mr Huang, Fidelity
is the latest institution to become a substantial shareholder of SFGI. It seems
like there has been quite a lot of interest in SFGI. Let’s take a look at
SFGI’s recent and potential developments. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">1HFY13 results – Good
momentum<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">1HFY13 revenue and net profit jumped 29% and 24% y/y to RMB972m and
RMB174m respectively. (See <b>Table 1</b>
below for the elaboration on the results)</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Table 1: SFGI 1HFY13
result snapshot<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10pt;">Source: Company (*Technical issue, Im not able to put it here)</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">2HFY13 results – Likely
better</span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">2HFY13F is likely to be better than 1HFY13 as</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">a) The indicative orders won for their Garden Fresh juices and
Grandness canned products in their Chengdu trade fair in Mar 2013 are likely to
flow through to 2HFY13; </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">b) The additional new distributors secured in North-eastern and North-western
provinces are likely to have a gradual positive impact in 2HFY13 and beyond;</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">c) The contributions from the recently added distribution channels
(eg. Hongqi in <st1:state w:st="on"><st1:place w:st="on">Sichuan</st1:place></st1:state>
province and Meiyijia in <st1:state w:st="on"><st1:place w:st="on">Guangdong</st1:place></st1:state>
province) which were announced on <st1:date day="12" month="8" w:st="on" year="2013">12 Aug 2013</st1:date> are likely to gradually kick in 2HFY13 and
beyond.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<b><u><span lang="EN-US" style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span></u></b>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Recent shareholder
purchases bolster confidence<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">There have been several purchases in the last two months. In late
August 2013, CEO Mr Huang bought a total of 100,000 shares at an approximate
average price of S$0.525-0.550 which raised his stake to about 40.1%. Asdew
Acquisitions Pte Ltd also bought 1.756m shares at an approximate price of
$0.532. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Besides Asdew, Fidelity also raised its stake in SFGI to 5.06% by
acquiring 490,000 shares at an approximate price of $0.657 on <st1:date day="30" month="9" w:st="on" year="2013">30 Sep 2013</st1:date>.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<a href="" name="OLE_LINK1"><b><u><span lang="EN-US">Recent
developments<o:p></o:p></span></u></b></a></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Company has been busy on the
investor relation front. In late Aug, due to a short seller report on China
Minzhong which indirectly caused SFGI’s share price to plummet to an intraday
low of around $0.500, company expediently came to <st1:country-region w:st="on"><st1:place w:st="on">Singapore</st1:place></st1:country-region> to reassure investors. In
early Sep, company gave a presentation at a DMG conference in <st1:country-region w:st="on"><st1:place w:st="on">Singapore</st1:place></st1:country-region>. Last week, SFGI just organized a trade fair in
<st1:place w:st="on"><st1:placename w:st="on">Hubei</st1:placename> <st1:placetype w:st="on">Province</st1:placetype></st1:place>, together with an analyst plant
tour at their <st1:state w:st="on"><st1:place w:st="on">Hubei</st1:place></st1:state>
plant. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Potential upcoming events<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Potential upcoming events
include the appointment of investment bankers for their Garden Fresh IPO, calling
for an Extraordinary General Meeting for shareholders to approve the spinoff, (first)
roadshow to <st1:place w:st="on">Europe</st1:place> to introduce SFGI to
European funds and a seminar at Standard Chartered in late October. It is
noteworthy that these events are tentative in nature (i.e. they may not materialize).
</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Noteworthy points on Garden Fresh IPO<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">There are some pertinent points
on Garden Fresh’s planned IPO which are worth mentioning.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Firstly, <st1:country-region w:st="on"><st1:place w:st="on">China</st1:place></st1:country-region>’s fruit
juice industry has seen strong growth as corroborated by the growth momentum
seen in some industry players such, as WangLaoJi and Huiyuan. For example, Huiyuan’s
revenue has risen every year for ten consecutive years through 2012 to reach
RMB4b. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Secondly, it is noteworthy that
it has been some time since there is an IPO for a company which is a purely domestic
(beverage) consumption play in <st1:country-region w:st="on"><st1:place w:st="on">China</st1:place></st1:country-region>.
