Happy holidays.

This is to inform all you loyal readers that I will be away on holiday for the whole of next week.

I will, however, be back by the weekend to post my December 07 portfolio as well as my 2007 annual review.

But until then:

Selamat Hari Raya.

Here's wishing all Muslim readers "Selamat Hari Raya"!

STI Update.

This report was compiled by analyst Najeeb Jarhom for AM Fraser Securities yesterday.

Singapore Market

Challenging year ahead as investors perceive higher downside risk than upside potential judging from current weakness spoiling the year-end festive mood.

The unexpected market weakness just ahead of Christmas especially if it drags on this week to test the strong 3316 STI support, could only mean that investors/traders expect 2008 to be tough year for them.

They may also be wondering whether the STI could chalk up its 6th consecutive year of gain after 5 of strong gains by the ST Index - up 16% from 2985 at end-2006 to 3466 last Friday and for certain to end 2008 well above 2985. To be sure investors are fast losing confidence that this record feat can be repeated in 2008.

Note: The STI fell by -112.82 points to 3353.56 yesterday.

But this does not mean that we will definitely not see minor new highs above the current 3906 peak perhaps to 4000-4100 during the course of the year probably in the second half as the first half outlook continues to be blurred by the US housing crisis and economic slowdown.

Of course if the American problems are not successfully overcome by mid-year and drag into the second half stock prices could face further downward pressure. However towards end-2008 after the US presidential election in early November, hopes that the new president would be better able to tackle the US economy, a strong end-2008 rally could ensue.

If this scenario pans out than the year-end could see the highest STI for 2008 ie above current 3400-3500 perhaps at 3700-3800. However this also implies that the market could be under downward pressure for most of 2008.

This would probably be the worst case scenario ie the STI fails to hold at the strong 2932-2962 support ie the double bottom in March and August 2007 to test lower levels at 2700-2800 with the May 2006 high of 2666 acting as anchor.

At this stage, chances of a break of the psychological 3000 level should be one-third at least but could be for real if the US economy slips into a recession.

Days of short panic selling like what happened in mid-August when the STI slumped to an intra-day low of 2962 on Aug 17 but quickly reverted to its strong support at around 3150 could again be in store especially in the first quarter when investors seriously worry about the R-word.

Renewed heightened volatility may occur as early as January with the latest 6.4% slide from 3622 on Dec 7 to 3390 this morning something of precursor of a possible greater turmoil next month to add pressure on the Fed to be more decisive in rate cutting at the end-January FOMC meeting.

The normal year-end window dressing and rally to usher the new year are still likely but with the STI breaking 3400 this morning with the next strong support at the February high of 3316, it would be tough for our year-end/new year target of 3600-3650 to be met.

If the market comes under pressure by the second week of January, there could be expectations the Fed could cut rates by 50bp at month end, in which case a second-half January rally should ensue.

The rally could carry on into early February to celebrate Chinese New Year on Feb 7-8 and the Budget statement probably on Feb 15 or 22 (this year was on Feb 16).

But don’t count on the rally continuing to the end of the 2007 earnings reporting season by end-February as the US economy could slow down even more by that time and Wall Street comes under pressure again.

Thus for 1Q08, the market may well enjoy a rally of only a few weeks about 4-6 weeks out of the 13 weeks till March 31. If that is the case the STI is unlikely to have tested its 3906 peak and may not even have the stamina to climb back to 3700-3800 from around 3400 now.

However, the expected US market weakness may somewhat be compensated by a likely strong China/HK market in the run up to the Aug 8 Beijing Olympics.

This should help the STI to hold on to support around 3000 in the second quarter, prospects of which are barely visible at this time and best left to a later time in the 1Q when we have a better grasp of investor sentiment and economic/corporate fundamentals.

All told the STI is highly unlikely to repeat this year’s massive movement of nearly 1000 points between 2932 and 3906 – the second highest point range after 1993’s swing between 1280 and 2497. It would indeed be a bad year if it ends 2008 below 2007 year end closing.

JES Holdings IPO Part II

Taken from shareinvestor forum:

Jiangsu Eastern meets strong headwinds with Singapore IPO
Jonathan Boonzaier and Irene Ang
14 December 2007
Tradewinds

Chinese shipbuilder Jiangsu Eastern Heavy Industries could be in for a lackluster initial public offering (IPO) on the Singapore bourse as fears are raised over whether it has the wherewithal to complete its planned new shipyard on time.

The yard, which is listing under the name JES International, was required by the Monetary Authority of Singapore to place a large notice in the prospectus it issued this week warning potential investors that it had yet to acquire the land it needs for its proposed new facility and that even if it did succeed in buying such property:

The costs could be much higher than it had originally budgeted for, leaving it short of funds to complete the construction.

Furthermore, the company was forced to admit that:

Even if it did manage to complete the new yard, delays could affect its ability to deliver orders on time.

JES International wants to raise approximately SGD 264m ($183m) through the Singapore IPO. It was launched on 11 December with shares priced at SGD 0.67 each. The issue closes at noon on 17 December.

Conclusion:

The above reasons re-enforce my belief that JES should only be pegged at a Fair Value of $0.67 or IPO price (see here).

An inspirational story about Tony Fernandes.

The original story was published by Dr. Money for The New Paper. I want to archive it because it is a great example of how a small but brilliant idea can snowball into sometime big.

How A Small Statistic Started A Big Airline.

I occasionally get to listen to speeches by CEOs and others.

I keep a file of these speeches, which I was looking through the other day.

By far, the best speech I have ever heard was by Mr Tony Fernandes, 43, CEO of Asia Air. You may have seen Tony in his red-coloured Air Asia cap.

He even wore it at his keynote speech. It makes Tony a walking, talking Air Asia ad.


I called the airline's headquarters in Kuala Lumpur yesterday and got an update on Mr. Fernandes and his airline.

He took over the airline 5 years ago when it was one step from bankruptcy.

Today, it is a booming success. It will fly 18 million passengers this year and is the region's largest discount carrier.

In The Beginning

Tony Fernandes graduated from the London School of Economics. His first job, from 1987 to 1989, was an accountant for Sir Richard Branson's Virgin Records.

Being an amateur guitarist, he felt right at home in the music business.

But he got homesick and in 1992, at age 28, he moved back to Kuala Lumpur to take a job as the youngest vice-president of Southeast Asia's Warner Music Group.

He worked there until he had his fill of corporate life. In 2001, he quit his executive job and started Air Asia with his music buddies.

In his speech, Tony recalled that it all started with a statistic he spotted in the New Straits Times.

