Extraordinary Profits

Corporate Results Update.

2008-05-08T09:25:00.001+08:00

Compiled by DBS Vickers:

UOB’s 1Q08 results were in line with our expectations.

Annualised 1Q08 numbers were 6% lower than our full year estimates and 5% below consensus due to higher provisions set aside for its ABS CDOs. UOB further provided for another $43m against its profit and loss account.

Supporting the results were strong loan growth (18% y-o-y and 2% q-o-q) and higher NIMs of 2.20% (4Q07: 1.94%, 1Q07: 2.18%). Non-interest income was lower by 4% y-o-y and 22% q-o-q as expected due to mark-to-market losses coupled with lower fee income from fund management and investment-related activities, in line with the softer capital market conditions.

During 1Q08 UOB’s regional outfits performed well with the exception of Greater China due to a revaluation loss on the US$ capital injection. Excluding the revaluation loss, Greater China would have recorded a profit of S$26m rather than a loss of S$4m.

OCBC’s 1Q08 net profit came in at S$626m.

+12% y-o-y and 45% q-o-q. The disappointment is in GEH, which surprised on the downside with only a S$7m income contribution. Loan syndication fees were strong; no further provisions were made on CDOs. Maintain Buy, TP revised to S$9.80 (from S$9.00).

Net profit for StarHub came in below expectations.

Grew 15% y-o-y but fell 19% q-o-q to S$80.1m, mainly due to lower margins. Ahead of full mobile number portability, we do not expect competition to ease. Maintain Hold; target price of S$3.10. Management has guided for 10% revenue growth and 33% EBITDA margin in 2008.

1Q08 net profit for SembCorp Marine rose 24% to S$91.3m.

Turnover was down 4% yoy to S$916.1m. Sequential revenue and earnings should be higher in 2Q08 as we expect one semi-submersible and at least three jackups to hit the 20% milestone stage compared to only jackup in 1Q08. Maintain Buy with an unchanged TP of S$4.50.

Raffles Ed 3Q/9M results were in line with our expectations.

Revenue for 3Q grew 73% to S$49.2m, from S$28.4m arising from increased student enrollment, increased course fees and contributions from Zhongfa, Oriental University City (OUC) and Hefei Wanbo College (Wanbo). Contribution from OUC and Wanbo started in Jan 08.

Operating expenses grew 73%, which was in tandem with sales growth. This was due to staff costs and higher operating expenses as a result of its increased scale of operations. Gross margin for the quarter remained steady at 41.1%. Total student enrollment now stands at an estimated 26,900 students (excluding an estimated 23,000 students in Langfang Vocational Technical Institute and Langfang Health School).

1Q08 results for ARA were in line with our expectations.

Operational performance continued to grow strong from an increased AUM base. Gross revenues increasing 107% yoy to S$17.5m and net profit by 142% yoy to S$9.2m. We continue to like ARA for its asset light - fee income base model backed by stable real estate assets. Maintain Buy on ARA, TP S$1.13.

Compiled by OCBC Research:

DBS 1Q08 was ahead of market expectations.

DBS posted 1Q net earnings of S$603m, -2.3% YoY and +22.8% QoQ, and slightly ahead of market estimate of S$562m based on a Dow Jones Newswires poll. Interest Income rose 8.5% YoY (flat QoQ) to S$1,057m, while Non-interest Income fell 10.9% YoY (+6.8% QoQ) to S$506m, resulting in fairly flat total income of S$1,563m.

The gain in Interest Income came from the strong increase in loans growth, +5% QoQ and +21% YoY to S$114.2 billion (versus +19% YoY and +1.8% QoQ to S$94.4 billion for UOB). On the margin front, Net Interest Margin (NIM) slipped from 2.21% in 1Q07 and 2.11% in 4Q07 to 2.09% by 1Q08.

On the fee income side, the obvious declines came from stockbroking and wealth management. Net trading income sustained a net loss of S$161m, partly due to a charge of S$86m for Rosa. Costincome ratio improved slightly from 43% in 1Q07 to 42% in 1Q08. Nonperforming loan (NPL) rate also showed improvement from 1.5% to 1.0%. The group has declared a one-tier tax-exempt 1Q dividend of 20 cents per share.

S'pore to have highest concentration of millionaires by 2017.

2008-05-07T11:35:00.002+08:00

This article was published in today's Straits Times:

Singapore will leapfrog Hong Kong to have the highest concentration of millionaires in the world in 10 years, a new Barclays Wealth report says.

A total of 40.7 per cent of all households (Note: This is the key word here, not INDIVIDUALS) in the Republic, or 436,000 households, are set to boast net wealth in excess of US$1 million (S$1.36 million) by 2017.

This means two out of every five households in Singapore are projected to be millionaires by then. The report looks at the combined wealth of household numbers.

The data used measures aggregate wealth, financial wealth such as currency, deposits, loans and insurance, as well as non-financial wealth such as property and land. Liabilities are subtracted from the total.

Last year, Singapore ranked second with 23.3 per cent, behind Hong Kong's 26.4 per cent. In 2017, Hong kong is expected to register 39.4 per cent, ahead of Switzerland, which maintains its current third ranking.

Barclays Wealth, the leading wealth manager in Britain, said Singapore's efforts to move away from manufacturing into higher value-added activities like technology and financial services had helped its rise.

Mr Didier von Daeniken, Asia-Pacific chief executive of Barclays Wealth, said at a press conference yesterday that the opening of previously protected sectors, such as financial services, and various free trade agreements had also helped Singapore's cause.

He added that Singapore's future millionaires would likely come from a growing number of rich entrepreneurs.

The report, by Barclays Wealth, and the Economist Intelligence Unit, said wealth held by high net worth Singapore households, defined as those with more than US$1 million, could hit US$1.6 trillion.

Mr von Daeniken said this presented great growth opportunities for private banks. "Asia now represents 25 per cent of high net worth individual wealth globally, 60% of the world's population, but only about 10 per cent of the income of the major private banks."

Why aren't you earning 50% returns.

2008-05-05T23:11:00.002+08:00

This article was written by Joe Magyer and Tim Hanson for The Motley Fool (see here):

Look at the headline for this article. Is there any more preposterous question a client or boss could ask an investing professional?

Now switch. Is there a scarier question for an investing professional to hear from a client or boss?

You can imagine our surprise/heart-stopping fear when our boss, Fool co-founder Tom Gardner, put us in a room and asked, point-blank: "Why aren't you earning 50% annual returns?"

50 what?

To put 50% annual returns in perspective, understand that no money manager, anywhere, has ever achieved that degree of success for any meaningful period of time. Perhaps the closest were Jim Simons of Renaissance Technologies and Joel Greenblatt of Gotham Capital. Their funds reportedly have long-term 40% annual returns.

So where did Tom get his outlandish number? From none other than Warren Buffett. Of course, Buffett also said he had too much money to manage to prove it could be done.

How convenient.

Nuts to that, Tom

But after a few weeks that would have made Elisabeth Kubler-Ross proud, we finally answered the question. And although the answers may not help us earn 50% annual returns (still an outlandish number), they can help us all make more money in the stock market.

Ready to learn?

Lesson 1: Sell your index fund

There is no surer way to not beat the index than by investing in the index itself. Not exactly a revelation, right? Investing in index funds leads to nearly certain long-run underperformance, because of transaction costs and management fees.

Given that scenario, what would possess a returns-hungry investor to go that route? Owning an index fund makes sense in many cases, but if you're serious about market-beating returns, selling your index fund is Step 1.

Lesson 2: Follow Buffett's rules

He has two. Rule No. 1: Don't lose money. Rule No. 2: Never forget Rule No. 1. We ribbed Buffett above, but we respect him a great deal, and we believe he's spot-on about losing money.

Losing principal soaks your long-run returns. Imagine you've lost 50% of your initial investment on your biggest holding. The next year, it bounces back with a 100% return. Guess what? You're still worse off than if you'd just left that money in a savings account.

Efficient-market believers argue that risk and reward go hand in hand. That's generally true. But there is one obvious alternative path.

Lesson 3: Look where no one else is looking

et us put this plainly: You can't achieve anything even remotely close to 50% annual long-term returns by investing in large-cap stocks. Period. Sure, you can best the market in the long run with that approach -- and doing so by just a couple of percentage points annually would be a notable triumph -- but you won't get to 50% annually.

If you want to work toward that mythical 50% mark, you'll need to consistently crush the market by finding the next home run stock and holding for five years or more. Your best chance is by going small.

Why's that? First, small caps, because of their size, have more upside potential than large caps do. Second, because Wall Street players are typically constrained to looking only at large- and mid-cap companies, you can take advantage of pricing inefficiencies.

With small caps, you can get greater rewards -- and you don't have to outwit a horde of Ivy League CFA-types to buy the best ideas.

Note: One reader actually sneered at my stock holdings and questioned why I do not hold a single "classy blue chip". This is the reason why.

Ready for 50%?

Let us be clear: You can do just fine financially by saving and investing regularly in an index fund. But if you want to shoot for 50% annual returns, the strategies above are three ready-made ways to get started.

Yes, there will be volatility. Yes, they may not get you all the way to 50%. But if you employ the strategy faithfully, you should be able to seriously accelerate your portfolio's growth.

Beyond the seven-figure salary.

2008-05-05T22:56:00.002+08:00

Reported by Charmain Kok in the Business Times today:

Investment bankers work long and irregular hours in a highly stressful environment.

When one thinks of investment banking, the first things that come to mind are the tales of seven-figure salaries and images of the high life that comes with wining and dining high-profile clients. It is no wonder then, that the industry has become the top career choice for many of the brightest fresh graduates around the world. But before jumping onto the bandwagon, here is a brief guide to what the job entails.

What do investment bankers do?

In short, investment bankers help companies to raise capital by issuing and selling securities in the capital markets. They also advise clients on mergers and acquisitions, placements, restructuring and listing on stock exchanges.

According to Jennifer Goh, a consultant in the front office banking division at recruitment consultancy Robert Walters Singapore, there are client coverage bankers as well as execution bankers. 'Client coverage bankers tend to be known as the bankers who wine and dine the clients, establish contacts and bring the deals through the doors; while execution carries out the deal to completion,' Ms Goh explained, adding: 'The Singapore market is fairly small, therefore most of the bankers here have a dual client and execution role.'

Fact or fiction?

Sometimes, it's hard to differentiate between truth and folklore from the investment banking world. Here are some things to take note of:

Exposure to high profile clients

Due to the nature of their jobs, investment bankers get to meet a lot of high-profile, dynamic and influential individuals. 'You get to rub shoulders with some of the who's who in the industry and senior management, as well as wine and dine with clients on the banks' accounts,' shared Ms Goh. However, be prepared to get a taste of this only when you become vice-president, which usually happens around the seventh year in investment banking. 'Otherwise, you will be stuck staring at your screen, crunching numbers,' she added.

Attractive remuneration, long working hours and health hazards

As most probably know, the salary compensation for investment bankers is potentially enormous. According to Ms Goh, fresh graduates can expect to receive around $90,000-$110,000 per year, excluding additional allowances and bonuses.

However, working hours for investment bankers are known to be long and irregular, with 100-hour work-weeks being very common. The constant long working hours and highly stressful environment might take a toll on one's health and personal or social life.

'The demands and nature of this industry will inevitably keep an investment banker's lifestyle very much skewed towards work,' warned Ms Goh. So be prepared to be very devoted, committed and passionate about one's job in investment banking.

Involvement in high-profile transactions

One of the best upsides of a career in this field is the chance to be involved with high-profile transactions, which make the news headlines.

For UBS investment banking analyst Calvin Li Xiangrun, who was a fresh graduate from Singapore Management University only a year ago, one of the main reasons for entering the industry was the wide exposure to different types of transactions and the vast learning opportunities available.

'Some of the key attractions to me was the wide variety of assignments across various industries. In UBS Singapore, we got numerous opportunities to execute transactions across Malaysia, Indonesia, Singapore, ranging from IPOs and debt offerings to mergers and acquisitions,' he said.