Hence, there may be some pent up demand for stocks in such sectors. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Thirdly, Huiyuan’s results seem
to be improving based on consensus estimates below. (See <b>Table 2</b> below) This should bode well for the overall industry as
Huiyuan can be considered to be one of the top players in the beverage industry.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<b><span lang="EN-US" style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span></b>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Table 2: Analysts’ consensus estimates for Huiyuan<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgwFXG2BJIqBCH1R0qfzWzvEDAwNAeE-62VgJh66nQk_oWvhXiD3Q1wbeBPBQXsQ9kvPKnbP1V_wxnjQ4YdaK1ujTlUkGm_o7vvDXUw_T25HsfeaNEHNIyiTjMMC4fArlgVrYg0W9MKa70/s1600/1886+HK+EEO+dated+7+Oct+13.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="458" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgwFXG2BJIqBCH1R0qfzWzvEDAwNAeE-62VgJh66nQk_oWvhXiD3Q1wbeBPBQXsQ9kvPKnbP1V_wxnjQ4YdaK1ujTlUkGm_o7vvDXUw_T25HsfeaNEHNIyiTjMMC4fArlgVrYg0W9MKa70/s640/1886+HK+EEO+dated+7+Oct+13.gif" width="640" /></a></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /><!--[endif]--></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt;">Source:
Bloomberg (7 Oct 13) <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Fourthly, Huiyuan’s price has
seen a significant jump of around 78% since late July 2013. (See <b>Table 3</b> below) This may be due to
increased optimism on its business operations and a July 2013 bullish research
report citing a target price of HKD7.40.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Table 3: Huiyuan’s price chart – 78% rally since late July 2013<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgbHyn9TrR70yU1v1M2Icz2T22FGm9qU7Dmqq3FNamz2CpPfOkLLvFKSZR15RYBuob8I5Qw1-QzQSlXVdYuL3gxVmh7S-q0LKs_FU6X4_PX_rBW9iN4aW-lS0ueECl4VDoH-HRqJl868j0/s1600/1886+HK+Price+chart.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="458" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgbHyn9TrR70yU1v1M2Icz2T22FGm9qU7Dmqq3FNamz2CpPfOkLLvFKSZR15RYBuob8I5Qw1-QzQSlXVdYuL3gxVmh7S-q0LKs_FU6X4_PX_rBW9iN4aW-lS0ueECl4VDoH-HRqJl868j0/s640/1886+HK+Price+chart.gif" width="640" /></a></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /><!--[endif]--></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt;">Source:
Bloomberg (7 Oct 13)</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Last but not least, based on <b>Table 2</b> above, Huiyuan’s estimated net
profit for FY14F is around RMB317m and is trading at an estimated FY14F PE of
around 30x. According to Kim Eng, Garden Fresh may achieve its net profit of
RMB250m this year. Assuming FY14F is another growth year for Garden Fresh,
their results may not be too far off Huiyuan. Consequently, Garden Fresh may be
able to fetch a PE valuation (based on 2014 earnings) which may not be too far
off from Huiyuan. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Conclusion – Waiting for more news on its IPO and 3QFY13F results<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Average analyst target price
stands at around S$0.905. SFGI closed -$0.045 to $0.640 yesterday. In order for
the market to narrow the difference between SFGI’s current price and its average
analyst target price, it is likely that we need to wait for more developments
on its Garden Fresh IPO and its 3QFY13F results.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<span lang="EN-US" style="font-size: 12pt;"><br clear="all" style="page-break-before: always;" />
</span>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Disclaimer<br />
</span><span lang="EN-US">The information contained herein is the writer's
personal opinion and provided to you for information only, and is not intended
to, or nor will it create/induce the creation of any binding legal relations.
The information or opinions provided herein do not constitute an investment
advice, an offer or solicitation to subscribe for, purchase or sell the
investment product(s) mentioned herein. It does not have any regard to your
specific investment objectives, financial situation and any of your particular
needs. Accordingly, no warranty whatsoever is given and no liability whatsoever
is accepted for any loss arising whether directly or indirectly as a result of
this information. Investments are subject to investment risks including
possible loss of the principal amount invested. The value of the product and
the income from them may fall as well as rise. You may wish to seek advice from
an independent financial adviser before making a commitment to purchase or
invest in the investment product(s) mentioned herein. In the event that you
choose not to do so, you should consider whether the investment product(s)
mentioned herein are suitable for you. The writer will not, in any event, be
liable to you for any direct/indirect or any other damages of any kind arising
from or in connection with your reliance on any information in and/or materials
appended herein. The information and/or materials are provided “as is” without
warranty of any kind, either express or implied. In particular, no warranty
regarding accuracy or fitness for a purpose is given in connection with such
information and materials.</span></div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-19898855279993582012013-07-21T15:58:00.000+08:002013-07-21T15:58:12.935+08:00Nam Cheong – Likely beneficiary of Malaysia’s oil and gas capex plans<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">It is common knowledge that Malaysia’s Petronas has sharply
increased its 2012-2017 capex by approximately 70% to MYR300b over the previous
five years. A likely beneficiary to this industry development is Nam Cheong
Limited (“Nam Cheong”).</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Description<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">According to an independent market research report by Pareto
Securities Asia Pte Ltd., Nam Cheong is the largest shipbuilder of offshore
support vessels (“OSVs”) in Malaysia and the 2<sup>nd</sup> largest player east
of the Suez Canal. It has about 50-75% of the market share in Malaysia and 7%
of the regional market share. It started ship building in 1968 and has more
than two decades of track record in building OSVs. Since 2007, it has delivered
more than 80 vessels. Examples of OSVs built are accommodation work barges,
accommodation workboats, anchor handing tug supply (“AHTS”) vessels, Platform
supply vessels (“PSVs”) and safety standby vessels (“SSVs”) etc. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Nam Cheong’s shipbuilding arm comprises more than 90% of its overall