It said only 6 per cent of Malaysians had ever traveled on an airplane.

That number got Tony thinking.

He recalled: 'I know my countrymen well. First, if you put the price low enough, they'd risk their lives. Second, everyone would like to travel. But it cost most people more than one month's salary to travel between Malaysian cities.'

As he saw it, it all added up to a sure-win discount airline venture.


Tony said, 'I think when you start a business, the most important thing is does the market want it?

I knew the market wanted it. If that is there, everything else is surmountable because people power is strong.'

He and his music friends discussed Tony's 6 per cent statistic over dinner and decided to go for it. They would enter the airline business.

After congratulating one another on their wisdom and courage, someone asked, 'Ahh, does anyone know if we need a license to start an airline?'

Of course you do.

This dampened spirits until they hit on the obvious solution: Tony should go see Prime Minister Mahathir to ask the government to grant them a license.

With no contacts, he naively called the PM's office, explained his request and asked for an appointment. Surprisingly, he got it.

Tony recalled the appointment was for 10 AM. He was so excited that he arrived at 7 AM. His presentation lasted from 10:00 to 10:30. The PM listened politely but remained silent.

When Tony had finished, there was a long silence.

Then PM Mahathir said, 'I can see that your group has zero experience in the airline industry.

'Well, maybe that is what's needed. A fresh approach. The so-called experts haven't done a particularly good job.'

The PM explained that no new licenses would be issued.

But Tony's group of musicians could buy one of two struggling airlines. Tony recalled, 'One airline was beyond hope while the other was about dead. We chose the one that was about dead. It had two Boeing jets and $11 million in debt'.

His group purchased the company for a token price of RM$1.

Three years later, Air Asia went public.

Now, after 6 years, the company flies 65 planes to over 100 destinations.


Tony Fernandes' stake in Air Asia is worth more than $300 million, ranking him number 15 among the richest businessmen in Malaysia.

From February 1 next year, four discount airline flights will be permitted daily between Kuala Lumpur and Singapore. It will break the 25-year duopoly of Malaysian Airlines (MAS) and Singapore Airlines (SQ), which now make 30 flights each day.

Competing for the two Singapore slots are local airlines, Jetstar and Tiger Airways. On the Malaysian side, the contenders are Air Asia and Firefly. Firefly is the new low-cost start-up of Malaysian Airlines.

Cheap Fares Are Coming

One year from now, on December 1, 2008, all restrictions will be lifted on the number of discounted flights that can be offered. It is part of the open-skies initiative to free up air links between capital cities of the 10-member block of Asean countries.

The savings will be BIG. Fares for the 45-minute flight between Singapore and KL now costs about $400 round trip, making it one of the most lucrative routes in the world.

After Feb 1, look for Singapore-KL air fares to fall to around $100 round trip, including taxes and surcharges.

The only thing cheaper will be to go by coach. It costs about $55.

Who says you can't beat inflation?

Lifebrandz Update.

Let me get straight to the point.

Lifebrandz is probably the worst stock I have ever invested in.

The negatives:

In terms of price performance, Lifebrandz has fallen a hefty -63% since I purchase the stock at $0.16 in February to just $0.06 currently.


Typically, I would be more than comfortable to average down on a stock if its price keeps going lower. But for Lifebrandz, what was highly unusual and disappointing is that their directors themselves have been regularly selling their stake in the company for the most of this year.

Whilst it is true that they might be selling the stock for other reasons than the company just being bad, but the truth is this:

People sell a stock when the think the price is going down, and they buy a stock when they think the price is going up.

And directors are also people.

It also announced (see here) a very negative development on 4 December 2007.

One of the positive developments for Lifebrandz was that it was in talks to acquire 4 entertainment outlets in Shanghai in order to set up base in PRC. Thus, the announcement that it had decided not to proceed with the acquisition was very disappointing.

And to top it all up, for its 1QFY08 results released yesterday, its net profit fell from S$475,000 in 1QFY07 to -S$796,000 in 1QFY08.

The positives:

But as in all situations, there is always a silver lining on the dark cloud.

Its fall in net profit was largely due to increased expenses due to the setting up of an additional 8 venues to the existing 2 venues. Its expenses almost doubled from S$5.94m to S$11.76m.

In fact, its revenue has actually increased 59%, which means that its additional venues had resulted in increased sales.

Going forward, next quarter's results should fare better since the Festive Season typically results in stronger sales for Lifebrandz. Thus, it is important to monitor its 2QFY08 results to ensure that happens.

Conclusion:

Although I am somewhat disappointed with Lifebrandz's performance thus far, and also apologetic to any of you readers who might have took up a stake in Lifebrandz following my decision to do so, the fact of the matter is this:

It is impossible for me to always pick winners. Not even Warren Buffett can do it.

Even the best of investors get their stock picks right 60% - 70% of the time. What is of greater importance is to keep your losses small and make your winnings big.

In the case of Lifebrandz, I only hold 50 lots of it which means that my absolute loss thus far is -$5,200, which is only less than 1% of my entire stock portfolio.

I am very thankful that I managed to keep my ego in check. If I had stubbornly refused to admit the negative points about Lifebrandz and insisted on averaging into the stock, i would now be staring at greater losses.

At present, I am in no rush to buy more of the stock. I am quite happy to wait for the internal and external volatility to stabilise before I decide what to do.

Fundamentally, I am still positive about the long term future of Lifebrandz. I believe that they will begin to reap their rewards once they have expanded their business to a comfortable position and can experience spillover from the IRs when they are up.

Until then, I am prepared to hold and wait.

Eastern Holdings Update.

Eastern Holdings announced (see here) a very positive development yesterday -

It had received approval from SGX to upgrade to the Mainboard as of 19 December 2007.

This move will enhance its profile as an up and coming player in the Singapore property market, and will aid in exposing the company to a broader spectrum of investors and institutions.

My view:

Currently, I don't advise anyone to take up a big position in property plays since property prices has already risen significantly over the past year.

- Yes, I don't believe in talking up my own stock for no good reason -

But for those who are already vested in Eastern, I believe you have benefited greatly from this investor-centric company that has been extremely generous in the past year with its dividends and bonus shares.

United Overseas Australia IPO.

Closing date of application: 17 December 2007
Commencement of trading: 19 December 2007

Established in the 1987, United Overseas Australia (UOA) is a Malaysian-based, Australian-listed property developer that focuses on the middle to high end residential and commercial property development and investment projects in Kuala Lumpur.

They are seeking a secondary listing in Singapore because they believe a Singapore listing will allow them to raise funds more effectively to expand into Asia, because investors here are likely to be more familiar with the asian market than Australian investors.