'I enjoy the ability to take on early responsibilities and getting to work closely with companies, even as a junior banker,' added Mr Li. 'In the execution of IPOs, you get to meet with the management and work closely with them under the mentorship of the senior bankers. Interacting with management, learning about the industry and the company was really insightful and an eye-opening experience for me.'

What do you need to get in?

Gary Lai, manager of Robert Walters' front office banking division in Singapore, admits that in hiring fresh graduates, investment banks place a strong emphasis on academic track record and the schools that students graduate from. However, aside from grades, an outstanding involvement in extra-curricular activities that exemplifies leadership qualities is just as important.

Prior knowledge in finance or accounting is not required, as investment banks often hire employees with educational backgrounds as diverse as philosophy and engineering. Furthermore, banks often have structured training programmes which will ensure that its bankers have the necessary knowledge and technical skills to perform their jobs.

Aside from hard knowledge, communication and people skills are vital for investment bankers, as Mr Lai explained: 'Investment banking is after all, a sales role. Therefore, communication, presentation, selling and relationship management skills are critical. A fresh graduate who comes with these skills and is analytically and numerically inclined but does not come with a first class honours may come up tops against someone who only possess a first class honours.'

To Mr Li, traits like being highly motivated, a strong team player, having strong analytical skills and good time management skills are critical to being a good investment banker. Due to the high pressure environment and long working hours, time management and the ability to multi-task is key as well.

'This job is more suited for someone who is fresh out of school, self-driven, loves the fast-paced life and has little commitments,' commented Mr Lai.

For all investment banking hopefuls, Mr Lai's advice is to research, work on the resume and re-evaluate if one is really cut out for the job. 'Everyone wants to get into investment banking for the money and prestige, but these alone are not enough to carry anyone through years of late nights and burnt weekends. We would advise candidates to self-evaluate if they indeed have the qualities and aptitude to be an investment banker in the first place.'

Market Update.

2008-05-05T09:42:00.002+08:00

This report was compiled by DBS Vickers this morning:

STI should grind higher towards the next near-term resistance at 3310, followed possibly by 3428 to 3470 subsequently. Short-term, buy near 3150; sell near 3310. Upside bias to the next resistance level at 3310 before a pullback to test the rising trend line and 15-day moving average support at 3150 to 3200.

The McClellan Oscillator should trend higher towards the overbought level near 50 as the STI heads for 3310 and ease back, in line with STI behaviour. If the STI rises above 3310 subsequently, the next level is 3428 to 3470.

DBS Research sees the USD strengthening from 1.36 currently to 1.39 during 2Q to 3Q. This is positive for shipping trusts Rickmers Maritime, Pacific Shipping Trust and First Ship Lease given their USD-based cashflows and attractive yield. DBS Research has Buy recommendations for Rickmers Maritime (S$1.07; TP: S$1.80; FY08 yield: 11.3%) and Pacific Shipping Trust (US$0.45; TP: US$0.52; FY08 yield: 10.5%). No rating for First Ship Lease (S$1.06; FY08 yield: 13.9%, based on consensus). From a technical prospective, we like Rickmers Maritime and see a trading objective of $1.24. Buy at $1.05 support or slightly above.

The Master Plan, to be exhibited in its draft form in late May this year as part of a review every 5 years, is the statutory land use plan aimed to assist in guiding the physical development of Singapore in the medium-term over the next 10 to 15 years.

We have identified the Property sector as a key and obvious beneficiary.

Stronger planning initiatives and an improved sense of fundamentals will bring foreign investment into Singapore, directly benefiting developers over time.

Our top picks in the sector are City Dev (BUY, TP S$12.81), CapitaLand (BUY, TP S$7.50), Fraser and Neave (BUY, TP S$5.85) and Allgreen (BUY, S$1.66). Among the S-Reits, we favour CMT (BUY, TP S$3.93) and Suntec REIT (BUY, TP S$1.98) for their exposure to the resilient retail sector.

We also continue to like CCT (BUY, TP S$2.93) for its strong organic growth with positive rental reversions likely up to 2010; and CDL HT (BUY, TP S$2.90) for its exposure to the booming hotel sector.

Apart from the Property sector, also standing to benefit from this strategic outline are the Hotel, Aerospace, Healthcare, Transport and Construction sectors. Within the construction sector, we prefer the building material suppliers like Hong Leong Asia (BUY, S$4.30) and Pan-United Corp (BUY, TP S$1.16). For the healthcare and transport sectors, likely long-term beneficiaries would include Raffles Medical (BUY, TP S$1.74), Parkway Life REIT (BUY, TP S$1.50), SMRT (BUY, TP S$2.00) and ComfortDelgro (BUY, TP S$2.15).

Corporate Results Update.

2008-05-02T23:53:00.000+08:00

Indofood Agri Resources announced a 586% rise in quarterly profit, mostly driven by additional revenue from its recent acquisition of subsidiaries. This is in line with the broad rise in commodity prices this year.

For the medical healthcare sector, Raffles Medical announced a 48% rise in quarterly profit.

For the transport sector, SMRT announced a -5.5% fall in quarterly profit despite a 14.3% rise in revenue, largely due to higher operating expenses, especially higher oil prices.

for the retail sector, Jardine C&C, one of the region's largest automotive retailers, announced a 64% rise in quarterly profit, which is surprising given that rising inflation and poor economic outlook is supposed to reduce consumer spending.

For the property sector, Capitaland announced a -59% fall in quarterly profit. But upon closer examination, its revenue and gross profit actually registered -1% and 9% respectively, and that the fall was mostly attributed to the exceptional fair value gains of its investment properties last year.

Cosco Corp, one of the leading S-shares in terms of growth potential and market cap, announced a 110% rise in quarterly profit.

April 08 Portfolio.

2008-05-01T13:38:00.002+08:00

These are my current stocks holdings as of 30 April 08.

Pan United
Sarin
Yongnam
Taisin
Sinotech Fibre
Eastern
Lifebrandz
Sihuan
China XLX
FujianZY
Sing Inv
UIS
China Sports
Fibrechem
HLN Tech
China Pplus
ARA
Yongnam W121214

The April 08 portfolio value of $369,945 is a decrease of -$27,263 (or -6.8%) over the March 08 portfolio value of $397,208. There was also a cash reduction of -$39,477 from stock sales, so in fact, the portfolio value had increased by $12,214 (or 3%).

These are the key Portfolio Changes.

I sold off my stake in IFS, not for any negative reason. I still see the stock as an excellent defensive yield stock, and it had served me well in protecting my principal capital during these volatile months.

Thus my purpose of selling it is with the intention of using the proceeds to purchase other undervalued potential growth stocks, which I will identify during this reporting season.

Corporate Results Update.

2008-04-28T20:54:00.000+08:00

Singapore Land announced a 85% and 20% rise in revenue and profit respectively, due to the fact that it derives most of its income from the rental of its properties (see here). On the other hand, Allgreen's results were affected by the current slowdown and announced a -59% fall in quarterly profit.

HL Finance, one of the leading mid-cap finance companies, announced a 16% rise in quarterly profit.

Ferrochina announced a 264% rise in quarterly profit, largely contributed by strong sales demand and the additional production capacities derived from the Superb Team acquisition in 2007. Sino Environment announced a 177% rise in quarterly profit, with all its business segments registering revenue increases. Yangzijiang announced a 124% rise in quarterly profit.

These 3 companies are the first amongst the leading china growth stocks to report their results. Hopefully, its a sign of good results to come from the other china stocks.

Corporate Results Update.

2008-04-25T12:09:00.001+08:00

Keppel Corp announced a 5% rise in quarterly profit. As the market leader in the offshore and marine industry, this is a sign that that industry is holding up quite well thus far.

Keppel Land announced a -3% fall in quarterly profit. This is actually quite encouraging since it was thought that the property market had an exceptionally poor 1Q08.

Unsurprisingly, Osim registered a loss of -S$13.4m largely because it does most of its sales during the 4Q holiday season, and also due to its exposure to the weakening US dollar and retail market. There was a silver lining in that it managed to reduce its quarterly loss by 24%.

I also noticed that the construction companies have clinched a lot of contracts during 1QFY2008.

Pan United:

Secured 5 ready-mixed concrete supply contracts worth a total of S$124.5m, especially for the MRT downtown line stage 1.

Yongnam:

Secured its 1st major contract win in India via a S$70m sub-contract to erect the roof structural steelwork for the Delhi International Airport Terminal 3 Building.

Secured 2 construction contracts worth a total of S$131.7m with the Marina Bay Sands IR.

BBR:

Secured a S$6m contract with LTA to upgrade its vehicular bridges at 7 locations.

Secured a S$95.3m contract with Ascendas to build an Office Tower Block at the International Business Park in Jurong East.

Secured 2 contracts worth S$8m for piling works on a 5-storey Youth Community Building in Orchard and a 10-storey Condominium in Hillview.

KSH:

Secured 4 contracts worth a total of S$354.3m to construct 3 luxury condominium projects and 1 office building.

LKH:

Secured S$346m contract with Resorts World Sentosa for the construction of Hard Rock Hotel, the ballroom and festive walk at Sentosa.

Market Update.

2008-04-23T18:13:00.002+08:00

This report was compiled by Lim & Tan Securities this morning:

Business Times’ latest poll shows 3 out of 4 fund managers (2 fundamentals-based: Mark Mobius of Templeton, and Jim McCaughan of Principal Global, and 1 chartist, Paul Nesbitt of Fortis) believe the worst may be over for the equity markets. (The “bear”, Chris Caspar of Russel Investments, while warning of a retest of recent lows, expects a V shaped economic recovery in the US, which will be positive for Asian stock markets.)

Straits Times quoted a few market commentators as saying GIC’s views (reported yesterday) were too gloomy, eg the UBS economist noted that unemployment rate in the US hit a post-war high of 10.8% in Dec ’82 vs 5% today.

Merrill Lynch, one of the worst hit during the current credit crunch, yesterday raised US$9.55 bln selling unsecured notes (with yields more than 300 basis points above treasuries of similar maturities) and perpetual preferred shares yielding 8.625%. This brings the total raised by financial institutions to US$28 bln in the past 2 days, which shows there is ample cash on the sidelines.

As a result of the above, the world’s largest banks and securities firms have so far raised US$194 bln after reporting more than US$290 bln in losses and write-downs. This should provide much comfort to investors around the world.

Talking of decisive measures to deal with the current crisis, we are reminded of the HK Monetary Authority’s (HKMA) master stroke during the Asian Crisis to protect the HK$ and boost market confidence, in setting up the Tracker Fund to mop up stakes in the top blue chip stocks listed on the HK Exchange.

Everything moves in cycles after all.

And HKMA has been laughing all the way to the bank since the stupendous recovery of the HK stock market.

One wonders if the US Treasury will some day in the not-too-distant future, set up a monster fund to mop up the delinquent mortgages in the US, to stem further deterioration of the housing market, the root cause of the current crisis.

Corporate Results Update.

2008-04-23T15:36:00.001+08:00

I've been saying for the past few months that this round of corporate results, especially those of the bigger companies, will be vital to determine the direction in which the market will move in 2H2008.

At present, some companies have already announced their results, and I'm pleased to say that they have been encouraging so far.

For the large caps:

SPC announced a -12% fall in quarterly profit. This is fairly reasonable and expected given rising oil prices and the weakening USD.

SPH announced a -7% fall in quarterly profit, but this was mostly due to a significant decrease in investment income. Otherwise, its profits would have increased 36% due to increased contribution from its property development.

SGX announced a surprising 14% rise in profit despite the difficult market conditions.

Amongst my holdings, UIS Securities and China XLX have announced their results.

UIS announced a -59% fall in quarterly profit, but this was expected given the poor market conditions over the past few months. Importantly, its NAV has managed to stay at $1.83, and this will provide the support for its share price.