group revenue for the past three years. Its shipbuilding can be segregated into
build to stock (builds ahead of firm orders) and build to order model (builds vessels
with contracts secured). </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Besides shipbuilding, it also has a ship chartering arm with a fleet
of 13 vessels, namely two AHTS vessels, two landing crafts and nine SSVs. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Its headquarters is situated in Kuala Lumpur. Readers can read more
about Nam Cheong on its company website: <a href="http://www.namcheong.com.my/our-business/shipbuilding.cfm">http://www.namcheong.com.my/our-business/shipbuilding.cfm</a>
</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Investment merits<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Bright industry outlook<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">According to various market research, notwithstanding the weak
shipbuilding cycle, the OSV sector is a buoyant sector to be in, especially in
Malaysia. It is common knowledge that Malaysia’s Petronas has sharply increased
its 2012-2017 capex by approximately 70% to MYR300b over the previous five
years. (See <b>Figure 1</b>) This would
fuel developments in marginal and deepwater field developments and increased
exploratory activities. Such activities should bode well for Malaysia OSV
operators such as (Bumi Armada, Perdana Petroleum) and consequently to OSV
builders such as Nam Cheong.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Figure 1: Petronas’ capex<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10pt;">Source: CIMB, Petronas</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Secondly, according to <b>Figure
2</b>, there seems to be replacement demand for AHTS and PSVs. About 37% of the
world’s AHTS is older than the usual lifespan of 25 years. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">It is noteworthy that the majority of vessels built in the early
days (1980s) were arguably small-to-medium sized vessels due to low technical
capability, requirements and they are likely to be less fuel efficient. Vessel
owners are showing increasing preference for younger and more fuel efficient
vessels. Consequently, this fuels replacement demand for AHTS and PSVs.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Figure 2: Age profile of
AHTS and PSV<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-size: 10pt;">Source: CIMB, Clarksons</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Build to stock business
model </span></b><b><span lang="EN-US" style="font-family: Wingdings; mso-ascii-font-family: "Times New Roman"; mso-char-type: symbol; mso-hansi-font-family: "Times New Roman"; mso-symbol-font-family: Wingdings;">à</span><span lang="EN-US"> higher margins<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="Default" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Part of Nam Cheong’s
shipbuilding business model is its build to stock model. This essentially builds
vessels in anticipation of orders, and sells the vessels at a premium due to
the short time to delivery. This is the main reason why Nam Cheong can command enviable
shipbuilding margins of 19-20% over the past three years as compared to high
single digit margins for its peers which do not have a build to stock model.<o:p></o:p></span></div>
<div class="Default" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="Default" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Strong
earnings visibility<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Nam Cheong’s net shipbuilding order book amounted to MYR1.3b (FY12
group revenue was MYR877m), thus this lends some visibility to its FY13F and
FY14F results. In addition, Nam Cheong’s sales momentum remains strong. It has
sold 13 vessels year to date as compared to the record 21 vessels in FY2012.
(FY2011: 13 vessels) Typically, according to CIMB research, revenues tend to
lag vessel sales by 1-2 years. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Risks<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Inherent risks in their build
to stock model <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">As Nam Cheong builds its vessels ahead of firm orders for its build
to stock model, there is a possibility that it may end up with unsold
inventory. Being in the business for decades, it is cognizant of this risk and it
builds vessels catering to the small medium OSV segment which is the largest
market among OSVs. This should mitigate risk to a certain extent.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Lumpy revenue / net
profits<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">For its build to stock model, all the work to date is recognised
immediately in revenue and profits upon the signing of firm sale orders. Future
progress on build to stock shipbuilding program is recognized on a
percentage-of-completion method. Thus, it is apparent that quarterly results
can swing depending on the timing of vessel sales.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Ave analyst TP: $0.350<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">According to Bloomberg, Nam Cheong trades at 8.6x FY13F PE vis-à-vis
7.8x FY13F PE for Vard Holdings. However, most analysts believe that Nam
Cheong’s results are likely to be stronger in FY13F and FY14F as opposed to weak
results from Vard Holdings.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">To be balanced, I have also put in the various analyst target prices
from Bloomberg. (See <b>Figure 3</b>). Ave
analyst target price is around $0.350.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Figure 3: Ave analyst
target price $0.350<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1VAGtFe6yBQoGtDO362tuXbV3vHBKxMcDoPWWXY0HrXbu3YpUcJ-p-DEQmodnDvWQ0yWHamgT_iQJTaaN-jwc-M8Owh2aN31aXoA5ObVpg_paRHIgtlLfRjNV8lgD0dFUZyja-aTJkPI/s1600/ncl+anr.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="458" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1VAGtFe6yBQoGtDO362tuXbV3vHBKxMcDoPWWXY0HrXbu3YpUcJ-p-DEQmodnDvWQ0yWHamgT_iQJTaaN-jwc-M8Owh2aN31aXoA5ObVpg_paRHIgtlLfRjNV8lgD0dFUZyja-aTJkPI/s640/ncl+anr.gif" width="640" /></a></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /><!--[endif]--></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt;">Source: Bloomberg as on 18 Jul 13<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Chart analysis<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
With reference to <b>Chart 1</b>,
Nam Cheong has traded in a seven month range from $0.240 to 0.290 since 14 Dec