Beyond Malaysia, they are also looking to expand into other Asian countries like China, Vietnam, and India.

Their Key Completed Projects include the following:

1. UOA Centre
2. UOA Damansara
3. UOA II
4. UOA Pantai
5. Villa Mon’t Kiara
6. Villa Yarl
7. Taman Megah Kepong Baru (Phases 1 to 3)
8. Prima Midah Heights Condominium and Terrace Houses
9. Prima Setapak Mixed Development (Phases 1 to 4)
   

Key Competitive Strengths:

1. Their 'UOA' brand is recognised in Malaysia as a developer for premium properties.
   
2. They have a significant land bank in the strategic prime districts of Kuala Lumpur, with a total saleable and lettable area of 316,149 sqm of properties under development, and a total saleable and lettable area of 761,516 sqm being held for future development.
   

Key Risk Factors:

1. Their revenue fluctuates from period to period, which makes it difficult to predict their future performance.
2. They will require additional funding to finance future land acquisitions or developments.
   

Financial figures

Intended IPO price: $0.38
No. of shares available for public offer: 2m
No. of shares available for placement offer: 53m
Total post invitation share capital: Approx. 818.5m

Note: Unaudited 2QFY2007 figures were available in the prospectus.

FY2006
Revenue: $40.2m
Profit: $21.8m
NAV: 0.3315
EPS: 0.0266
EPS % Incr: -50%
PE ratio: 14.3x
Price: 0.38

2QFY2007
Revenue: $29.8m
Profit: $39.8m
NAV: 0.3326 (incl. IPO proceeds)
EPS: 0.0486
EPS Incr: 83% (Est.)
PE Ratio: 7.8x
Price 0.38

Dividend policy: No fixed policy.

Conclusion:

UOA has no real peer on SGX, being the first property play with a focus on the Malaysia market. Similar small cap property plays such as Eastern, Heeton, LC Development, tend to trade between 10x - 12x PE. Based on that, UOA has priced its IPO quite attractively at only 7.8x PE.

However, its earnings are by no means consistent, since it actually saw a drop of -50% from FY2005 to FY2006, which makes it difficult for us to predict its earnings as thus peg a fair value to it based on that.

Thus the safest bet would be to buy it at or below its NAV of $0.33. That would mean avoiding this IPO and waiting to buy it on the secondary market, which is not a bad idea since there are only 2m available shares for its public offer.


Probability of getting allotted for the IPO - VERY LOW


I have only included the key points of the prospectus. Certain information have been omitted in order to keep my write-up short, but you can find the entire prospectus here.

JES Holdings IPO.

Closing date of application: 17 December 2007
Commencement of trading: 19 December 2007

Established in the 1970's, JES is a major PRC shipbuilding group with production facilities capable of producing different types of vessels:

• Bulk carriers - for transportation of bulk cargo items such as ore, food staples, or similar cargo
• Containerships - for transportation of all kinds of containerised cargo
• Ocean engineering vessels - mainly crane barges for the offshore oil sector and construction building works
• Roll on/roll off vessels - designed to carry wheeled cargo, such as cars, trailers, or railway carriages

Their customers include major shipowners based in Europe, Canada, and Asia, including PRC.

Key Competitive Strengths:

1. Revenue and profit has been growing annually at 109% and 110% respectively for the past three years.
2. Their order book as of 30 June 07 stands at a record high of US$1,484.7m, which consists of 43 vessels to be delivered from July 2007 through 2011.
   

Key Growth Plans:

1. To expand their production capacity significantly by building additional shipbuilding facilities on land adjacent to their existing Shiwei Yard, to be operational by 2009.
   
2. To increase their operational focus on building larger, more technologically advanced vessels that command higher margin.
   
3. To selectively and strategically venture into other shipbuilding related businesses, including ship repair services, when the suitable opportunity arises.

Pre-IPO Investors:

It has a strong list of pre-IPO investors, namely:

• Amaranth LLC
• Clariden Leu Ltd.
• OCBC Capital Investment Private Limited
• SkyVen Growth Capital Fund Pte. Ltd.
• Lim Oon Cheng
• Tan Keh Poo @ Tan Kay Poo
• Emirates Tarian Asset Management Pte. Ltd.
• Wang Yu Huei
• Marksman Capital Ltd
• Portchester Asset Management Ltd
• Pinetree Fund PteLtd
• Rotol Singapore Ltd
• IPC Peripherals (Pte) Ltd
• Gay Chee Cheong
• Tommie Goh Thiam Poh
• Chew Hua Seng
• Unibond Capital Limited
• Asset Grow Investment Limited
  

Financial figures

Intended IPO price: $0.67
No. of shares available for public offer: approx. 16.2m
No. of shares available for placement offer: approx. 356.94m
Total post invitation share capital: Approx. 1,144m

Note: Unaudited 2QFY2007 figures were available in the prospectus.

FY2006
Revenue: $230.2m
Profit: $24.9m
NAV: N.A.
EPS: 0.0218
EPS % Incr: 22%
PE ratio: 30.7x
Price: 0.67

2QFY2007
Revenue: $224.3m
Profit: $32.4m
NAV: 0.26 (incl. IPO proceeds)
EPS: 0.0283
EPS Incr: 150% (Est.)
PE Ratio: 23.7x
Price 0.67

Dividend policy: No fixed policy.

Conclusion:

JES's closest comparable peer on SGX in Yangzijiang - one of the best performing S-shares. Ever since its listing in early April, it has almost tripled from its IPO price of $0.95 to a high of $2.90, before correcting to its current $2.06 due to the broad market correction.

Comparatively, JES has a smaller sales revenue and lower profit margin as compared Yangzijiang, but with the offshore shipping sector expected to do well in the next few years, Yangzijiang already trades at a hefty 47.5x FY07 PE.

JES is strongly tipped to follow in Yangzijiang's footsteps, thus it should do very well.

Nevertheless, to give ourselves a comfortable margin of safety, I am pegging JES at a Fair Value of $0.67 or 24x PE (IPO price) only.


Probability of getting allotted for the IPO - GOOD


I have only included the key points of the prospectus. Certain information have been omitted in order to keep my write-up short, but you can find the entire prospectus here.

Hour Glass Update.

Following my initial Stock Alert (here) on 7 November 2007, Hour Glass has risen some 13% from $1.60 to $1.80.

Additionally, DBS Vickers has just issued a buy call on Hour glass this morning.