China XLX announced a surprising 42% increase in quarterly profit - which is probably why its share price has been on the rise recently, even recording a 10.4% today.

Conclusion:

The upcoming corporate results of the financial banks and larger property stocks will play a huge factor in determining the direction of the market. I will provide more updates as and when the results are released.

Conflicting Views.

2008-04-22T09:22:00.002+08:00

The local investing community was a buzz yesterday following this statement from Dr. Tony Tan, Deputy Chairman of the Government of Singapore Investment Corporation (GIC) that "the world may face its deepest recession in 30 years".

But what I'm deeply puzzled about is this:

If that really is the view of GIC, then why on earth did it make those significant investments in UBS and Citigroup. If its view of the situation is so pessimistic, then wouldn't its investments be poorly timed and irrational?

This is clearly a case whereby its thoughts versus its actions are not at all cohesive.

Don't get me wrong. I'm not saying that GIC is wrong and that all will be okay.

But I do think that this damning and pessimistic statement should not be taken so seriously.

Market Update.

2008-04-19T11:30:00.002+08:00

After the Dow's strong showing last night (see here), I received an sms from a trusted broker friend of mine informing me that he believes that we are almost 80% through this current crisis.

His view was substantiated when I logged into Sgfunds this morning and read what Starry had to say:

1st statement posted last night:

If tonight DJI closes above 12800, be ready for the above moment.

Things will go crazy one more time.

Forget about all the noises and all the never ending debates on sub-prime and recession. Never believe in them from the first day except that they make good reading.

The doom day will come, but everyone before they die will have a good day. But then people have called me crazy after they read what I said above, so up to you to believe in my judgement and evidence.

2nd statement posted this morning:

In response to this statement: Something is very wrong...banks announce losses and share price surges??? eg Citigroup and Merril.

I know abt EMH and rational expectations but this is a bit stretching it don't u think.

It has nothing to do with the banks. Sub-prime was never the main factor of dragging the market down over the last few months anyway. I have said that so many times till I am blue on my face.

I read TODAY's and it says that local property sales have drop like 46% compare to the last quarter because people are all waiting at the sidelines? Wait a minute....it says people are doing the "wait and see", hence poor sales. It didn't say people "gave up". Can't be any better setting for the property market to continue shooting up.

I know many people are hoping the property prices to come down, but looking at the current situation, it's not going to happen anytime soon. People who are doing the wait and see now is going to be sorry.

3rd statement posted this morning:

In response to this statement: the surge most likely, is due to pent up money looking for a good return. those money on the sidelines are itching to find something good. its the flow of funds and the presence of it that matters. anything else is pretty secondary.

look at tech.

The surge more likely due to the breach in the critical 12750-12800 level. It's a breach against a near triple resistance. It's a matter of time anyway, just look at the weekly charts and you know what I mean.

Expect it to come back down to near these levels before gaining strength again.

Conclusion:

The timing of these views nicely coincide with my own view that it may be a good time to buy in again once the next set of corporate results are in and stock prices are reevaluated based on their earnings revisions.

Watch this space for updates on stocks worth buying soon!

Wanted: Singapore's Fourth PM.

2008-04-18T12:44:00.002+08:00

The hunt is on. The hounds are braying. But can the prized hare be caught?

Right now, he is probably boarding the corporate jet, one wife, two kids and 4As in tow, winging his way to a plum posting in Shanghai, New York, or London.

Or he is poring over policy papers, or medical research books, or legal briefs, secluded in an office with a big window. Politics is far from his mind.

Wherever he is, it will not be an easy search for Singapore's fourth prime minister.

The weight of the search falls on the shoulders of Dr Ng Eng Hen.

He is coordinating the ruling People's Action Party's (PAP) recruitment efforts for the next General Election, due to be held by 2011.

While his task is not to find the next PM per se, he has to put together a team of new MPs. From past precedent, the number will be in the 20-25 range.

From that group will have to emerge future ministers, who will then have to 'decide among themselves who is primus inter pares - first among equals', as Dr Ng puts it.

This political manhunt is 'the top-most priority' for the PAP, he adds.

The party's recruitment process thus far has relied on its network of contacts. The net is cast wide, covering the civil service, the corporate sector, and professions such as law, banking and medicine.

The promising ones are then put through tea sessions, interviews, and even psychological tests.

Election after election, this process has unearthed hundreds of MPs, some of whom have become top ministers.

What makes the latest search different is the need to find someone who can become PM after Prime Minister Lee Hsien Loong retires. Incumbent ministers are mostly around the same age as PM Lee or even older.

Another factor is the rapidly changing nature of the electorate. As MP Indranee Rajah puts it, the next PM must be 'a man of his time', attuned to a generation that is better educated, more well-travelled, more demanding.

So will the PAP's recruitment process have to be refined? What assumptions might have to be re-examined?

Key attributes

Some fundamentals are set in stone. Any PAP candidate, says Dr Ng, will have to be 'trustworthy, capable and caring'.

'These are non-negotiable,' he says. 'If you don't have these, you're not on the slate.'

Another attribute critical for the next PM: He will need to be a 'global citizen'.

Whether it is about inflation, the price of rice or free-trade agreements, Singapore is so 'globally linked that its leaders need to be internationally exposed and globally aware', says Dr Ng, who is the Minister for Education and Second Minister for Defence. 'That will become increasingly important.'

Ng Eng Hen's views on...

The next generation of voters

That generation and those leaders from within that generation are going to be substantially different from previous generations. If I take someone born in 1970, he wouldn't have experienced the angst of founding Singapore. His mental images are not of Bukit Ho Swee, Singapore Improvement Trust flats, the Green Bus company, the Chinese Middle School riots.

He will belong to the digital age, an age of globalisation and climate change. In terms of educational qualities alone, almost half currently get a university degree. In 20 years' time, it may be 60, even 70 per cent.

Whether we like it or not, the electorate does give a premium to its leaders being intellectually able. It doesn't mean that somebody without academic qualifications cannot rise. But it does mean that intellectually, he has to command respect. That's just an observation, not a value judgment.

Whether the party is looking outside its traditional fishing grounds - beyond the SAF, the civil service and the usual professions - for candidates

Our aim is to be comprehensive. We know what we are looking for and we want to cast our nets very wide. We are not so concerned which pond the person is swimming in.

How do we know that we are not missing somebody who could add value to the Government as a minister or as an MP? Obviously, if you are a quiet worker who doesn't attract any attention, then yes, we might miss you. But Singapore is not very big. I think those people who have enough substance to be noticed do get recommended.

Why the focus is on those in their 30s and early 40s

Self-renewal is vital. You need to constantly refresh not only the MPs but also, from the MPs, the Cabinet.

You also need a lot of energy to lead. You can have a crisis, so energy is important.

You need to strike a balance (between the old and the young).

I don't think you want to choose by formula. But neither do you want a situation where you don't have younger blood in the Cabinet.

The PM's remark that 'these are not revolutionary times' and so people are not stepping out to enter politics

We ought to celebrate the fact that in Singapore, we don't have mass policies to correct, we don't have failed education systems, we don't have brown-outs, we don't have natural calamities that we have to respond to ever so often.

If your question is, do I wish for these to be revolutionary times, I say well, thank goodness, I don't. That's my first reaction.

My second reaction is that really, Singaporeans are also being very sensible. They are not campaigning vigorously against certain things because, as the PM says, they feel it's safe enough to leave it to somebody else to run the country.

If there is corruption, incompetence or negligence, I believe there are Singaporeans who will rise to the challenge and say, well, I'm going to take over.

So it's not political apathy. It is really (them) saying, well, I can contribute to the economic good, and I'm also helping out in many, many groups.

For these, we sometimes prevail upon them and say, look, we think that there need to be leaders and if you don't do it, somebody else could be doing it but he may not be as capable as you are.

So far, I think we have been able to maintain our standard of governance.

Will there come a time when Singaporeans just don't care? My sense is not.

I don't think it's quite true that Singaporeans are non-activists. If you remember the last tsunami off Aceh, many Singaporeans went on their own even before the Government did.

Whether the Government becoming more open politically will encourage Singaporeans to be more engaged in political affairs

We are open. You can form political parties. Political parties exist. You can go on the Net, say whatever you want to say; of course, within the constraints in terms of racial aspects and other aspects.

I know of many who faithfully and diligently help out in social groups, charities, school boards, etc. They spend many hours toiling with passion. But the press does not always highlight their efforts, perhaps because they think they are not newsworthy. But are they politically apathetic?

Property Market Update.

2008-04-16T11:36:00.002+08:00

This report was compiled by DBS Vickers this morning:

March Down to A Quiet Quarter.

URA released yesterday the monthly price and sales data of new residential units sold in the month of March. Developers sold a total of 301 units in March, and this brings the total number of uncompleted units sold by developers in the first quarter of 2008 to 795 units.

This is the lowest number of new units sold in a quarter since 1Q2003 (when 322 units were sold), during the worst of the SARS crisis. The quarterly data is within our expectations and continues to reaffirm our view that the economic uncertainty relating to the sub-prime crisis and the health of the US economy took a toll on the confidence of property buyers.

March Less Than Before.

On a q-o-q basis, 1Q08 new sales declined 43% from the 1,397 units sold in 4Q07. On a y-o-y basis, the contrast was even starker – an 83% slide from the 4,565 new units that were sold by developers in 1Q07.

Prices were generally maintained across the broad market segments, supporting the earlier flash estimates of a 4.2% increase in overall prices in 1Q08. However, some developments began to see lower prices in their transactions, although this was again observed more in the projects by smaller developers.

High-End Prices Likely to Fall.

The 53 units at Grange Infinite that were sold to ARA Asset Management at a median S$psf of around S$2,600 in March 2008 is about 20% lower than the last transacted price (in January 2008) of around S$3,300 psf for that development.

This is consistent with our belief, highlighted in "Frosty February for Home Sales, 18 March 2008", that the high-end segment could come under some price pressure this year, with a possible drop of up to 20% in high-end prices.

A Challenging Quarter Ahead.

Going forward into the second quarter, we believe that the number of launches will continue to be thin in line with the caution and volatility in global financial markets, as the sub-prime woes continue to unravel and the prognosis of the US economy becomes clearer.

If overall global economic news continues to be negative, developers may start to get more realistic with their pricing; but if 2Q08 signs point towards a quick recovery in the US economy, then developers may decide to maintain price levels at the expense of slower sales.

Either way, 2Q08 should continue to be a challenging quarter for the property market.

Marching Forth.

Going forward into 2Q08, we believe that the number of launches will continue to be thin in line with the caution and volatility in global financial markets, as the sub-prime woes continue to unravel and the prognosis of the US economy becomes clearer. 2Q08 should continue to be a challenging quarter for the property market.

We continue to prefer companies that are more well-diversified geographically, with a multiple-revenue model that combines both development properties as well as investment properties. Among those with a focus on development projects, we would prefer diversified players that have a greater exposure to the mass-market segment.

Our top picks in the sector are Allgreen Properties (BUY, TP S$1.66), which offers attractive P/Book NAV valuations along with a stable recurrent income from its commercial properties and low-cost mass-market landbank.

We also continue to like F&N (BUY, TP S$5.85), which has become a relatively big mid and mass-market developer whilst offering exposure to the less cyclical F&B business.

Market Update.

2008-04-15T23:31:00.000+08:00

This report was compiled by analyst Narjeeb Jarhom for AmFraser Securities this morning:

STI tested 3000-3050 support zone and poised to recover back to 3100-3150.

The market is unlikely to sustain any downtrend all the way below 3000 to 2900 or 2800 during the current earnings season without making significant rebounds as the macro picture has not deteriorated.

At this stage the market is not reacting too negatively to the same old bearish views that the worst of the sub-prime is still to come and that the US is headed for the worst economic and financial woes since the oil crisis of the 70s or even since WW2 or the Great Depression of the 30s.