2012. It closed at $0.280 on last Friday. Day high and low were $0.280 and
$0.270 respectively. Near term support and resistance are at $0.265-0.270 and $0.280
respectively. It is noteworthy that it has been testing $0.280 recently and it
is likely that the more times it tests $0.280, the more likely it can breach
past $0.280. The next resistance is seen at $0.290.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"> </span> </div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Having said the above, for stocks which trade within a range, it typically
takes some good news (perhaps in the form of contract wins; good results etc)
to propel them higher. If it breaches 0.290 with volume expansion, an eventual
technical measured target price is around $0.340. Notwithstanding this, it is
noteworthy that chart reading is subjective and may have different
interpretations for different people. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Chart 1: Trading in a 7
month range 0.240-0.290<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3qD5iLjmclbdb0lJxVnwmxw9zK1fK3E3Mf9Vvwu0zS4k2xomq3bXy6hf0kVvxEFm1nUEYSEsuN251ZIMgSY2YWdB3Pw5QB4IQi4zMGSXSp-GMqM9-Eg5parvZ6sH-TYDx1K9MmvFYcEs/s1600/Nam+Cheong+chart+19+Jul+13.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3qD5iLjmclbdb0lJxVnwmxw9zK1fK3E3Mf9Vvwu0zS4k2xomq3bXy6hf0kVvxEFm1nUEYSEsuN251ZIMgSY2YWdB3Pw5QB4IQi4zMGSXSp-GMqM9-Eg5parvZ6sH-TYDx1K9MmvFYcEs/s640/Nam+Cheong+chart+19+Jul+13.gif" width="640" /></a></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /><!--[endif]--></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt;">Source: CIMB itrade complimentary chart (19
Jul 13)</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><u><span lang="EN-US">Conclusion<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">This is just an introduction to Nam Cheong. Readers who are keen to
know more about Nam Cheong should visit the company website, read the company
annual reports, latest financial results and announcements etc. There are also
informative analyst reports which they can read to have a better idea on Nam
Cheong. Readers can email me at <a href="mailto:crclk@yahoo.com.sg">crclk@yahoo.com.sg</a>
for the latest analyst reports and my writeup above complete with Figures 1 & 2 which i am unable to attach here.</span><span lang="EN-US" style="font-size: 11.5pt;">
</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">P.S: I have mentioned this company informally to my clients in Sep
2012 (trading at $0.200); Dec 2012 ($0.240); Apr 2013 ($0.245) and recently Jul
2013 ($0.265). Finally, I have the time to sit down and do a writeup on this
company on my blog.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<span style="text-align: justify;">Disclaimer</span><br />
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">The information contained herein is the writer's personal opinion
and is provided to you for information only and is not intended to or nor will
it create/induce the creation of any binding legal relations. The information
or opinions provided herein do not constitute an investment advice, an offer or
solicitation to subscribe for, purchase or sell the investment product(s)
mentioned herein. It does not have any regard to your specific investment
objectives, financial situation and any of your particular needs. Accordingly,
no warranty whatsoever is given and no liability whatsoever is accepted for any
loss arising whether directly or indirectly as a result of this information.
Investments are subject to investment risks including possible loss of the
principal amount invested. The value of the product and the income from them
may fall as well as rise. You may wish to seek advice from an independent
financial adviser before making a commitment to purchase or invest in the
investment product(s) mentioned herein. In the event that you choose not to do
so, you should consider whether the investment product(s) mentioned herein are
suitable for you. The writer will not, in any event, be liable to you for any
direct/indirect or any other damages of any kind arising from or in connection
with your reliance on any information in and/or materials appended herein. The
information and/or materials are provided “as is” without warranty of any kind,
either express or implied. In particular, no warranty regarding accuracy or
fitness for a purpose is given in connection with such information and
materials.</span></div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-90095970047097710782013-07-04T21:15:00.002+08:002013-07-04T21:15:31.004+08:00Kreuz – Bullish Breakout flag formation<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">On 28 Mar, I have written on Kreuz when it was trading at $0.485
(See <a href="http://www.sharesinv.com/articles/2013/04/02/kreuz-holdings-good-results-strong-chart-low-valuations/">http://www.sharesinv.com/articles/2013/04/02/kreuz-holdings-good-results-strong-chart-low-valuations/</a>).
It has since appreciated 63% to a high of $0.790 on 21 May before retracing to the
current level of $0.690.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">With reference to <b>Chart 1</b>
below (dated 3 Jul 13), Kreuz seems to have completed a bullish flag formation
on 3 Jul after it broke the resistance of 0.685 with volume expansion. Total
volume transacted on 3 Jul was 4.35m shares which is more than the average 30D volume
of 3.5m shares. This is also the highest volume reached since 12 Jun. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Chart 1: Kreuz breaks out
of flag formation.<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj_D8aZ3ZutcwFS96OXEQ6IR7V_8xfpTp5PmoAoMZRSD3VI2YKB2tpGVEDpMnVvLhFYtVHQ04oxDPrMTdEyInICItYWCcqVrNak8uVCHWGHfhahSyy3sSCiVD2N149pT6vPbyxVnOKliWg/s600/Kreuz+chart+dated+3+Jul+13.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj_D8aZ3ZutcwFS96OXEQ6IR7V_8xfpTp5PmoAoMZRSD3VI2YKB2tpGVEDpMnVvLhFYtVHQ04oxDPrMTdEyInICItYWCcqVrNak8uVCHWGHfhahSyy3sSCiVD2N149pT6vPbyxVnOKliWg/s640/Kreuz+chart+dated+3+Jul+13.gif" width="640" /></a></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /><!--[endif]--></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt;">Source: CIMB itrade complimentary chart (3
Jul 13)<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Near term target is around $0.725 / $0.755 – 0.760 / $0.800. Eventual
measured target price is around $0.950. The bullish technical setup will be
invalidated if it closes below the upper channel resistance on a sustained
basis for more than three days. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">On the fundamental aspect, consensus analyst target price is $0.830.