The Hour Glass: BUY (Initiating coverage);
S$1.72; HG SP; Price Target:12-Month S$2.32

Hour Glass distributes and retails watches, clocks and luxury timepieces.

In over 28 years, it has grown from one store in Singapore to a retail and distribution network of over 21 stores in 6 cities.

It retails over 60 international brands including Rolex, Patek Philip and Breguet. With a healthy set of 1H08 results and its seasonally strong Christmas season coming up, we expect strong earnings to continue.

We forecast FY08 net profit to experience a 40% y-o-y growth to S$26m. Going forward, buoyant economies in Singapore, HK and China will fuel demand for luxury watches.

In Singapore, government initiatives like the IRs and F1 race will increase tourist arrivals and should boost sales. Hour Glass Watch is expected to register steady y-o-y net profit growth of 9% into FY 09.

Initiate coverage with a BUY recommendation and target price of S$2.32, based on 10x FY08 earnings. Our valuation is at a discount to its closest competitor, Sincere Watch, that trades at consensus 19x FY08 PER, given its smaller market capitalization and low share liquidity.

Market interests in HG should increase following the announcement of a 1-for-1 stock split on 10 Dec 2007 following a report that Peace Mark, a HK listed fashion and luxury watch retailer is making a voluntary general offer for Sincere Watch at an attractive PE of 19x on FY08 earnings on 7 Dec.

2008 STI Preview by Straits times.

This article was compiled by Yang Huiwen for the Straits Times yesterday. Even though I do not act much on analysts' advice and sometimes even prefer to take a contrarian approach, it is always worthwhile to take note of what these big fund houses are focusing on.

While share price growth is set to slow down amid volatility, valuations are still attractive.

The contagion effect of the U.S. sub-prime crisis has taken a modest toll on the local equities market - but analysts see good investing opportunities next year.

Amid expectations of a "soft" landing, possibly even a recession, in the U.S. and some key global economies, analysts are pointing to a year of more modest returns.

It will be an "increasingly tough environment for local stocks in 2008", said a UOB Kay Hian report.

Most analysts agree Singapore is still a very compelling market, citing attractive valuations and strong fundamentals.

STI Forecast


They expect the Straits Times Index's (STI's) performance to remain robust, but this may undercut by shrinking risk appetite, amid more concerns over how long it will take for credit markets to be cleansed of bad debts.

Overall volatility will remain high for at least the first half of the year, they say. Concerns over the weakening U.S. economy and a likely recession in the first half of the year may also hurt profitability.

Singapore offers an attractive value proposition based on its price-earnings (PE) ratio, a key measure of profitability, which is about 15 times, said OCBC head of research Carmen Lee.

"Despite recent gains and volatility, valuations are higher but not excessive in Singapore," she said, adding that some other markets in the region are already trading at about 20 to 30 times PE.

Bullish estimates are also coming from Merrill Lynch analysts Melvyn Boey and Tse Wei Choo who set an SI target of 4,430 points - a 20% upside from current levels.

In the worst-case scenario, the downside for the STI would be limited to 3,000 points, said analysts from UOB Kay Hian who gave a more conservative target of 4,100 by the end of next year "if the macroeconomic outlook improves".

Citigroup analyst Kelvin Chong said: " With tightening credit, a depreciating U.S. dollar and jittery markets, we think the market's willingness to pay for risk may be lowered."

Marine, banking plays lead next year's stock picks

Analysts were almost unanimous in their view of the continued robust growth potential of the offshore and marine industry next year, on the back of strong order books and momentum.

Credit Suisse's Mr Haider Ali has "outperform" calls on Sembcorp Industries and Cosco, while Citigroup's Mr Chong is overweight on the sector, with "buy" calls on stocks that include Keppel corp and Sembcorp Marine.

Despite the ongoing credit crunch, banking is touted as another worthwhile sector. "Asia has become cash rich now, and local banks have limited exposure to the U.S. sub-prime debt and related structured products," said a Credit Suisse report.

IR boom could spur building, real estate plays

Construction and property firms are also expected to ride on the upcoming integrated resorts boom.

Merrill favours banking, property and infrastructure-related stocks due to their "close structural ties to the economy". Its picks include DBS Group Holdings, United Overseas Bank, Capitaland and CDL Hospitality Trust.

Merrill expects the valuation gap between these counters and their Hong kong peers to narrow.

China plays

China firms listed locally, or S-shares, which are up about 36 per cent this year, are also expected to deliver. Due to the China growth story, consumer stocks with a mainland play, such as Man Wah Holdings, Cacola Furniture and Koda, are also looking very rosy.

"Valuations are cheap and lower than their China peers," said OCBC's Ms Lee, adding that this gave the counters good growth potential.

Defensive plays

Investors should also make space for defensive stocks in their portfolios for a nice balance. UOB Kay Hian's favourites include Parkway Life Reit and Pacific Shipping, while OCBC picks Singapore Press Holdings.

Technology plays

Analysts, however, hold mixed views on the technology sector. DBS analyst Sachin Mittal forecasts Singtel, his top pick in the sector, to register double-digit growth in earnings next year.

An OCBC report said, "We continue to like Venture Corp and believe that its strong management and diversification into industrial and medical devices should allow it to ride out the storm relatively intact.

Karin Technology, WesTech and Willas-Array are also expected to benefit from an electronics boom in China.

KTL Global IPO.

Closing date of application: 12 December 2007
Commencement of trading: 14 December 2007

Established in the 1960's, KTL Global is a supplier of rigging equipment and related services. Their customers are mainly in the offshore Oil & Gas and marine industries, and also in the engineering and construction industries.

Their sales and marketing team covers mainly Singapore, SE Asia, and Middle East. They also sell to customers in other parts of Asia and Europe.

Their products and services are depicted in the illustrations below:



Key Competitive Strengths:

1. With more than 60 years experience in the business, they have a long history and established track record with their customers and suppliers.
2. Their business is globally diversified, having already made inroads to overseas markets such as Vietnam, UAE, India, Egypt, PRC, and Australia.
   
3. Revenue and profit has been growing annually at 12.7% and 62% respectively for the past three years.

Financial figures

Intended IPO price: $0.28
No. of shares available for public offer: 2m
No. of shares available for placement offer: 38m
Total post invitation share capital: Approx. 160m

Note: Unaudited 4QFY2007 figures were available in the prospectus.

FY2006
Revenue: $35.7m
Profit: $3.2m
NAV: 0.149
EPS: 0.02
EPS % Incr: 100%
PE ratio: 14x
Price: 0.28

4QFY2007
Revenue: $41.9m
Profit: $4.2m
NAV: 0.171 (incl. IPO proceeds)
EPS: 0.026
EPS Incr: 30% (Est.)
PE Ratio: 10.8x
Price 0.28

Dividend policy: No fixed policy.