Even the likes of Ben Bernanke and Alan Greenspan have acknowledged that the balance sheets of US corporations are sound with strong cash positions and that the real economy “appears to be reasonably good” which implies that core corporate earnings should underpin the market in the event of more sub-prime related credit losses.

After the first quarter market turmoil, analysts too have become increasingly cautious in earnings forecasts which should help to mitigate any investor disappointments during this latest reporting season.

Having seen the STI plunged some 28% from its 3831 peak to 2746, with the 2750-2800 area well-defended after being tested 3 to 4 times, there is less fear of a major crack of this support level anytime soon.

Although the future remains bleak the market has a way of adapting itself to bearish situations always trying to discount them quickly and try to read the fundamental picture 6 to 9 months going forward.

Thus even if the credit losses reach the US$945b IMF figure or $1.2tr Goldman Sachs estimate, Wall Street’s reaction may not be worse than it had been in q1 which had seen the Dow plunged to below 12000 to around 11600.

Investors have been encouraged by the consistent rebounds to above 12000 with the Dow showing single digit year to date loss (currently 7.4% down at 12302).

This will lead to more widespread views that Wall Street will be sticky on the downside and the STI too will not easily break the established 2750-2800 support.

The recent strong rebound to as high as 3181 shows the market’s potential to look at the bright side of things especially with the Singapore economy rebounding strongly in q1, the strong S$ which will mitigate inflationary pressures and the continued bullish economic picture with tens of billions to be pumped into transport and building projects.

The STI’s recent rebound and relatively tame pullback notwithstanding yesterday’s 84 point plunge (lows of 3035 yesterday/today), shows the market had read the local economic and hence earnings picture well and will not over-react to bearish overseas leads more than it had done earlier.

The STI after all is down 12.4% YTD against 7.4% for the Dow when our economic and earnings picture look much better than the US.

Thus there is still a good possibility that the STI will meet our 50% retracement target of 3250-3300 in the next one to 2 months. At this level it will still be 5-6% below 2007 close of 3466.

China Zaino IPO.

2008-04-14T08:11:00.000+08:00

Closing date of application: 16 April 2008
Commencement of trading: 18 April 2008

Established in 1995, China Zaino is the Number One backpack company in China, with the largest market share of 35.8% (in terms of 2006 revenue). They also began manufacturing luggage in September 2007.

Company background

Their Dapai brand products is sold through distributors in over 3,000 concessionary retail outlets across 26 provinces / cities in PRC.
Their primary market is the mid-range mass market consumer segment, thus their products are retailed at an affordable price range of RMB$50 - RMB$300 for backpacks and RMB$300 - RMB$700 for luggage.
They introduce approx. 200 new designs annually to suit different consumers' tastes and needs.

Key Growth Plans:

To expand their distribution network to more than 4,000 concessionary retail outlets by end 2008.
To aggressively expand their production capacity by 1) purchasing new plants and machinery, 2) increasing the number of production staff and shifts, 3) acquisition of synergistic companies, and 4) construction of new production plants.

Growth Prospects

The PRC backpack and luggage industry is at the early to mid stage of the industry life cycle, and is expected to grow at a CAGR of approx. 19.4% between 2007 and 2009.

Financial figures

Intended IPO price: $0.60
No. of shares available for public offer: 2m
No. of shares available for placement offer: 143m
Total post invitation share capital: Approx. 945m

Note: Unaudited 3QFY2007 figures were available in the prospectus.

FY2006
Revenue: $182.9m
Profit: $38m
NAV: N.A.
EPS: 0.0402
EPS % Incr: 100%
PE ratio: 15x
Price: 0.60

3QFY2007
Revenue: $273.6m
Profit: $55.4m
NAV: 0.1284 (incl. IPO proceeds)
EPS: 0.0586
EPS Incr: 46% (Est.)
PE Ratio: 10.2x
Price 0.60

Dividend policy: They intend to distribute not less than 20% of profits as dividends for FY2008 and FY2009.

Conclusion:

Based on its numbers and that it is the top backpack company in China, China Zaino can be considered as a blue chip S-Share. If not for the current weak market sentiment, this is one of those growth stocks that could easily trade well over 20x PE.

As such, I believe that it should be valued higher than the average manufacturing stock's PE of 12x, thus:

China Zaino should trade at a Fair Value of $0.88 or 15x 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.

The Difference Between Hyflux vs Hyflux Water Trust.

2008-04-12T12:36:00.000+08:00

I was asked this question by a reader, and thought it would be useful to share my answer here:

What is Hyflux?

Hyflux is a water treatment company specialising in the provision of integrated treatment systems for advanced water treatment and membrane filtration.

It derives its revenue from the projects it undertakes.

What is Hyflux Water Trust?

On the other hand, the primary business of Hyflux Water Trust is the ownership and management of water treatment facilities, whereby it derives its revenue from the rental of these facilities.

Hyflux Water Trust thus can be considered somewhat of a subsidiary of Hyflux, whereby Hyflux can create a win-win situation for itself by:

1) Transferring the risk of ownership of those facilities over to the Trust.

2) And yet deriving rental income via the ownership of shares in the Trust.

What is the difference to an investor?

An investor in Hyflux would be investing in the growth prospects of the company, whereby the likely capital gains would come mainly from the rise in share price.

As a growth company, Hyflux mainly re-invests its profits into driving its business forward, which is why its dividend yield is usually maintained at a low 0.6-0.8%.

On the other hand, an investor in Hyflux Water Trust would be investing in the stable and regular rental income derived its portfolio of facilities.

The Trust will typically pay out most of its profits as dividends - it had stated in its prospectus that its projected dividend yield based on IPO price of $0.78 would be 4.46% for FY2008, and 5.26% for FY2009.

Its income is not likely to grow significantly unless it acquires additional facilities which will provide more rental income.

Conclusion: Hyflux is a growth play whereas Hyflux Business Trust is a yield play.

China Eratat Sports IPO.

2008-04-11T10:23:00.000+08:00

Closing date of application: 15 April 2008
Commencement of trading: 17 April 2008

Established in 1998, China Eratat Sports is engaged in the design, manufacture, and sale of sports fashion footwear and apparel under their own Eratat brand.

Company background

Their products are sold across 21 provinces / cities at 1,393 retail locations through their PRC distributors.
They distinguish themselves from their competitors by developing their products based on the concept of "Life - Sports".
International Artiste Wang Lee Hom has been their brand ambassador since 2002.

Competitive Strengths

They are well received and widely recognised in the PRC market since 1998, even having received the "2006 China Best Public Image Brand".
They have strong product development capabilities, being able to generate approx. 3,000 and 1,000 design specification types for their footwear and apparel products range per annum respectively.

Key Growth Plans:

To increase their production lines in their new factory premises to achieve 11.5m pairs of footwear and 6.2m apparel units per annum.
To strengthen their brand image and recognition by advertising aggressively on TV and print, use of brand ambassadors, especially for the run-up and during the Beijing Olympics.

Financial figures

Intended IPO price: $0.30
No. of shares available for public offer: 8m
No. of shares available for placement offer: 155m
Total post invitation share capital: Approx. 414.9m

Note: Unaudited 2QFY2008 figures were available in the prospectus.

FY2007
Revenue: $56.3m
Profit: $8m
NAV: 0.0752
EPS: 0.0194
EPS % Incr: 160%
PE ratio: 15.5x
Price: 0.30

2QFY2008
Revenue: $77.3m
Profit: $13m
NAV: 0.1351 (incl. IPO proceeds)
EPS: 0.0318
EPS Incr: 64% (Est.)
PE Ratio: 9.4x
Price 0.30

Dividend policy: They intend to distribute not less than 20% of profits as dividends for FY2010.

Conclusion:

Based on its numbers, China Eratat is a smaller company as compared to its SGX-listed peers of China Hongxing and China Sports, whose net profits were approx. S$60m and S$30m respectively.

As such, they trade at a higher 25x and 18x historical PEs respectively.

China Eratat Sports should trade at a Fair Value of $0.40 or a discounted 14x PE only.

Probability of getting allotted for the IPO - FAIR

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.

Sihuan Pharmaceutical Update.

2008-04-10T11:22:00.002+08:00

This report was compiled by Daiwa Institute of Reseach this morning (and is probably the reason why Sihuan has been rising steadily over the past few days):

A perfect fit

We maintain our buy rating for Sihuan, but have raised our six-month target price to S$1.43 from S$1.28, based on a target PER of 15x on our 12-month earnings outlook to 3Q08.

While the peer-comparison PERs have declined in line with lower general market valuations, we believe that Sihuan deserves a premium due to its increased R&D content and a strengthened earnings-growth outlook following its latest acquisition.

The acquisition

Sihuan has acquired a 60% stake in a Shandong R&D entity, comprising Shandong Xuanzhu Pharmaceutical Technology and Jinan Diwei Pharmaceutical Technology, for a total consideration of Rmb62.5m.

The entire assets of Jinan Diwei will be transferred to Shandong Xuanzhu after the acquisition is completed, with Sihuan owning 60% of Shandong Xuanzhu, and the researchers of the Shandong R&D entity owning the rest.

The Shandong R&D entity is one of the top pioneers of Me Too Me Better drug research in the PRC, specialising in CV and anti-infection drugs. It identifies promising new drugs in overseas markets, and develops new variations of the drugs with compound structures or delivery systems not covered by their existing patents, but with similar (Me Too), or improved (Me Better), therapeutic benefits.

Management believes that the Me Too Me Better approach is subject to a lower risk of failure, lower research costs, and potentially higher sales than novel drugs. It lists Lipitor, the top-selling cholesterol-lowering drug in the world, as an example of a successful Me Too drug.

Management aims to maximise the returns and minimise the risks of the Shandong R&D entity by:

1) Targeting new drugs that are already at the final stage of their clinical trials for research. These drugs have a lower risk of failure compared to new drugs in their early stages of clinical trials, and offer more room for variations than drugs that are already in the market.

2) Aiming to develop the new variations to the pre-clinical stage, before selling the patents to international drug manufacturers. The risk and costs of failure increase exponentially as the drug moves into clinical trials. While the payoffs for drugs at the pre-clinical stage are significantly lower than those in the clinical stage, income is more certain. Nevertheless, management has not ruled out the possibility of developing drugs into more advanced stages, if it deems that the rate of success is high.

The entity is headed by Mr. Huang Zhenhua, who has more than 20 years’ experience in the pharmaceutical industry. It has a team of more than 70 scientists and researchers, most of whom have worked in the US and Japan, and has various collaborations with R&D partners in the US and the PRC.

It also employs 12 full-time staff to manage the intellectual-property applications for new drugs. To date, the Shandong R&D entity has filed applications for more than 300 patents in the PRC and around the world.

We expect the acquisition to enhance Sihuan’s in-house R&D capabilities, add to its future product range (by further developing some of the more promising Me Too Me Better drugs), and create a new source of revenue from the sale of patents. The Me Too or Me Better variations of successful drugs are highly sought after by international drug companies, and we expect Sihuan’s earnings to jump significantly if it can successfully develop and sell some of its patents.

Management aims to start selling its patents from 2009. Overall, we are positive on the acquisition, as it makes Sihuan a more balanced company with diversified growth drivers, in our view.

Apart from the Rmb62.5m acquisition cost, Sihuan has committed to invest up to Rmb40m annually, from 2008 to 2010, in the Shandong R&D entity to fund the R&D of its existing and new patents. As a result, the total exposure to Me Too Me Better research would be up to Rmb182.5m, which in our view is sustainable by Sihuan’s current balance sheet.

Earnings-forecast revisions

Our earnings forecasts for Sihuan remain largely intact. The Shandong R&D entity recorded a net profit of Rmb0.5m for 2007 from providing R&D services, and we expect its contributions to be minimal in the near term. We do not expect an increase in R&D expenses, as most of the R&D costs relating to the Me Too Me Better research will be capitalised.

On the upside, we see the prospects for a significant jump in earnings from 2009, if Sihuan can successfully develop and sell its patents. However, we have not factored this into our forecasts, as the earnings can vary according to products.