(See <b>Figure 1</b> below)</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b><span lang="EN-US">Figure 1: Analysts’ target
price<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3ggZgB1nPdWTvgrgdb1Ac6D-gU8DZjsCZiHlb2YGBvmWl2SeF2F0ZboXzGdvnFoEkNEqZc2bZVnDDac3fBrAbMCqrwqhRX49R0reLyEau3fKivjGaMZBOc7_ZOAnPtMDhldCUjrteZVw/s736/krz+sp+anr+4+Jul+13.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="458" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3ggZgB1nPdWTvgrgdb1Ac6D-gU8DZjsCZiHlb2YGBvmWl2SeF2F0ZboXzGdvnFoEkNEqZc2bZVnDDac3fBrAbMCqrwqhRX49R0reLyEau3fKivjGaMZBOc7_ZOAnPtMDhldCUjrteZVw/s640/krz+sp+anr+4+Jul+13.gif" width="640" /></a></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /><!--[endif]--></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="font-size: 10.0pt;">Source: Bloomberg 4 Jul 13<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">P.S: This is an abridged version which I had sent to my clients on
last Tues, 2 Jul where Kreuz was trading at 0.665-0.690. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Readers who are interested to know more about
Kreuz can email me at <a href="mailto:crclk@yahoo.com.sg">crclk@yahoo.com.sg</a>
for the latest analyst reports.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<a href="" name="OLE_LINK1"><span lang="EN-US">Disclaimer<br />
</span></a><span lang="EN-US">The information contained herein is the writer's
personal opinion and is provided to you for information only and is not
intended to or nor will it create/induce the creation of any binding legal relations.
The information or opinions provided herein do not constitute an investment
advice, an offer or solicitation to subscribe for, purchase or sell the
investment product(s) mentioned herein. It does not have any regard to your
specific investment objectives, financial situation and any of your particular
needs. Accordingly, no warranty whatsoever is given and no liability whatsoever
is accepted for any loss arising whether directly or indirectly as a result of
this information. Investments are subject to investment risks including
possible loss of the principal amount invested. The value of the product and
the income from them may fall as well as rise. You may wish to seek advice from
an independent financial adviser before making a commitment to purchase or
invest in the investment product(s) mentioned herein. In the event that you
choose not to do so, you should consider whether the investment product(s)
mentioned herein are suitable for you. The writer will not, in any event, be
liable to you for any direct/indirect or any other damages of any kind arising
from or in connection with your reliance on any information in and/or materials
appended herein. The information and/or materials are provided “as is” without
warranty of any kind, either express or implied. In particular, no warranty
regarding accuracy or fitness for a purpose is given in connection with such
information and materials.</span></div>
Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0tag:blogger.com,1999:blog-3041396702339237068.post-6871943826919954372013-06-02T14:54:00.000+08:002013-06-02T14:54:27.967+08:00Personal compilation of reits sorted by total potential return<div style="text-align: justify;">
<span style="font-size: 12pt;"><span style="font-family: inherit;">Singapore Reits have slumped in
the past 2-3 weeks. For example, Mapletree Industrial has fallen 13.4% from an
intraday high of $1.61 on 15 May to close at 1.395 on last Friday. Some are rather oversold with RSI between 20-30 and are near their 200D
EMA. </span></span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><span style="font-family: inherit;"><br /></span></span></div>
<div style="text-align: justify;">
<span style="font-size: 12pt;"><span style="font-family: inherit;">Below is my personal compilation of Reits with their potential
dividend yield and potential capital appreciation for reference.</span></span></div>
<br />
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 688px;" x:str="">
<colgroup><col style="mso-width-alt: 4315; mso-width-source: userset; width: 89pt;" width="118"></col>
<col style="mso-width-alt: 1536; mso-width-source: userset; width: 32pt;" width="42"></col>
<col style="mso-width-alt: 2669; mso-width-source: userset; width: 55pt;" width="73"></col>
<col style="mso-width-alt: 2560; mso-width-source: userset; width: 53pt;" width="70"></col>
<col span="2" style="mso-width-alt: 1645; mso-width-source: userset; width: 34pt;" width="45"></col>
<col style="mso-width-alt: 1901; mso-width-source: userset; width: 39pt;" width="52"></col>
<col style="mso-width-alt: 1389; mso-width-source: userset; width: 29pt;" width="38"></col>
<col style="mso-width-alt: 2194; mso-width-source: userset; width: 45pt;" width="60"></col>
<col style="width: 48pt;" width="64"></col>
<col style="mso-width-alt: 2962; mso-width-source: userset; width: 61pt;" width="81"></col>
</colgroup><tbody>
<tr height="51" style="height: 38.25pt;">
<td class="xl75" height="51" style="height: 38.25pt; width: 89pt;" width="118">Short
Name</td>
<td class="xl75" style="border-left: none; width: 32pt;" width="42">Last Price</td>
<td class="xl75" style="border-left: none; width: 55pt;" width="73">Consensus TP</td>
<td class="xl76" style="border-left: none; width: 53pt;" width="70">Chg from
consensus TP</td>
<td class="xl75" style="border-left: none; width: 34pt;" width="45">52 Wk High</td>
<td class="xl75" style="border-left: none; width: 34pt;" width="45">52 Wk Low</td>
<td class="xl76" style="border-left: none; width: 39pt;" width="52">Adj Mkt Cap</td>
<td class="xl75" style="border-left: none; width: 29pt;" width="38">Hist P/BV</td>
<td class="xl75" style="border-left: none; width: 45pt;" width="60">Est Div Yield</td>
<td class="xl75" style="border-left: none; width: 48pt;" width="64">YTD Total Return
(%)</td>
<td class="xl77" style="border-left: none; width: 61pt;" width="81">Est Cap gain +
Est Div Yield (%)</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Croesus
Retail T</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">0.980</td>
<td class="xl79" style="border-left: none; border-top: none;">NA</td>
<td class="xl72" style="border-left: none; border-top: none;">NA</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.180</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">0.930</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="416.8135986328125">416.8</td>
<td class="xl67" style="border-left: none; border-top: none;">NA</td>
<td class="xl84" style="border-left: none; border-top: none;">NA</td>
<td class="xl71" style="border-left: none; border-top: none;">NA</td>
<td class="xl83" style="border-left: none; border-top: none;">NA</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Asian Pay
Televi</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="0.94499999999999995">0.945</td>
<td class="xl79" style="border-left: none; border-top: none;">NA</td>
<td class="xl72" style="border-left: none; border-top: none;">NA</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="1.0049999999999999">1.005</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="0.88500000000000001">0.885</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1357.7760009765625">1,357.8</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="0.98135478917498786">1.0</td>
<td class="xl84" style="border-left: none; border-top: none;">NA</td>
<td class="xl71" style="border-left: none; border-top: none;">NA</td>
<td class="xl83" style="border-left: none; border-top: none;">NA</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Cambridge