Conclusion:

There are several small cap oil & gas service providers listed on SGX, though KTL would probably be one of the smallest in terms of market cap, total share capital, and sales revenue.

Most of those stocks trade between 12x - 16x PE, but because of its small size:

I believe KTL should trade at a Fair Value of $0.32 or 12x PE only.


Probability of getting allotted for the IPO - VERY LOW


I have only included the key points of the prospectus. Certain information have been omitted in order to keep my write-up short, but you can find the entire prospectus here.

Mercator Lines IPO.

Closing date of application: 10 December 2007
Commencement of trading: 14 December 2007

Established in the 1983, Mercator Lines is a leading Indian-owned international dry bulk shipping company, focusing on the transport of coal into India, and iron ore from India to countries such as PRC, Japan, and South Korea.

Their customers are large players in the thermal-based power and steel sectors, and include Tata Power and Global (a subsidiary of Arcelor Mittal Group).

Their parent company, MLL India, is the 2nd largest private sector shipping company in India by aggregate fleet tonnage capacity.

Key Competitive Strengths:

1. They have a modern fleet of 11 vessels, with an average age of 2 years for owned vessels, and less than 9 years for chartered-in vessels, as compared to an average age of 15 years for global bulk carrier fleet.
   
2. Because of their affiliation with MLL India, they are able to provide their customers with total logistics solutions, from load port to the point of usage.
3. It enjoys stable revenue because of long term fixed rate contracts ranging between 11 months to 4 years with their customers.
   

Key Growth Plans:

1. To strategically expand their fleet by acquiring 4 gearless vessels.
2. To maintain the majority of their fleet on fixed rate contracts, and to deploy up to 30% of their fleet on the spot market to capitalise on higher pricing.
3. To exploit backhaul opportunities to optimise vessel utilisation and profitability.

Key Risk Factors:

1. Their strategy to expand their fleet may result in substantial debt. They currently have US$394m of outstanding debt comprising Convertible Bonds, a loan from MLL India and bank loans, resulting in a finance cost for the five months ended August 31, 2007 amounted to US$10.2 million.
2. If the holders of their US$16m Series B Bonds do not exercise their conversion rights prior to the maturity date, they may be required to repay the principal amount of our Series B Bonds in full.
3. The company was only established in May 2005, thus it has a limited operating history with only 8 employees currently.
   

Financial figures

Intended IPO price: $0.94
No. of shares available for public offer: approx. 10.85m
No. of shares available for placement offer: approx. 259.35m
Total post invitation share capital: Approx. 1,316.6m

Note: Unaudited FY2007 figures for the 1st 5 months were available in the prospectus.

FY2006
Revenue: $74.4m
Profit: $6.2m
NAV: N.A.
EPS: 0.0047
EPS % Incr: N.A.
PE ratio: 200x
Price: 0.94

5mFY2007
Revenue: $160m
Profit: $38.9m
NAV: 0.0763 (incl. IPO proceeds)
EPS: 0.0295
EPS Incr: 528% (Est.)
PE Ratio: 31.9x
Price 0.94

Dividend policy: No fixed policy.

Conclusion:

Mercator Lines is the first Indian shipping company to list on SGX, so there is no real precedent for it to be compared with. Most SGX-listed shipping stocks trade between 12-15x PE.

Pros:

Despite its short operating history, its strong growth figures is evident of a good growth stock, plus it has a strong parent company and very reputable cusomers.

Cons:

It is a very new and small company.

Most of the other Indian companies previously listed on SGX, such as NeraTel, Meghmani SDS, QAF, have largely been ignored by investors.

Considering all the above factors, it seems as if there is a lot of uncertainty surrounding this IPO. As such, I would decline to give it a Fair Value as of yet.

I would prefer to avoid this IPO for the time being, but will be monitoring its future price performance and results.


Probability of getting allotted for the IPO - GOOD


I have only included the key points of the prospectus. Certain information have been omitted in order to keep my write-up short, but you can find the entire prospectus here.

12 Saving Tips for the Holidays.

This old article was written for Yahoo Finance by David Bach this time last year, but its cost-cutting tips are still relevant today, and worth taking note of. After all, prudent saving is just as important to wealth building as is intelligent investing.

The holidays are here, and many of us will get caught up in the excitement of the season and be sent into a spending frenzy. In fact, The National Retail Federation reports that the average shopper will lay out close to $800 on holiday shopping this year.

If you find that the only holiday tradition you have is to overspend, take heart in the old saying that traditions were made to be broken. I challenge you to create a spending plan this year that you can stick to. With a little creativity and commitment, you'll be kicking off a new year this January without the burden of holiday debt.

Here are my 12 tips to help you save money this holiday season:

1. Start with a detailed list.

Write out who you're buying for and how much you can afford to spend for each gift. When you add it all up, you'll know if you need to cut back the list or perhaps decrease your spending limit per person. Impulse purchases will quickly get you off track, so bring the list with you when you shop -- and resolve to stick to it.

2. Use cash.

If, like the average shopper I mentioned above, you spend $800 on gifts, charge it all on your credit card, and only make the minimum payment each month, at a rate of 18 percent you'll end up paying another $800 in interest and it will take you 131 months to pay it all off!

Paying with cash makes your spending more real and will cut down on your urge to splurge. If you can't afford to pay for a gift with cash, then more than likely you can't afford it.

How about chipping in with a family member or friend? Or go for something less costly but more meaningful -- a carefully chosen book, a favorite photo in a frame, even a homemade treat made with love.

3. Shop online.

According to an AOL Shopping/Zogby poll, a whopping 80 percent of Americans expect to purchase gifts online this holiday season.

Online prices often beat out in-store prices, but will require you to use your credit card. Shop with the card that has the lowest interest rate and keep track of what you're charging. If you don't pay your balance off in full, you'll more than wipe out the saving benefits of buying online.

Also, take note -- a recent USA Today article stated that more than 80 percent of online retailers now offer free shipping. If you meet the minimum purchase requirement, you'll want to take advantage of free shipping offers for gifts you plan to ship long-distance. You'll save yourself a bundle, not to mention long lines at the post office.

4. Compare prices.

Another advantage to shopping online is the myriad of comparison tools available on the Internet to help you find the best deal. Check out sites like Yahoo! Shopping, Shopzilla, PriceGrabber.com, and Shopping.com.