Valuation

We have raised our six-month target price for Sihuan to S$1.43, from S$1.28, based on a target PER of 15x on our 12-month earnings outlook to 3Q08 (from 2Q08 previously). While the peer-comparison PERs have declined in line with lower general market valuations, we believe that Sihuan deserves a premium due to its enhanced R&D content, a more diversified earnings base and a strengthened growth outlook.

If Sihuan is successful in its R&D venture, we also see prospects for the stock to be rated in line with other high R&D-content pharmaceutical companies, such as Wuxi PharmaTech, which is trading currently at a PER of about 42x.

While we advocated previously the privatisation and re-listing of Sihuan on another stock exchange, the options have diminished following the sharp increase in its share price over the past few days, and the declines in the prices of pharmaceutical stocks listed in the PRC and Hong Kong, relative to those listed in Singapore.

The median trailing PER of peers listed in the PRC has declined from 59.3x for February, to 44.7x currently, and our previous valuation benchmark – 75% discount to the PRC-listed peers – would imply a PER of 11.2x.

Similarly, the average 2007 PER of Hong Kong- and Singapore-listed peers has declined from 15.5x to 12.1x. The gap between Hong Kong- and Singapore-listed peers has also narrowed with the ongoing takeover offer for AsiaPharm Group (APHM SP, S$0.725, 4) and the recent sharp decline in the prices of pharmaceutical stocks listed in Hong Kong.

We believe that the valuations of PRC stocks listed on exchanges outside the PRC will become more uniform, as fund managers become more aware of their sector stocks listed on the various stock exchanges.

Property agents in race against en bloc clock.

2008-04-09T22:41:00.002+08:00

This article was published in The Business Times today:

Sites relaunched at lower prices as collective sales agreement deadlines loom

Property agents are expected to keep pushing out a steady stream of relaunched en bloc sales over the next few months, as they attempt a last hurrah before their collective sales agreements (CSAs) inked last year expire.

Asking prices for such sites this time round are about 10-20 per cent lower than last year. Agents hope developers will bite, given their strong participation in recent government land tenders.

'Whatever collective sales that went into the market in the third or fourth quarter of last year and which are not yet sold, you can expect their CSAs to expire around mid-2008 or Q3 this year. So the current second quarter is pretty much the only window of opportunity for the sellers and agents to make a last try,' a seasoned agent in the en bloc sales business says.

Data from Credo Real Estate show there were 14 en bloc sale sites launched in Q3 last year but which are still unsold, while another 30 launched in Q4 last year have yet to find takers. These include The Riverwalk, Elizabeth Towers, Cairnhill Mansion, Grange Heights, Chancery Court, Thomson View Condo, Villa delle Rose, Spanish Village, Estoril and Vista Park.

From the time the minimum 80 per cent consent level is secured for a CSA, agents have up to 12 months to find a buyer and submit an application to the Strata Titles Board for an order for the collective sale.

Says Colliers International executive director of investment sales Ho Eng Joo: 'We can expect to see a rush on the part of owners and agents to take another shot at the market. If you don't do that, the old CSA expires and any fresh attempt at an en bloc sale will fall under new rules that took effect last October - and these are a lot more onerous.'

Colliers yesterday relaunched Amber Glades along Amber Gardens with an indicative price of about $127 million or $1,140 psf per plot ratio, inclusive of development charges. This is about 15 per cent lower than the $1,345 psf ppr sought by Amber Glades' owners in October last year.

In recent weeks, Landmark Tower in Chin Swee Road, Pinetree Condo in the Balmoral area and Royalville in Bukit Timah have also been relaunched at indicative prices ranging from 10-20 per cent below what they had been offered at in Q3 or Q4 last year.

Typically, these sites are being relaunched under the existing CSAs and based on the same reserve prices as last year. However, this time round, owners' asking prices are closer to reserve prices, whereas last year, the asking prices may have been pegged at a significant premium to the reserve prices, market watchers say.

Some agents are also believed to be in discussion with owners who've signed a CSA to see if they are willing to sign a supplementary agreement to lower the reserve price.

Savills Singapore director Steven Ming says: 'The initial asking prices were a bit lofty when the sites were launched last year. That was when the market was still exuberant. As the sub-prime crisis set in, confidence weakened and home sales slowed. Developers have had to factor this in when pricing their bids for en bloc sites.

'They also have to take into account higher construction costs and with the ongoing credit squeeze, the opportunity cost for putting in more equity into the project.'

Knight Frank managing director Tan Tiong Cheng has this advice for en bloc sellers: 'Developers are no longer prepared to pay the price owners had expected last year, but if you can still collect a premium from an en bloc sale than if you were to sell your unit on your own, why not adjust your pricing and collect the windfall? You may also be able to take advantage of a more subdued market to shop for a replacement property.'

Besides the pressure of looming CSA expiry dates, market watchers point to another factor in the impetus for the current wave of en bloc sale relaunches: the strong bidding at recent state tenders, for instance, for a reservoir-fronting condo site in Yishun and a 'white' site at Serangoon Central. 'This has brought back a bit more confidence in the market,' says Credo Real Estate managing director Karamjit Singh.

'Property bigwigs like Mr Kwek Leng Beng and Mr Liew Mun Leong have also come out to say they remain confident about prospects for the Singapore property market, but that we need time for sub-prime to clear before we see activity coming back again.'

"If there were a barometer to measure the mood of the day in the property market, April's measure appears to be slightly better than March,' he says.

Broad-based rally not in sight yet.

2008-04-07T20:45:00.002+08:00

This article was published in The Business Times today:

Recent rebound does not signal a V-shape recovery

In just a short span of three weeks, the benchmark Straits Times Index (STI) has staged an impressive rebound, recovering over 360 points, or some 13 per cent, from its lows in March - a balm for investors' rattled nerves.

Even so, analysts say that there are no signs of a bottoming-out in valuations, and a near-term market rally is still not in the bag.

The continuing market weakness was reflected in a dip in the STI last Friday of 15.99 points or 0.5 per cent to 3,155.56, ahead of key jobs data from the US later that day.

This left the STI still reeling, with a year-to-date loss of 310.07 points or 9 per cent, largely mimicking the Hang Seng Index. The HSI is also nursing a year-to-date loss of 12.8 per cent despite steep gains over the past three weeks.

Technical chartists call the recent spike in the STI a 'rebound in a downtrend' or a bear rally, without any shift in the short-term trend of the index.

'We are at a crossroads. We have the first-quarter reporting season where the STI may face some resistance when the results start to stream in,' said Kelive Research technical analyst Ken Tai. 'It's too early to call for a bottom at this moment.'

From a technical point, the market looks overbought in the past two weeks, he said.

He is pegging STI resistance at 3,306 points and eyes a bottom for this year at 2,650 points, a level which he expects to be cleared in the next three months and a signal for re-entry into the market.

UOB KayHian analyst K Ajith believes that a V-shape recovery is unlikely but instead, sees a base formation for the STI on retesting of lows or sideways drifting over the next three to six months.

What the market could be seeing now is a 'major low' and not a real bottoming-out, Mr Ajith said.

'We are not seeing a broad-based rally - some small caps are still underperforming, some laggard stocks are rallying and property stocks are underperforming.

'It's not sufficient to bring the market index to a new high.'

Mr Ajith sees STI support at 3,050 points, which was formed earlier last week, and technical resistance at 3,190 points.

These views resonate with that of billionaire George Soros, who told Bloomberg last week that the markets would fall further this year after a temporary reprieve, and that the recent bottom touched by the market would probably not be the final bottom.

Chief investment officer of Fullerton Fund Management Chan Chia Lin also said in a recent interview with Reuters that a decisive rally in the global equity markets is not imminent, held back by the US economic woes and slower earnings.

Analysts here say that the market could see further volatility as the earnings reporting season kicks in by end-April, when investors would look for signs of further damage from the US sub-prime crisis and the global economic slowdown.

'At this stage, the market still looks attractive on a fundamental basis but if you are talking about sentiment-driven, nobody can really tell whether the worst is over,' said Terence Wong, senior vice-president for research at DMG & Partners Securities. 'I do suspect there will still be some volatility at least for the next couple of months.'

He added that, at least for the first and second quarters, there will be further revelations of collateralised debt obligation (CDO) writedowns by banks, though it would be less shocking than previously.

'Earnings may not have bottomed out but hopefully sentiment has become more resilient,' Mr Wong said.

On a medium to long-term outlook, analysts remain optimistic of the STI's uptrend since there has been no fundamental shift in the Singapore economy, and recommend stock picking in select industries.

Mr Ajith of UOB KayHian recommends switching to laggard mid-cap and low-beta defensive stocks such as SingTel, ST Engineering, Parkway Life and SMRT.

DMG's Mr Wong said that it is time to look at stocks with growth prospects and defensive qualities, such as those in the oil and gas sector and telecommunications.

In the same vein, Mr Tai of Kelive said: 'We would look at low betas to tide over.'

These are stocks that have lower sensitivity to market volatility, such as SPH and real estate investment trusts (Reits).

Investors will be looking out for Singapore's first-quarter GDP data on Thursday, Westcomb research head Goh Mou Lih said, which he expects to include some positive numbers given the stronger loans growth, index of industrial production and stronger exports and retail sales seen in January and February.

But the latest snapshot of the US job market last Friday, which showed US employers slashing 80,000 jobs and the jobless rate rising to 5.1 per cent last month, provides yet another sign of a shrinking US economy and this might cap any upside on the markets this week, analysts say.

Property Market Update.

2008-04-07T10:40:00.002+08:00

Published in today's Straits Times:

Another 60 units sold at City View

City View @ Boon Keng, a condo-like Housing Board project, has sold an additional 60 units under a walk-in selection process that ended yesterday.

In all, almost 520 units out of 714 have been sold, a spokesman for Hoi Hup Sunway Development told The Straits Times.

As for the remaining 190-odd units, the developer will decide how best to sell them. Meanwhile, the project is still open to the public for sale, he added.

Some 460 units were sold earlier under a different process that required balloting, as applications had outnumbered the units available. As it turned out, many successful applicants got cold feet, and there were excess units left after all buyers had been given a chance to buy the flats they wanted.

City View boasts condo-like features, such as timber floors, built-in wardrobes and air-conditioning. But they do not have more expensive common facilities like swimming pools.

The project, which comprises 72 three-room flats, 168 four-room flats and 474 five-room flats, can be bought only by families earning no more than $8,000 a month.

The units cost between $349,000 and $727,000 each.

The take-up for City View has been a major talking point because the overwhelming response from potential home buyers has not translated into actual sales.

About 3,500 applications for the flats were received by the time registration closed in January.

Compiled by DBS Vickers this morning:

Property Sector: West Side Story (NEUTRAL)

Extreme Makeover - Jurong Edition:

The government’s proposal to turn Jurong into a commercial and entertainment hub is a major concerted effort to transform the Jurong Lake District into a unique lakeside destination for leisure and business over the next 10-15 years. This is likely to have a positive impact on property capital values there in the long term.

Go West:

Plans for the 360ha land area, close to the size of Marina Bay, includes developing the area around the Jurong East MRT station into a commercial hub serving the west region and creating a new leisure destination around Jurong Lake.

About 70ha of land is allocated for development into a vibrant commercial hub with 5.4msf of GFA for office use while a further 2.7msf GFA is slated for retail, entertainment, F&B and other complementary uses. There is potential for 2,800 hotel rooms and more than 1,000 private residential units.

The other major development would involve converting 220ha of land and 70ha of water into a major leisure destination with plans for 4-5 new ‘edutainment’ attractions in addition to current attractions.

Western Exposure:

The office component is sizeable and would likely complement the existing business needs catering to R&D, biotech, pharmaceutical, and chemical industries. However, development will take place over 10-15 years in tandem with market demand and take-up, allaying fears of oversupply in the medium-term.