Reit</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="0.745">0.745</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="0.90499997138977051">0.905</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="0.21476506226814829">21%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">0.860</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="0.52500000000000002">0.525</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="911.82470703125">911.8</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.1366666282338067">1.1</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="6.9798659999999998E-2">7.0%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="0.1390112">14%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.2845637222681483">28.5%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Saizen Reit</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="0.182">0.182</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="0.2199999988079071">0.220</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="0.20879120224124792">21%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="0.23499999999999999">0.235</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="0.13300000000000001">0.133</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="258.21499633789062">258.2</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="0.78146940033414058">0.8</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="6.8479409999999991E-2">6.8%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="4.0637779999999998E-2">4%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.27727061224124794">27.7%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Capitaretail</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="1.5549999999999999">1.555</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="1.843999981880188">1.844</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="0.1858520783795421">19%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="1.885">1.885</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.230</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1165.4796142578125">1,165.5</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.1683783229862494">1.2</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="6.0450160000000003E-2">6.0%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="-4.6515639999999997E-2">-5%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.2463022383795421">24.6%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Religare
Health</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">0.920</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="1.0640000104904175">1.064</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="0.1565217505330625">16%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.000</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">0.760</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="725.0814208984375">725.1</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.0147953886626804">1.0</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="8.8043479999999993E-2">8.8%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="3.9548050000000001E-2">4%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.24456523053306251">24.5%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Lippo Malls</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="0.505">0.505</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="0.57999998331069946">0.580</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="0.14851481843702863">15%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">0.580</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="0.35499999999999998">0.355</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1109.620361328125">1,109.6</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="0.89318276596596258">0.9</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="7.1287130000000004E-2">7.1%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="6.2045950000000002E-2">6%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.21980194843702863">22.0%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Aims Amp
Capital</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.630</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="1.8619999885559082">1.862</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="0.14233128132264317">14%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.880</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="1.115">1.115</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="845.67724609375">845.7</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.1046308900314863">1.1</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="6.7484660000000002E-2">6.7%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="0.1331281">13%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.20981594132264317">21.0%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Mapletree
Indust</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="1.385">1.385</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="1.5807143449783325">1.581</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="0.14130999637424724">14%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.610</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.130</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="2273.9345703125">2,273.9</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.260444954610056">1.3</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="6.7148009999999994E-2">6.7%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="5.0787319999999997E-2">5%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.20845800637424722">20.8%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Mapletree Log
Tr</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="1.1950000000000001">1.195</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="1.3492307662963867">1.349</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="0.12906340275848249">13%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.350</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="0.95499999999999996">0.955</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="2906.251953125">2,906.3</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.3020673433875638">1.3</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="5.8577409999999996E-2">5.9%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="7.3141339999999999E-2">7%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.18764081275848249">18.8%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Cache
Logistics</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.290</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="1.4381250143051147">1.438</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="0.11482559248458513">11%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="1.4450000000000001">1.445</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.010</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="998.81817626953125">998.8</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.2005305392628032">1.2</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="6.7441860000000006E-2">6.7%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="7.6432189999999997E-2">8%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.18226745248458515">18.2%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Sabana
Shariah</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="1.2350000000000001">1.235</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="1.3600000143051147">1.360</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="0.10121458648187409">10%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="1.385">1.385</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="0.93500000000000005">0.935</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="799.60565185546875">799.6</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.1371918473225211">1.1</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="7.7732789999999996E-2">7.8%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="0.12560499999999999">13%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.17894737648187409">17.9%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Starhill
Global</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="0.88500000000000001">0.885</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="0.99299997091293335">0.993</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="0.12203386543834283">12%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">0.990</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="0.61499999999999999">0.615</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1719.575439453125">1,719.6</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="0.9972299191231766">1.0</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="5.6497180000000001E-2">5.6%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="0.15913569999999999">16%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.17853104543834283">17.9%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Ascendas Real
Es</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">2.390</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="2.6684999465942383">2.668</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="0.11652717430721271">12%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">2.860</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="1.9850000000000001">1.985</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="5734.58740234375">5,734.6</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.2307565429409084">1.2</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="5.9832639999999999E-2">6.0%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="3.5091960000000005E-2">4%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.1763598143072127">17.6%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Ascendas