Most sites will even offer a bottom-line comparison, which shows you the best deal with tax and shipping included. For big-ticket items, comparing prices before you buy will pay off big-time.

5. Use coupon codes.

This is one of my favorite ways to get some good deals while shopping online. Don't leave that "coupon code" field blank when you're ready to check out. Take a moment to visit sites that offer discount codes for hundreds of stores -- from Amazon.com to Zappos.

Check out Currentcodes.com, dealcoupon, CouponHut.com, savester, and MyBargainBuddy.com.

6. Cash in your reward points and frequent-flier miles.

Here's how you can put your credit cards to good use. Cash in your reward points in exchange for store gift cards. Right now, 5,000 points on a Capital One card will get you a $50 gift card to retailers like Macys, Barnes and Noble, The Gap, and many others.

Similar exchanges are also available for many frequent-flier programs, so check them out. Use the gift cards to either purchase gifts, or give the card itself as a gift. For the full scoop on gift cards, read my earlier column "Four Tips for Avoiding a Gift Card Fiasco."

7. Draw names from a hat.

With a large family or group of friends, it's just not feasible to buy a gift for everyone. I nstead, pre-select names from a hat so that each member of the family or group only buys a gift for the name that they've chosen.

Set a spending limit and have some fun with it. Visit GuessList.com for entertaining variations on this idea.

8. Donate to a charity.

For the person who has everything, consider making a donation in their honor to a charity that holds special meaning for them. At JustGive.org you can buy a donation certificate to give as a gift. Your recipients can then choose a charity to donate to and you'll get a nice tax deduction.

Be sure to save your receipt, and make sure the charity you ultimately choose is legitimate. Check them out first at GuideStar or Give.org.

9. Host a potluck dinner.

You can do a great job of keeping your gift list in check and then blow your whole budget on an overly expensive dinner for your guests. Steer clear of splurging on lobster tail and filet mignon when you're on a tuna fish budget.

If it's your turn to host family and friends this year, take some of the burden off by asking your guests to each bring a favorite dish or dessert.

10. Wrap with recyclables.

Sometimes we end up spending more on wrapping paper than we do for actual gifts. When I was a kid and we ran out of wrapping paper, my creative mom used the comics from the Sunday paper to finish the job. It looked cool and didn't cost a dime.

Today, you can do the same thing and feel good about recycling. Another alternative: More and more fund-raising groups sets up tables in stores and malls, where they'll wrap your gifts for a small donation -- a win/win for you and them.

11. Accessorize.

There's no need to buy an expensive new outfit for your holiday get-together or office party. In fact, I'll bet you'd be surprised by what you find in the back of your closet if you look close enough. Dress it up with a new holiday tie, scarf, or pin and make the old new again.

12. Don't spoil the kids.

I know how hard it is to resist the urge to overindulge the kids at holiday time. With gaming consoles like Sony's PlayStation 3 selling for over $1,000 and preschoolers requesting iPods in their letters to Santa, it's all too easy to spend more than you can afford.

Overindulgence simply isn't good for the kids, and it's certainly not good for your pocketbook. Try substituting a large-ticket item with a special "date" with your child. Plan a family outing to a local ice-skating rink, bake some holiday treats together, or pop a bowl of popcorn and watch a holiday classic with each other.

In years to come, your children will treasure the memories of time spent with you far more than the latest toy fad.

As you save cash with these tips, I hope you'll be able to recapture the magic of the season by replacing overspending and holiday debt with treasured memories, quality family time, and freedom from financial worries. Happy Holidays to all.

Soon Lian Holdings IPO.

Closing date of application: 11 December 2007
Commencement of trading: 13 December 2007

Established in the 1980's, Soon Lian is a specialist supplier of over 1,200 different aluminium alloy products, mainly sold to the marine and precision engineering industries. They also sell their products to other aluminium stockists and traders, as well as customers in other industries.

Over the years, they have built a diversified clientele with over 1,000 customers in more than 15 countries within Asia.

Their use of products is depicted in the illustration below:


Key Competitive Strengths:

1. They currently generate approx. 89% of their revenue from the marine and precision engineering industries, which are niche markets which provide better profit margins.
   
2. They have strong relations with their major suppliers, having been awarded distributerships by Alcoa, Alcan, Elval, Merrem, LB Aluminium, and PT Sri Indah, and appointed by Hukamin as an approved stockist.
   

Key Growth Plans:

1. They established a warehouse cum office in Penang in Oct 2007 so as to better serve their customers the Northern West Malaysia.
   
2. To commence operation of their Indonesian office, and to explore expanding into Vietnam and UAE in 2008.
   

Key Risk Factors:

1. Because their entire product line is made from aluminium, their revenue is directly affected by the fluctuations in aluminium price.
   
2. They carry a high level of inventories - approx. 54.7% of their total assets - which if not converted to sales, can affect their profitability.
   

Financial figures

Intended IPO price: $0.21
No. of shares available for public offer: 1m
No. of shares available for placement offer: 26m
Total post invitation share capital: Approx. 108m

Note: Unaudited 2QFY2007 figures were available in the prospectus.

FY2006
Revenue: $31m
Profit: $3.3m
NAV: 0.089
EPS: 0.03
EPS % Incr: 130%
PE ratio: 7x
Price: 0.21

2QFY2007
Revenue: $39.6m
Profit: $5.4m
NAV: 0.105 (incl. IPO proceeds)
EPS: 0.05
EPS Incr: 67% (Est.)
PE Ratio: 4.2x
Price 0.21

Dividend policy: No fixed policy.

Conclusion:

Soon Lian's closest comparable on SGX would probably be AEI Corp, an aluminium alloy profiles manufacturer which services the electronics and precision engineering, and construction and infrastructure building industries. Both companies are also very similar in terms of revenue volume generated and profit margin.

As such, based on AEI Corp's historical PE, I believe Soon Lian should trade at a Fair Value of $0.375 or 7.5x PE only.

This gives us a very healthy potential 75% upside to its IPO price. Unfortunately, there is only a ridiculous 1m shares on public offer, which means the chances of being allotted via its IPO are close to nil.


Probability of getting allotted for the IPO - VERY LOW


I have only included the key points of the prospectus. Certain information have been omitted in order to keep my write-up short, but you can find the entire prospectus here.

Market Update.

Compiled by DBS Vickers this morning:

Trading activity among 2nd and 3rd liner stocks started to pick up on Tuesday afternoon and continue yesterday. The leader group was the S-chips, which attempted to and broke out of their 1-2 weeks long sideways consolidation band.