The government will adjust its land supply and consequently, the development timeframe, through the Government Land Sales (GLS) mechanism. In terms of beneficiaries, CMT (BUY, TP S$3.93) has established a presence in this area through Jurong Entertainment Centre and IMM Building that could benefit from higher population mass, while A-REIT (BUY, TP S$2.80) has properties in the International Business Park that could benefit from higher capital values in the long-term. TT International is also developing a big-box retail scheme, to be completed in 2009.

Re-introducing Lushhome.

2008-04-05T12:58:00.002+08:00

I used to frequent this website called Lushhome for its regular updates on news and information on the Singapore property market, and was disappointed that it had been taken down some months ago.

Yesterday, whilst casually surfing the internet, I was delighted to chance onto Lushhome again at its new address.

For those who want regular updates updates on the Singapore property market, this is the website for you.

http://lushhomemedia.com/

I have also re-included it under my investment links.

Disclaimer: This blog has no affiliation nor is paid to advertise Lushhome. I am merely mentioning it because good websites deserve mention.

The Oil Factor by Stephen Leeb.

2008-04-04T10:50:00.000+08:00

This is the book that was recommended by Starry (see here) that explains in detail the impact of oil prices on the stock market.

If you intend to purchase the book.
Please click on the image below.

This is an editorial review from Publishers Weekly:

Stephen Leeb, editor of the "Complete Investor" newsletter, believes the U.S. economy is headed for a significant fall because of a severe shortage of oil, which has been inextricably tied to the economy for the past 30 years.

Leeb, author of several books including Getting In on the Ground Floor (also co-written with wife Donna), believes the country must become less dependent on oil imports over the long term.

Meanwhile, though, Leeb advises individuals to choose investments based on the longstanding relationship between oil prices and the stock market. He has a number of solid observations based on an examination of the past 30 years of stock performance and oil prices:

Since 1973, the economy and stock market have danced to oil's tune.

Sharp rises in oil prices have led to recession/stagflation and plummeting stocks, while declining prices or prices that are just mildly uptrended have led to good times.

Leeb provides a great deal of historic context and analyzes industries, selected companies, and other investment choices such as bonds and Treasury notes. Leeb's thesis is well researched, and the book offers a solid, concise overview of the economy and stock trends.

Still, given the uncertainty of the stock market-and the lack of job security-readers should consider Leeb's strategies carefully before overhauling their portfolios.

This is the top-ranked customer review on Amazon dot com:

Unevenly assembled concept; much practical investing advice.

"The Oil Factor" is a comprehensive and practical investing book disguised in a misleading title. The book is best described as a very lengthy investment newsletter that describes how to use the price of oil to time major investment decisions.

For a book with the word "oil" in the title, you expect discussion of concepts such as Hubbert's Peak and the state of current oil production. Mr. and Mrs. Leeb do not disappoint and present these topics in a way that is palatable to the uninitiated. However, this is not the main focus of the book.

The main focus of the book is the use of a market timing indicator that they call "the Oil Factor".

They describe a way to use the price of oil to predict the direction of the US economy and thus the direction of US stocks. The premise is that all economic activity in the US involves energy and the principle energy source is oil.

It is an interesting idea and they have a decent amount of back-tested results to show how utilizing the Oil Factor to switch between the S&P 500 index and Treasuries would have resulted in a doubling of your returns in the tested time period.

This indicator is surprisingly simple and can be easily calculated and monitored by anyone. It is so simple, that it occupies only a single chapter to describe in full.

The bulk of the book is subsequently used to present the case that the economy is in for hard times and investing strategies that will help you prosper. A surprisingly thorough treatment of the entire US Economy is presented.

The book is an unexpectedly excellent summary of the bear's case for the next decade. The recommendations are surprisingly specific. Mr. and Mrs. Leeb name specific companies, believing strongly that their recommendations will stand the test of time that is demanded of books but not demanded of magazines and newsletters.

Complete model portfolios are presented. They describe a model inflation portfolio for when the Oil Factor swings in one direction and a model deflation portfolio for when the Oil Factor swings in the opposite direction.

The highly specific and pragmatic nature of the book will surely be a breath of fresh air for those accustomed to theoretical treatments, but very serious flaws of construction undermine the main thesis of the book.

The first is that the Oil Factor is yet another simple mechanical method perfected through data mining. That is, they found something that correlates with market performance and have made the assumption that what worked over the past 30 years should work into the next decade.

Suffice to say that out of countless models invented over the past century that utilize simple rules to outperform the market, none has ever stood the test of time. Some may remember the once popular "Dogs of the Dow", one of the more recent demonstrations of such a failure.

I see no reason why the Oil Factor should survive and in fact see many reasons why it should fail. For example, the back-tested strategy uses only the past 30 years. The past 30 years excludes an enormously crucial factor clearly visible into the future: China.

Strangely enough, Mr. and Mrs. Leeb discuss the enormous impact that industrializing China will have on the world's oil supplies, but neglect to discuss how this might influence the reliability of the Oil Factor, which has never seen a nation of 1 billion people pushing into the industrial age.

A second serious flaw is that even if you accept the premise of the Oil Factor as a method of switching between stocks and cash, the authors then go on to argue that you should not use the Oil Factor to switch between stocks and cash, but rather to switch between an inflation portfolio and a deflation portfolio.

They do not bother to backtest this strategy, but present only forward-looking fundamental arguments of why this should work in the future. It is a flaw stacked on top of a flaw.

In summary the book is a poorly unified in concept. It should be noted, however, that the proposed deflation portfolio and inflation portfolio are excellent. Few people have arranged diverse asset classes under these banners.

This alone makes the book worthwhile. If you believe that we are headed for inflationary or deflationary times, you may want to buy this book and skip to the last few chapters to find out what to buy.

Market Update.

2008-04-04T09:26:00.000+08:00

Further explanation by Starry on the impact of oil prices on the markets:

I could go on and on here, but I would not have explain better than Stephen Leeb, author of the book "The Oil factor".

In that book, he uses almost 100 years of data to churn an oil indicator which make use of year to year increase in oil price to predict stock market movement.

Oil, being the essential of almost everything has a big impact on corporate profits worldwide than any other issues on earth (short of world war).

It is a reliable indicator and my own TA and FA studies always come back in agreement with his studies.

Go read the book "The Oil factor" and you will understand.

Starry from Sgfunds shared his view on the current market situation on 2 April:

The issue has never been all the sub-prime problems. I have said that many times in the past.

If you focus on the sub-prime issue, you will lose the big and real picture. Sub-prime is just a hot story cooked up by the media. It is a problem, but it is not that BIG a problem.

The real issue is the old oil price which apparently lost its hip factor due to sub-prime.

Watch the year to year increase in oil price. Just 3 weeks ago, the year to year increase is 85% which spells disaster to stocks. Today it is at 55%. See the difference between now and three weeks ago? And what difference was there in the financial markets between now and 3 weeks ago? Nothing much, and probably even worse. So all these sub-prime stuff doesn't explain what happen to the market yet everyone seems to look at it.

IMO, be ready for one of the biggest rally you going to see.

Unless oil price continue to shoot up, the year to year increase will continue to drop because it has already risen quite a lot over the last 6 months. Coupled that with interest rate that probably go down further, the stage is set for that rally. Use the year to year increase of oil price to gauge.

His statement is a bold and surprising one because there are many sgfunds forummers who believe his views to be the absolute truth, and should he be wrong, he would fall flat and hard on his face.

Admittedly, I too am a big fan of Starry's, and as much as I would like him to be right, I prefer to stick to my plan to review the situation only AFTER the next set of corporate results provide confirmation of sound fundamentals.

STI Technical Update.

2008-04-03T22:11:00.005+08:00

This report was compiled by OCBC Research this morning:

Upside capped around 3,300 - 3,400

The STI has performed as per our forecast on 26 March.

The break through the 1st resistance zone around 3,000 - 3,100 was a result of a gap up in yesterday's trading session. As it was made on the back of high volume, it suggests that there could be further upside in store as the trading week progresses.

Elliot wave counts suggest this could be the 2nd wave (Wave B) of a 3-wave correction which began in Oct 07. This would mean that the index could garner sufficient momentum to head towards our 2nd resistance level around 3,300.

3,300 is a significant level because it was the level around which the index had consolidated in the past and is also in proximity to the longterm uptrend line which was broken in Jan 08 and also the 200-day moving average which currently trades around 3,400 (refer to chart 1).

Chart 1:

Based on our standard deviation (SD) measure of the STI, we also observe that the 1,5x SD level sits around 3,350. Hence the level around 3,300 -3,400 should provide a formidable resistance ahead as the index progresses higher (refer to chart 2).

Chart 2:

We have observed that the stochastic indicator has begun showing signs of a reversal at this stage as it trades within overbought region, hence we expect mild weakness to arise before the STI attempts 3,300 (refer to chart 1).

Our expectation of limited upside for the index at this stage is based on historical performance of the STI on the monthly price chart against the 20-month exponential moving average. We have observed that each time the index cuts down on this moving average, the following month's performance tends to be weak.

We have seen muted returns in Feb and Mar, hence Apr could prove to be a month which the index will attempt to rebound before slipping back down again (refer to chart 3).

Chart 3:

We maintain immediate support at the low in Mar of around 2,745 and subsequent support at around 2,500 - 2,600.

Market Focus: Deceleration Mode.

2008-04-03T11:46:00.003+08:00

This report was compiled by DBS Vickers this morning:

Our strategy to stay defensive paid off last quarter, underpinned by strong performance of SingTel, SPH and REITS. We are turning cautiously optimistic, as P/E valuations have hit a three-year low, and we would bargain hunt on market dips for recovery in 2H08. We have cut our 12 month target to 3450 for the FSSTI, representing PEG of 1x.

Cuts in GDP growth and EPS downgrades.

We expect earnings growth to slow to 13.8% in 2008 from 28% last year, following earnings downgrades on the back of the slower GDP growth of 6%. The most significant cuts in earnings came from the property division, due to the delay in new launches and expectations of lower ASPs.

In addition, we have shaved margin assumptions for consumer goods and basic materials sector given the inflationary environment, while rising steel cost and the weak US$ will be negative for shipyards.

Cautiously optimistic, positioned for 2H08 recovery.

Following the sell-down in 1Q08, we are turning cautiously optimistic on the market, although we expect volatility to continue to rule in 2Q08 as confidence has yet to be restored, in the face of continued uncertainties from the US.

The market is trading at P/E of 13x(FY08F) and 11x(09F), making it the cheapest in the region.

This is also below its average rolling forward P/E of 14.9x. However, we believe EPS downgrades have yet to fully run its course. Investors will be watching the release of the 1Q08 results closely, which is unlikely to bring cheer given drastic changes in operating dynamics and the rising cost environment.

We expect volatility and uncertainties to prevail in 2Q08, which will present opportunities for bargain hunting in 2H08. Following our earnings cuts, we have cut our 12 month target for FSSTI to 3450, on a bottom-up basis.

This translates into 13.8x on FY09 earnings, which we believe is fair at this juncture in the earnings cycle (implied PEG of 1x). Our stock picks this quarter reflects a balanced approach, featuring stocks with stable cash flows (Sing Post) and REITS (CMT), while our beta picks are Cosco, SMM and SIA, which are value buys after the sell-down last quarter.

Whiplash - the fluctuations of the world's richest fortunes.

2008-04-03T11:16:00.008+08:00

This article was published by Forbes last week:

Stocks fluctuate, as they say.

Some of the world's 1,125 billionaires have lost serious money in the recent correction. On the other hand, quite a few have watched their fortunes wax and wane in the past year.

Hong Kong's Li Ka-shing was worth $23 billion last year, jumped to $32 billion on Jan. 4, 2008, then dipped to $26.5 billion on Feb. 11, our valuation day.

Thanks to her dad's transferring his stock to her, Yang Huiyan, the largest shareholder in Chinese property developer Country Garden, became Asia's richest woman in April, when the company debuted on the Hong Kong stock exchange. Back then she was worth $8.8 billion. Yang topped out at $17.3 billion in September and is now down to $7.4 billion.