Hospita</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="0.92500000000000004">0.925</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="1.0299999713897705">1.030</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="0.11351348258353555">11%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.060</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">0.860</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="744.6900634765625">744.7</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.1261751262705915">1.1</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="6.27027E-2">6.3%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="2.0442350000000001E-2">2%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.17621618258353555">17.6%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Mapletree
Commer</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.320</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="1.4851000308990479">1.485</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="0.12507578098412719">13%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.540</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">0.910</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="2731.4013671875">2,731.4</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.2435548897584359">1.2</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="4.6969700000000003E-2">4.7%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="0.11421039999999999">11%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.1720454809841272">17.2%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Frasers
Commerci</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.430</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="1.5957143306732178">1.596</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="0.11588414732392849">12%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="1.595">1.595</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">0.860</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="938.9210205078125">938.9</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="0.94471031079781354">0.9</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="5.4545450000000002E-2">5.5%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="0.11038410000000001">11%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.17042959732392848">17.0%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Frasers
Centrepo</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">2.020</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="2.2378571033477783">2.238</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="0.10785005116226642">11%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">2.340</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.570</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1664.63818359375">1,664.6</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.312491443898272">1.3</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="5.3960399999999999E-2">5.4%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="3.4462180000000002E-2">3%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.16181045116226642">16.2%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Cdl Reit</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="1.885">1.885</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="2.0685713291168213">2.069</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="9.7385320486377269E-2">10%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">2.130</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="1.7649999999999999">1.765</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1830.809814453125">1,830.8</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.1832669511665344">1.2</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="6.1538459999999996E-2">6.2%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="3.0553549999999999E-2">3%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.15892378048637726">15.9%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Capitacommercial</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.550</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="1.7131578922271729">1.713</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="0.10526315627559546">11%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="1.7450000000000001">1.745</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.170</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="4434.24609375">4,434.2</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="0.94612150940288176">0.9</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="5.1612900000000003E-2">5.2%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="-5.7020470000000004E-2">-6%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.15687605627559548">15.7%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Ascott
Residence</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="1.365">1.365</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="1.475454568862915">1.475</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="8.0919098068069628E-2">8%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="1.5049999999999999">1.505</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.030</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1722.078125">1,722.1</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.0378131890303137">1.0</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="6.4468860000000003E-2">6.4%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="3.9638220000000002E-2">4%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.14538795806806964">14.5%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">First Reit</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.260</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="1.3583333492279053">1.358</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="7.804234065706761E-2">8%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.450</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">0.860</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="887.1636962890625">887.2</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.5071035513682494">1.5</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="6.1904760000000003E-2">6.2%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="0.2192759">22%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.13994710065706761">14.0%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Suntec Reit</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.740</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="1.8874210119247437">1.887</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="8.4724719496979128E-2">8%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">2.000</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="1.2649999999999999">1.265</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="3926.19384765625">3,926.2</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="0.84548696752379571">0.8</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="5.2298850000000001E-2">5.2%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="6.5150109999999997E-2">7%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.13702356949697914">13.7%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Far East H
Trust</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.010</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="1.0896666049957275">1.090</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="7.8877826728443123E-2">8%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.220</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">0.930</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1624.8565673828125">1,624.9</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.0845279510896866">1.1</td>
<td class="xl69" style="border-left: none; border-top: none;" x:num="5.7722772277227719E-2">5.8%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="3.7767420000000003E-2">4%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.13660059900567084">13.7%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Capitamall