US market's overnight rally should see follow through gains among small caps in early session trade but China's decision to shift its monetary policy from 'prudent' to 'tight' next year could be taken as a reason for short-term profit taking.

The Chinese government is concerned that inflation and the bubble in asset prices could threaten social stability. Bargain hunt only on pullback rather than momentum buying into strength is preferred for S-chips that have risen in the past two days.

STI should spurt above the Monday high of 3570 but upside should be capped at below 3640 as market awaits US employment data scheduled for release tomorrow.

US markets rallied on positive economic news and after regulators and lenders agreed to freeze interest rates on subprime mortgages for a period of five years. The ADP report showed that the private sector expanded at a faster pace in November, fueling optimism that Friday's job data may show that the US economy is not dipping into the brink of a recession.

However, the ADP report is noted to be highly volatile. In separate economic data releases, factor orders went up while the non-manufacturing sector continued to grow. Still, one day of positive data does not wash away concerns about a US economic slowdown.

Watch too, for oil price movement. OPEC has left production quotas unchanged.

Federal Reserve is looking for additional ways to increase credit to companies and consumers. It may lower the discount rate, which is what it charges banks for short-term direct loans, by a quarter-point more than the benchmark rate.

Such a move would narrow the gap between the two rates, normally one percentage point, to a quarter-point and may spur lending.

First Resources IPO.

Closing date of application: 06 December 2007
Commencement of trading: 10 December 2007

Established in 1992, First Resources is one of the largest private sector producers of crude palm oil in Indonesia. All their operations and assets, consisting of 13 oil palm plantations and 6 palm oil mills, are located in Riau province, Sumatra, Indonesia.

As of July 2007, they own a total landbank of 184,280 ha.

Their business areas are depicted in the illustration below:


Key Competitive Strengths:

1. A substantial majority of their trees are in the early stages of their peak production years, hence fruit bunch capacity is expected to increase over the next few years, at minimal increase in production costs or capital expenditure.
2. They use the best industry practices so as to maximise their production yields and lower production costs.
3. There is strong growing consumption for crude palm oil in China and India, which is expected to strongly increase demand.
   

Key Growth Plans:


Financial figures

Intended IPO price: $1.10
No. of shares available for public offer: 3m
No. of shares available for placement offer: 222m
Total post invitation share capital: Approx. 1,384.6m

Note: Unaudited 2QFY2007 figures were available in the prospectus.

FY2006
Revenue: $137.2m
Profit: $56.2m
NAV: 0.184
EPS: 0.026
EPS % Incr: 62%
PE ratio: 42.3x
Price: 1.10

2QFY2007
Revenue: $243.3m
Profit: $107.8m
NAV: 0.223 (incl. IPO proceeds)
EPS: 0.046
EPS Incr: 145% (Est.)
PE Ratio: 24x
Price 1.10

Dividend policy: No fixed policy.

Conclusion:

First Resources' most comparable peers on SGX would be Wilmar, Golden Agri Resources, and Indofood Agri Resources. All three companies are much larger in size than First Resources in terms of market capitalization and also plantation sizes.

Naturally, they also deliver higher sales revenues. Here is a comparison in FY07 revenue between the 4 companies:

Wilmar - S$19.2 billion
Golden Agri Resources - S$2.3 billiion
Indofood Agri Resources - S$896.4 million
First Resources - S$243.3 million

However, First Resources does boast of a much higher profit margin than Wilmar and Indofood:

First Resources - 44.3%
Golden Agri Resources - 47.9%
Indofood Agri Resources - 16.6%
Wilmar - 3.5%

Considering all the factors, I believe First Resources should trade at a Fair Value of $0.83 or 18x PE only.

However, all palm oil stocks have currently recovered strongly since the August correction to new all-time highs, thanks to rising palm oil prices. As such, First Resources' IPO comes at a very good time, and it should do very well in the next few months.

Unfortunately, with only 3m shares available on public offer, most value investors would not be able to buy this stock at a price level that offers good margin of safety. This stock will probably become a very good trading stock so long as this bull run continues.


Probability of getting allotted for the IPO - VERY LOW


I have only included the key points of the prospectus. Certain information have been omitted in order to keep my write-up short, but you can find the entire prospectus here.

Credit Crisis Update.

Why the Credit Crisis Shakes more than Banks

It's not just companies like Citibank and Merrill that have exposure to the credit markets.

A surprising number of manufacturers have drifted into financial services.

Harley-Davidson has a problem, and it's not only that people are becoming less inclined to spend $15,000 on a pair of wheels. It's that the ones who bought bikes a while ago are having trouble paying. Harley itself finances half the hogs it sells. This year defaults on its loans have risen nearly half a percentage point to 1.65%.

Harley's fortunes largely ride on its skill at selling bikes. But its ability to size up a good credit risk matters a lot, too. Last quarter 13% of its pretax earnings came from loans and leases.

Herein lies a hidden risk in corporate profitability: It's not just the financial sector that will suffer if the subprime crisis spreads to other kinds of lending.

A lot of companies that are not classified as financial have financial arms and could suffer along with the banks and the brokers if borrowers stop paying their bills.

General Electric, for example, gets 34% of its pretax earnings from financial services. Deere & Co., Caterpillar and Pitney Bowes each get at least 12% of their earnings by financing things.

Quite apart from the very obvious risk that U.S. consumers will throttle back next year is the risk that they won't be able to keep up payments for their past spending sprees. Now signs are emerging that payback problems are spreading from mortgages to other kinds of loans. In November HSBC said that unsecured loans like credit cards were experiencing "early-stage delinquency." Last quarter Capital One wrote off 4.13% of its credit card receivables, up three-quarters of a percentage point, and warned it expects losses to jump this quarter again. Its auto loan business just slipped into the red, too.

Did you know that Sony owns 60% of a finance company, Sony Financial? The electronics maker sells health, life and car insurance and even runs a bank. With a few clicks on its Web site shoppers can buy a flat-screen TV or PlayStation 3 gaming system with no money down and no interest until 2009.

Last year 82% of Sony's $1.1 billion in pretax earnings came from its financial unit--twice what its pictures division made producing films like The Da Vinci Code and Casino Royale. Sony's financial operations are in fine shape--for now. One area to watch: its $2.8 billion in mortgage loans, up 63% annually since 2004.

Businesses selling to other businesses on credit is big, too. That's more or less how GE veered away from lightbulbs and locomotives and into loans and leases. Now GE's financial operations are a business in their own right, largely unconnected with the products it sells. But the original motivation of non-financial companies getting into lending, to move goods off the shelves, remains important in many industries. Boeing carries $8 billion of customer leases and interest-bearing receivables on its books. Paccar, a maker of tractor-trailer trucks, has $9 billion.