The chart below depicts the fluctuations of the principal stocks that drive the fortunes of some well-known billionaires. Each net worth listed below includes assets beyond main stock holding.

Yongnam Update.

2008-04-02T17:41:00.002+08:00

This report was compiled by OCBC Research today (see full report here):

A momentous two years ahead

The great Singapore re-making.

The key catalyst that will propel Yongnam Holdings Ltd (Yongnam) through the next few years is Singapore’s re-making into a world-class urban city. The government plans to spend about S$50bn just on road and rail infrastructure development over the next 10-12 years.

Yongnam has already enjoyed significant orders stemming from this revamp – it recently completed work on a recreation and commercial complex for the upcoming Formula One event. The integrated resorts (IRs) are the crown jewels of the new Singapore: more than S$5b is going into developing the Marina Bay Sands IR alone. Once again, Yongnam is involved and has already secured two sub-contracts for work on the IR.

Breaking new frontiers with New Delhi project.

Yongnam has been busy beyond Singapore’s borders as well. Last month, it secured a S$70m structural steelwork sub-contract for the highly anticipated Terminal 3 at New Delhi’s Indira Gandhi International Airport. This represents Yongnam’s first major project in India and should serve as a showcase in yet another lucrative construction market.

Yongnam also continues to focus on building its business in the Middle East, which is witnessing its own construction boom. In FY07, business from the Middle East contributed to 37.6% of its revenue.

Solid order book and pipeline for FY08-09.

Yongnam kicked off the year with a strong order book amounting to S$232m, almost 33% higher than its FY07 revenue. We understand that these orders will be recognized over FY08-09. Apart from the recently completed F1 complex and the New Delhi airport project, the current order book includes work at the Marina Bay Sands, the ION Orchard, the Circle Line and the Dubai Metro Rail.

On top of this, Yongnam expects a project pipeline worth S$1b from select infrastructural developments to kick off over the next two years. A 30% hit rate would more than double Yongnam’s current order book.

Doubling capacity to fully exploit growth prospects.

Yongnam’s facilities for its structural steelworks business in Singapore and Malaysia make it five times larger than its nearest local competitor. Its average utilisation has been over 90%. Yongnam is now building its second fabrication factory in Malaysia, which is expected to be ready by end June.

The new plant should double Yongnam’s capacity and allow it to fully exploit what is a momentous time in its industry. We do not have a rating on Yongnam.

Property Market Update.

2008-04-02T17:19:00.006+08:00

This is a detailed analysis of yesterday's URA figures compiled by CIMB-GK (see here):

PPI of 178pts close to peak levels in 1996.

The URA released its 1Q08 flash estimate for the residential property price index (PPI) yesterday. Overall prices rose 4.2 qoq, from 170.8pts in 4Q07 to 178pts in 1Q08. PPI of 178pts is just 1.8% off the previous peak of 181.4pts in 2Q96.

Decent growth in all sub-sectors with the mass market leading the way this time.

Price growth captured in the 1Q08 flash data sprung up some decent numbers. According to the URA, residential prices in the core central region (CCR) and rest of central region (RCR) grew 4.4% qoq and 3.9% qoq respectively in 1Q08. Prices outside the central region, which has consistently lagged prime regions before 2Q07, was the outperformer this time, posting a 4.8% growth qoq, representing the highest among all sub-segments.

While overall PPI appears to be approaching peak, we estimate that prices in the mass markets are still well below the previous peak of 1996. We see further upside potential in asset prices to come from this segment this year.

However, low transaction volume paints a less bullish picture.

Based on URA statistics, we estimate that less than 350 new projects were sold in the first ten weeks of the new year. At this level, it is likely that transaction volumes for 1Q08 will fail to exceed the 890 units sold in 4Q97 during the last Asian Financial Crisis. This is a stark contrast to the positive tone depicted by the URA numbers for the quarter.

Given unsubstantial new sales, we believe the price growth registered in the sector were largely due to higher benchmark prices achieved for a few selected projects – hardly an indication of strength within the sector. Price growth from OCR could also have come from a better than expected resale market.

New projects that saw decent sale volumes in the quarter in the prime locations were Marina Collection in Sentosa (15 units sold, ASPS$2,728psf), Wilkie Studio (44 units sold, S$1,540psf) and Zenith (45 units sold, ASP S$1,662psf), while projects such as Reflections at Keppel Bay (1 unit sold, S$2,400psf), Hilltops (1 unit sold, S$3,818psf) and Martin Place Residences (2 units sold, ASP S$1,832ps) saw lacklustre sales.

Outside the central region, notable projects that achieved good ASPs include Botannia (6 units sold, ASP S$821psf), Waterfront Waves (38 units, S$797psf) and The PARC Condo (2 units sold, ASP S$1,044psf).

Anecdotal evidence points to a weaker 2Q08.

So far, news flow in the sector continues to negative for the sector. The recent pull-out of the bulk purchase for Goodwood Residence from the Kuwait based fund coupled with the lower than expected ASP of S$2,650psf (as opposed to S$3,200psf previously achieved) for Grange Infinite to AXA Asset Management seem to indicate lower institutional appetite for Singapore residential properties.

We believe the lower asking price for the Pinetree Condo enbloc of S$1,700psf v.s S$2,100psf previously in July 07, also reflects cautiousness among the developers. The recent benchmark bid of S$350psf achieved for the state land in Yishun from MCL Land (Not Rated) does not signal confidence returning in our view given significantly lower bids tendered by other competing developers.

With many of the developers expected to defer new project launches indefinitely, we see transaction volumes in 2Q08 depicting a similar trend as the last. Potential of further benchmark prices achieved will likely come from fringe-mid tier locations, albeit selective projects, in our view. We maintain our price forecast of 10- 12% for this segment in 2008.

For the prime location properties, we expect growth to remain flattish from hereon, maintaining our estimate of 5-10%.

Valuation and recommendation

Look for developers with margins buffer and RNAV resilience.

While smaller cap developers with highly leveraged balance sheets are usually fawned upon in a market downturn, we believe valuations for some of these stocks under our coverage are starting to provide good risk-reward propositions.

We maintain our Outperform call on BukitSemb (BS SP, S$9, Outperform) and HoBee (HOBEE SP, S$0.96, Outperform) for its low cost land bank and undemanding valuations respectively. While, a correction in asset prices appears to be in the cards, current valuations for HoBee imply a more than 40% price decline, which we deem to be too pessimistic. Trading at 62% discount to our end-CY08 RNAV estimate, we see limited downside from here for the stock.

Valuations for Allgreen (AG SP, S$1.24, Underperform), CityDev (CIT SP, S$11.56, Neutral) and UOL (UOL SP, S$3.83, Neutral) are not compelling at the moment and look to accumulate at more attractive levels. We continue to look for signs of improving sentiments as the re-rating catalyst for the sector. Maintain Underweight.

Private home price up but at slower rate.

2008-04-01T22:13:00.002+08:00

This article was published in today's Business Times:

Urban Redevelopment Authority's latest flash estimate shows that the price index for private homes in Singapore rose 4.2 per cent in Q1 2008 over the preceding quarter. This was lower than the 6.8 per cent quarter-on-quarter rise registered in Q4 last year.

URA also released today the flash estimates of the price changes in the three geographical regions for Q1 2008. Prices of non-landed private homes rose 4.4 per cent in Core Central Region (comprising the prime districts 9, 10 and 11 as well as the Downtown Core and Sentosa areas) , 3.9 per cent in Rest of Central Region and 4.8 per cent in Outside Central Region during the quarter over the preceding three months.

These increases compare with quarter-on-quarter gains of 7.5 per cent in Core Central Region, 7.7 per cent in Rest of Central Region and 7.0 per cent in Outside Central Region in Q4 last year.

In the public housing market, HDB's flash estimate showed the resale flat price index rose 3.4 per cent in Q1 2008 over the preceding quarter. This was lower than the 5.7 per cent increase in Q4 2007.

Market Update.

2008-04-01T09:46:00.002+08:00

This report was compiled by DBS Vickers this morning:

The anticipated short-term pullback in the STI that we highlighted started yesterday with the STI dipping 25pts to 3007. Our view remains unchanged:

A pullback towards 2927 this week before the index attempts the upper band of the trading range at 3167. A marginal rebound in the morning session should been seen as an opportunity to lighten up the high beta plays for very short-term traders. Support for these small caps should come in above their recent lows.

The $4 drop in oil price vindicates our view that commodity markets are likely to be volatile (wild swings) and may see weakness eventually as possible de-leveraging activities by hedge funds continue. The next immediate downside level for oil is USD96pbl. Avoid CPO plays.

Feb-08 loans grew 21.9% y-o-y and 6.8% q-o-q. This is higher than Jan-08 growth of 20.6% y-o-y and 5.7% qo-q. All sectors grew at a faster pace; notably the construction sector grew 48.7% y-o-y and 18.8% q-o-q (Jan-08: 48.7% y-o-y and 18.8% q-o-q).

And the main beneficiaries would be DBS and OCBC based on their respective exposure to the sector. Meanwhile, UOB should gain from the continued strength in housing loans:

Note: This is surprising since the consensus has been that the property market has been weak.

Which grew 16.0% y-o-y and 1.8% q-o-q. DBS Research expects OCBC to gradually pick up strength. We remain Neutral on Singapore banks with a Buy call for OCBC (TP S$9.00) and Hold call for UOB (TP S$19.30). STI. We switch our preference to OCBC from UOB, because OCBC appears more defensive and its operating parameters are strong. We think UOB now carries a premium.

DBS Research downgrades Singapore Exchange to Hold from Buy; TP: S$ 8.03 (Prev S$ 13.20). SGX’s earnings visibility is cloudy given the uncertainties in regional and global markets. We continue to expect derivatives activities to remain fairly robust, but new listings will slow down in 2008 as the equity market is expected to remain soft. However, trading volume has stabilised at around 1,700m-1,800m in 1QCY08 despite intermittent upside blips that are dependent on regional markets.

The market capitalization of Singapore-listed companies dropped to $692.5bn as at 31 Mar, eased 13.2% from end- December. Yangzijiang, Singapore Exchange, Cosco and China property group Yanlord led the losers among stocks in the benchmark FTSE Straits Times Index. Defensive stocks like SingTel, Starhub and SPH were in favour as investors preferred companies with strong cash positions and low volatility.

Soybean oil prices declined by 6.7% in CBOT overnight, which we believe would be a signal similar movement in palm oil prices today. The drop essentially reflects US soybean planting intentions next season as resported by the USDA, which are to increase by 18% or approximately 4.6m hectares. Our CPO price assumptions are based on the assumption that soybean planted area continue to decline by 2%. We will review our CPO price assumption to take this into account, although we believe supply should remain tight and demand should remain strong in the medium term.

In property news, Bravo Building Construction, a small property which snapped up over S$800m worth of en bloc sale deals last year, making it the 4th-largest buyer of en bloc sites in Singapore, has delayed the completion of two deals due to funding issues and walked away from another.

Bravo had bought the freehold Pender Court condo at Telok Blangah last July for S$80m (around S$872 psf ppr) and soon after purchased the freehold development Tulip Garden near Holland Road for S$516m (around S$1,018 psf ppr). However, completion of both deals have been delayed as Bravo requested for extensions. In addition, Bravo also announced that the S$162.8m collective sale of Makeway View in Newton (or about S$1,583 psf ppr) has been rescinded. This could indicate sagging confidence in the high-end market around Newton.

The URA put a one-of-a-kind hotel site in Balestier Road on the market. The 1.77-hectare plot, next to Sun Yat Sen Nanyang Memorial Hall, includes a 0.46-hectare park. The site has a maximum permissible gross floor area (GFA) of 430,556 sq ft. At least 60% of this must be set aside for hotel and hotel-related use. The rest can be used for commercial and residential purposes.