Trust</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">2.140</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="2.3264706134796143">2.326</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="8.7135800691408472E-2">9%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">2.450</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.760</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="7399.560546875">7,399.6</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.2830805309196345">1.3</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="4.7663549999999999E-2">4.8%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="1.9443780000000001E-2">2%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.13479935069140847">13.5%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Ascendas
India T</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">0.760</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="0.80500000715255737">0.805</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="5.9210535727049152E-2">6%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">0.860</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">0.730</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="695.43963623046875">695.4</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.1415538799552849">1.1</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="6.710526E-2">6.7%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="4.0399480000000002E-2">4%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.12631579572704915">12.6%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Hutchison
Port-U</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">0.800</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="0.82485002279281616">0.825</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="3.1062528491020203E-2">3%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="0.86499999999999999">0.865</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="0.67500000000000004">0.675</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="8807.9889526984334">8,808.0</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="0.82980936352287593">0.8</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="7.1324609999999997E-2">7.1%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="5.6486069999999999E-2">6%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="0.1023871384910202">10.2%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Fortune Reit</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">7.300</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="7.9437499046325684">7.944</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="8.8184918442817617E-2">9%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">8.590</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">4.260</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="2023.0620090957188">2,023.1</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="0.82867432023763998">0.8</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="9.684931506849315E-3">1.0%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="0.17431460000000001">17%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="9.7869849949666937E-2">9.8%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Parkwaylife
Reit</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">2.600</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="2.6749999523162842">2.675</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="2.8846135506263026E-2">3%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">2.820</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.790</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1573.006103515625">1,573.0</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.6497048708635731">1.6</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="4.2307689999999995E-2">4.2%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="0.235012">24%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="7.1153825506263021E-2">7.1%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">Keppel Reit</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.440</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="1.4393750429153442">1.439</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="-4.3399797545540242E-4">0%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.630</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="0.96499999999999997">0.965</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="3861.505615234375">3,861.5</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.0956184031470828">1.1</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="5.5555560000000004E-2">5.6%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="0.1444609">14%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="5.5121562024544601E-2">5.5%</td>
</tr>
<tr height="17" style="height: 12.75pt;">
<td class="xl70" height="17" style="border-top: none; height: 12.75pt;">K-Green Trust</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="">1.040</td>
<td class="xl79" style="border-left: none; border-top: none;" x:num="0.80000001192092896">0.800</td>
<td class="xl72" style="border-left: none; border-top: none;" x:num="-0.23076921930679906">-23%</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="1.125">1.125</td>
<td class="xl80" style="border-left: none; border-top: none;" x:num="0.96499999999999997">0.965</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="654.9725341796875">655.0</td>
<td class="xl67" style="border-left: none; border-top: none;" x:num="1.0292370693888131">1.0</td>
<td class="xl84" style="border-left: none; border-top: none;" x:num="7.4999999999999997E-2">7.5%</td>
<td class="xl71" style="border-left: none; border-top: none;" x:num="5.4812399999999997E-2">5%</td>
<td class="xl83" style="border-left: none; border-top: none;" x:num="-0.15576921930679904">-15.6%</td>
</tr>
</tbody></table>
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 740px;" x:str=""><colgroup><col style="mso-width-alt: 4315; mso-width-source: userset; width: 89pt;" width="118"></col><col style="mso-width-alt: 1901; mso-width-source: userset; width: 39pt;" width="52"></col><col style="mso-width-alt: 1536; mso-width-source: userset; width: 32pt;" width="42"></col><col style="mso-width-alt: 2669; mso-width-source: userset; width: 55pt;" width="73"></col><col style="mso-width-alt: 2560; mso-width-source: userset; width: 53pt;" width="70"></col><col span="2" style="mso-width-alt: 1645; mso-width-source: userset; width: 34pt;" width="45"></col><col style="mso-width-alt: 1901; mso-width-source: userset; width: 39pt;" width="52"></col><col style="mso-width-alt: 1389; mso-width-source: userset; width: 29pt;" width="38"></col><col style="mso-width-alt: 2194; mso-width-source: userset; width: 45pt;" width="60"></col><col style="width: 48pt;" width="64"></col><col style="mso-width-alt: 2962; mso-width-source: userset; width: 61pt;" width="81"></col></colgroup><tbody></tbody></table>
<br />
Source: Bloomberg as of 30 May 13<br />
Croesus and Asian Pay TV have no analyst coverage hence no estimated target price and estimated divident yield.<br />
<br />
<a href="" name="OLE_LINK1"><span style="font-size: 12pt;"><span style="font-family: inherit;">Disclaimer</span></span></a><br />
<div style="text-align: justify;">
<a href="" name="OLE_LINK1"><span style="font-size: 12pt;"><span style="font-family: inherit;">The information contained herein is the writer's
personal opinion and is provided to you for information only and is not
intended to or nor will it create/induce the creation of any binding legal
relations. The information or opinions provided herein do not constitute an
investment advice, an offer or solicitation to subscribe for, purchase or sell
the investment product(s) mentioned herein. It does not have any regard to your
specific investment objectives, financial situation and any of your particular
needs. Accordingly, no warranty whatsoever is given and no liability whatsoever
is accepted for any loss arising whether directly or indirectly as a result of
this information. Investments are subject to investment risks including
possible loss of the principal amount invested. The value of the product and
the income from them may fall as well as rise. You may wish to seek advice from
an independent financial adviser before making a commitment to purchase or
invest in the investment product(s) mentioned herein. In the event that you
choose not to do so, you should consider whether the investment product(s)
mentioned herein are suitable for you. The writer will not, in any event, be
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<a href="" name="OLE_LINK1">
</a>Ernesthttp://www.blogger.com/profile/13870962050900344357noreply@blogger.com0