Frederick Hickey, author of newsletter High Tech Strategist, says:

Companies tend to make loans to meet sales goals today, and worry about if they picked the right borrowers tomorrow.

During the tech bubble of the 1990s telecom gear makers like Cisco and Lucent extended billions of dollars of loans to phone companies to buy their products--then took billions in writeoffs when telecom crashed. Circuit City ate losses early this decade when it exited the credit card business.

How big is financing in the economy? One way to measure it: 18% of the $13 trillion market value of S&P 500 companies is for the financial sector. That bulge is a big part of why the market has been choppy since last summer: Credit problems are dragging down the banks, brokers and insurers.

Another measure is profits. The finance sector accounts for 28% of the index's combined $748 billion in earnings for 2006. Those earnings are likely to be down in 2007 when writeoffs are included. Neither of these percentages for financial services includes the financial activities of companies like Sony and GE.

Here's another way to look at how much is riding on the soundness of borrowers. Debt at U.S. households, governments (state and federal) and non-financial businesses now stands at 217% of gross domestic product, up from 141% a quarter of a century ago. So a small rise in interest rates or in defaults is likely to have a bigger impact than it once would have had on business bottom lines and consumers' ability to spend.

"The debt level is unprecedented, and the acceleration in the growth of the debt hasn't been seen since the 1920s," says Christopher Watling of Longview Economics in London. "Lots of businesses have profited off this, and they're vulnerable."

See full article from Forbes Magazine by Bernard Condon Jack Gage here.

Market Update.

This weekly commentary was compiled by DBS Vickers this morning:

KEY POINTS

• The rally ahead of FED meeting – Buy on rumor, sell on news
  

• STI near-term upside capped at 3575 (50% retracement), a re-test of 3400 likely during December

Weekly Comments

Equity indices have rebounded off their November lows. Expect range bound trade as investors await the FED decision. The STI should be capped at 3575 in the week ahead. Uncertainty about the impact of the credit crisis on the US economy and Asia’s growth remains. With equity indices yet to show a clear sign of a technical trend reversal to the upside,

we are treating last week’s rise as a counter-trend rebound within a larger trend that is still in consolidation.

Small caps, which lagged behind the blue-chip led index rally last week could enjoy brief spurt of life ahead of the FED meeting on December 11 but until investors’ confidence makes a return, the rise may not sustain.

Our earlier technical view for traders to adopt a contrarian positive view in anticipation of a technical rebound in the STI to 3510 has panned out. Oversold equity indices rose on increased expectations for a more aggressive 50 basis points rate cut during the December 11 FOMC meeting, a technical rebound in the USD and a retreat in oil price.

However, the basis behind last week’s rally coupled with technical factors currently suggests a mere technical rebound rather than a trend reversal to the upside -

Point 1:

The main drive behind last week’s rally was raised expectations that the FED may cut interest rates by up to 50 basis points. However, a declining interest rate environment does not necessarily equate to rising equity prices. During the period from May 2000 to June 2003, FED funds rate were lowered from 6.5% to 1%. The Dow consolidated from 10,935 to 9,011 during the same period when the US economy faltered.

While a 50 basis point cut in interest to 4% would be welcomed, it would also reveal that the FED is increasingly worried that the collapse of the housing market and credit crunch could have a larger negative impact on the economy. Investors are turning to this Friday’s November non-farm payrolls (consensus estimates 75,000) and unemployment rate (consensus estimates 4.7%) for signs of whether the FED will cut rates by 25 or 50 basis points.

A worse-than-expected non-farm payrolls and unemployment rate increases the chance for a 50 basis points cut and thus equity prices should continue to rally?

This argument sounds fragile.

A ‘buy on rumor, sell on news’ is the more likely scenario for US equities so long as the economic outlook remains uncertain.

Point 2:

Oil price fell to USD88.7pbl last week on speculation that OPEC may increase oil production. The pullback in oil price may be halted and reversed if the anticipated production increase does not materialize during the Gulf Cooperation Council (GCC) meeting this week.

Technically, we continue to see the likelihood of oil price heading above the psychological USD100pbl mark before peaking out at/before USD107pbl.

Conclusion:

Mere hopes of an aggressive cut in interest rates during the next FOMC meeting is not going to continue to power Asian bourses and the STI higher once the event is over.

The key to a sustainable rally may lay in the ability among Asian economies to withstand a slowdown in the US.

In this matter, the signs are encouraging. GDP growth (% y-o-y) among the Asia 10 countries rose from 5.7% in 1Q05 to 6.7% in 2Q07 even as the US economy slowed down from 3.2% to 1.7% during the same period.

From a technical perspective, the 50% upward retracement level and the mid-Nov high offers a likely short-term resistance to the current rebound for equity indices. This puts short-term resistance at 3575 (50% retracement) for the STI.

November 07 Portfolio.

These are my current stocks holdings as of 30 November 07.

1. Pan United
2. Sarin
3. Yongnam
4. Taisin
5. Sinotech Fibre
6. Eastern
7. Lifebrandz
8. Sihuan
9. China XLX
10. IFS
11. FujianZY
12. Sing Inv
13. UIS
14. China Sports
15. Fibrechem
16. HLN Tech
17. China Pplus
18. ARA
    

The November 07 portfolio value of $524.593 is a decrease of -$98,057 (or -15.7%) over the October 07 portfolio value of $622,650. There was also a cash reduction of -$14,597 from the sale of stocks (less the purchase of new stocks), so in fact, the portfolio value had decreased by -$83,460 (or -13.4%).

These are the key Portfolio Changes.

I did a strategic switch from Tat Hong to ARA so as to re-balance from an overvalued to undervalued stock. I also sold off some stock in IFS at $0.76 in early November, so that I may have some spare cash to pick up other growth stocks at lower prices . IFS has since corrected to $0.70 only, so that decision has proven to be correct.

I received dividends of $705 from Taisin for November 07.

Conclusion:

This has been the 2nd worst month for my portfolio performance, topped only by the performance back in August.

Nevertheless, I still remain a bull at heart despite the dire situation in the US, mostly because of the strong growth fundamentals in Asia, and led in Singapore by the property and construction industries, which I still have a strong stake in. I believe that the global markets will do well in 2008, especially in the first half.

At the same time, I will be cautious in investing in growth stocks that have stories which need to take a few years to unfold. Reason being that it is very hard to see what are that the growth factors that can drive the global markets beyond 2008-2009, hence the risk of investing in those stocks are significantly higher than a year before.