The cost of shipping Middle East crude to Asia, the world's busiest route for supertankers, may drop as oil companies delay hiring the ships they need, causing vessel supply to accumulate. There are 95 VLCCs available for hire within the next 30 days, compared with 66 for hire in March at the end of February.

US markets were lifted by modest gains as the first quarter drew to a close. Oil price tumbled $4.04 to USD101.58pbl. Gold dipped $8 to USD928.5 per ounce as the USD Index gained 0.2% to 71.74. After the bell, Lehman Brothers said it will offer 3.45mil shares of convertible preferred stock to boost cash flow and reduce debt.

Removal of Advertlets.

2008-03-31T23:16:00.003+08:00

This is just a short note to inform the bloggers amongst you readers that I have removed the advertlets links on my blog, the reason being:

I was due to receive a cheque from them in mid March, but once it did not arrive, I sent an email to them inquiring about the delay. This was sometime last week, and despite my repeated attempts to contact them via different email addresses, Advertlets has failed to respond thus far.

This experience, along with another experience in January this year whereby they had problems with their server which rendered my blog inaccessible, questions the efficiency, experience, and professionalism of Advertlets.

Which is why I decided to remove their links from my blog, and I advise fellow bloggers to do the same.

My deepest apologies for any inconvenience caused to you fellow bloggers.

On the bright side, I have received a total of more than S$600 from Nuffnang (No, I'm not paid to say this!) since joining in June last year, so I'm very pleased with that.

Keep it up, Nuffnang!

March 08 Portfolio.

2008-03-29T13:48:00.002+08:00

These are my current stocks holdings as of 28 March 08.

Pan United
Sarin
Yongnam
Taisin
Sinotech Fibre
Eastern
Lifebrandz
Sihuan
China XLX
IFS
FujianZY
Sing Inv
UIS
China Sports
Fibrechem
HLN Tech
China Pplus
ARA
Yongnam W121214

The March 08 portfolio value of $397,208 is a decrease of -$20,992 (or -5%) over the February 08 portfolio value of $418,200. I did not make any purchases or sales this month.

These are the key Portfolio Changes.

I received dividends of $705 from Tai Sin.

Conclusion:

As mention in my previous post (see here), I will probably not be making any major portfolio changes until the next set of corporate results are in.

I will also be removing all stock alerts except for IFS, UIS, and Sing Inv until I re-evaluate those nest set of results.

My personal view on the market.

2008-03-28T12:38:00.002+08:00

Faithful readers of my blog would probably have come to realise that I've been very quiet on the investing front recently - I have yet to execute a single trade for 2008.

At times, I must admit the current market has managed to strike fear and disheartenment into me. Thankfully, I usually manage to keep my emotions in check because of the logical and systematic method of investing that I have in place.

As such, the key reason for my inactivity is based on my rational conclusion that it is not yet time to bargain hunt.

Personally, I would prefer to wait until the next set of corporate results in May.

Reason being, 2008 has started quite badly for most companies, having to deal with a myriad of problems such as the global financial crisis, poor sentiment in property and retail markets, rising inflation in oil, metals, food products (key raw materials).

As such, I expect that most companies will register poorer-than-expected results, which will lead to many earnings downgrades.

For now, I've set my price alert for all the stocks on my watchlist to 50% of NAV, and would only seriously consider examining a stock if it hits that alert.

I will re-consider the price alerts only after the next set of results are in.

Disclaimer: The above post is purely my opinion, and is not an inducement to buy or sell.

Where No Fed Has Gone Before.

2008-03-27T21:34:00.003+08:00

Why the Federal Reserve's 'loan' for the Bear Stearns deal looks like an investment and faces serious scrutiny

Written by Peter Coy for Businessweek (see here)

The Federal Reserve has stretched its mandate up, down, and sideways to prevent a financial market deluge. Now it appears to be stretching the English language a bit as well.

What the Fed is calling a $29 billion "loan" to help finance JPMorgan Chase's (JPM) purchase of Bear Stearns (BSC) looks much more like a $29 billion investment in securities owned by Bear.

Although the Fed insists that it isn't technically buying any assets, in practical terms it's doing exactly that. All this adds up to a big and unacknowledged step up in the central bank's financial intervention with Wall Street investment banks.

The Fed, of course, is the only part of government with the speed, power, and flexibility to arrest a bout of market panic. By rapidly intervening in mid-March to keep Bear from filing for bankruptcy, it may well have prevented a series of cascading failures that could have severely damaged the financial system and the economy.

Many economists and analysts are happy that the Fed stepped into the breach. Nevertheless, now that things have quieted down a bit, the Fed is likely to face some tough questions about the precise nature of its actions as well as the legal justification for them.

The second-guessing has already begun. On Mar. 26, Senate Banking, Housing, and Urban Affairs Chairman Christopher Dodd (D-Conn.) announced an Apr. 3 hearing to explore the "unprecedented arrangement" between the Fed, JPMorgan, and Bear. Top officials from the Fed and other regulators, as well as Bear Stearns CEO Alan Schwartz and JPMorgan CEO Jamie Dimon, will likely be grilled about the details.

That Looks Like Equity

Meanwhile, Treasury Secretary Henry Paulson gave the Fed a gentle prod on Mar. 26 in a speech to the Chamber of Commerce. While saying he fully supported the Fed's recent actions, Paulson stressed that "the process for obtaining funds by non-banks must continue to be as transparent as possible." He also urged the Fed to continue to work with other agencies to get the information necessary for "making informed lending decisions."

So far, few people have focused on what exactly the Fed is getting in exchange for supplying $29 billion to JPMorgan Chase. That's a bit surprising because whatever the deal is, it's far from a standard loan. The strangest twist is that even though the money goes to JPMorgan, that firm isn't the borrower. So the Fed can't demand repayment from JPMorgan if the Bear assets turn out to be worth less than promised.

What's also odd is that if there's money left after loans are paid off, the Fed gets to keep the residual value for itself. That's what one would expect if the Fed were buying the assets, not just treating them as collateral for a loan. Vincent R. Reinhart, a former director of the Fed's Division of Monetary Affairs and now a resident scholar at the American Enterprise Institute, said in an interview on Mar. 26: "The New York Fed is the residual claimant. That doesn't look to me like a loan. That looks like equity."

An Arcane Arrangement

To understand what's going on, go back to the weekend of Mar. 15-16, when the Fed encouraged JPMorgan to buy Bear Stearns at a fire-sale price to keep Bear from going under and dragging other banks down with it. Even at $2 a share, JPMorgan wasn't willing to do the deal because lots of Bear's assets, despite having an investment-grade rating, were worth almost zero in the then-skittish marketplace.

So the Fed got creative. It set up an arcane arrangement that will give JPMorgan the full appraised value for some of Bear's assets if JPMorgan succeeds in acquiring Bear.

Here's how it works:

A Delaware-based limited liability company will be set up to receive, upon completion of the merger, $30 billion in various Bear holdings, such as mortgage-backed securities.
The Fed will lend $29 billion to that company, which will pass all the money along to JPMorgan, Bear's new owner. JPMorgan itself will lend $1 billion to the Delaware company.
The company, managed by BlackRock Financial Management, will pay back the loans by gradually liquidating the assets.
As a protection for the Fed, it gets paid back fully before JPMorgan gets back anything on its loan.

The other sweetener for the Fed is that if there's money left over even after JPMorgan gets repaid, the Fed gets it all.

From an economic perspective, this complex arrangement is functionally identical to a purchase of the Bear portfolio by the Fed—one that's financed in small part by the subordinated $1 billion loan from JPMorgan.

But the Federal Reserve Act doesn't seem to provide for the Fed to make such equity investments. That doesn't trouble the Fed because it argues that the $29 billion is indeed a loan—or, to use the antiquated language of the Fed's founding legislation, a "discount" of a "note."

Pushing the Limits

A word of explanation: The Federal Reserve Act allows the Fed to advance money to people and companies that can't get credit elsewhere. In the 1930s a big farmer, say, who gave the Fed a note promising to pay $1 million when the wheat crop came in might have gotten $900,000 immediately. (That's a discount from the note's face value to compensate the Fed for its trouble.)

The Fed is now arguing that the Delaware company is like the Depression-era farmer, getting money up front ($29 billion) for a promise to pay something in the future.

Of course, the Delaware company is promising to pay not only principal and interest but any money left over as well. It's that residual interest that gives the deal its equity-like nature. But the Fed argues it's just another type of promise to pay that's fully covered under its charter.

If this case proves anything, it's that the Fed is ready to press the limits of its charter to keep the financial system afloat.

Effectively acquiring the Bear assets at a bargain price and then liquidating them is similar to what Resolution Trust Corp. did when it shut down savings and loans and auctioned off their loan portfolios in the 1990s. The difference is that Congress set up the RTC but had nothing to do with the Fed's moves.

Are the Fed's emergency actions justified? Probably.

Are they going to come in for extremely close scrutiny? Bet on it.

Market Update.

2008-03-27T10:56:00.002+08:00

This report was compiled by DBS Vickers this morning:

We told you so: That US economic woes are not going to go away overnight, that commodity markets will be volatile (i.e. wild swings), that oil price should see a technical rebound from slightly below USD100pbl, that a technical rebound in the STI towards 3046 short-term is a chance to reduce.

This scenario is panning out during the course of the week: STI retreated from a high of 3023 yesterday and is likely to dip today on the back of the overnight fall on Wall Street and oil price has rebounded from a low of USD98.6pbl to USD105.9pbl.

We are sticking to our view, that the index is likely to stay range bound from 2746 to 3046 in coming week(s). The range bound behavior offers band trading opportunities when the STI dips closer towards 2746. The 2868 level is a support/resistance level within this range.

Market Update.

2008-03-25T19:31:00.002+08:00

This report was compiled by CMIB-GK this morning:

Singapore Equity Technicals
Riding on banks

Turned the corner.

Singapore equities appear to have turned the corner, with banking stocks leading the way. The Straits Times Index (STI) charted a double bottom at 2,745 last week, which led us to believe that it may have bottomed out.

Yesterday’s breakout above the 2,870 level confirmed the reversal. In the short term, the index appears to be heading towards 3,150, the upper resistance of its sideways trend.

Wave count positive nonetheless.

At the current juncture, we are unable to confirm a major bottom for the STI though an intermediate-term bottom is likely.

The index could have already completed its wave “a” correction from the Oct 07 peak and this would be followed by the wave “b” rebound to between 3,288 and 3,417, its 50% and 61.8% Fibonacci retracement, respectively. Wave “b” could take 2-4 months to complete.

Alternative wave count is even more bullish.

If Wave 4 is indeed over, impulsive Wave 5 could lift the index above the 3,831 high set in October last year. However, this is still a possibility and not a certainty. We need to see five waves formation on this upcoming rally to confirm.

On both wave counts, assuming we are right, this impending rally could offer both investors and traders a more-than-decent run in the next few months.

Banks to lead the way.

It appears that the banking stocks are leading the charge out of the consolidation. DBS, UOB and OCBC are all showing bullish signs of a likely rally in the medium term.

Please click here for the full report and technical charts.

Market Update.

2008-03-24T14:58:00.002+08:00

This weekly commentary was compiled by DBS Vickers this morning:

Our view for the STI to trend lower to 2530 to 2650 remains intact. Strong resistance remains at 2950 to 3000 while the short-term resistance is at 2868.

On first look, the Dow’s 410pt rise last week coupled with the fall in commodity prices and the rebound in the US dollar set the stage for stocks to rally.

However, we believe that it remains too early to call for a bottom in equities.

Subprime uncertainties are not over yet. Financial markets are only half way into the discovery process of the subprime debacle.

The latest USD11bil losses suffered by Bear Stearns, together with losses declared by Lehman Brothers and Goldman Sachs lifts the total industry subprime losses accounted for till date to about USD210bil.

This is only 55% of analysts’ estimated total subprime loss of USD400bil.

Last Thursday was a triple witching day (the simultaneous expiration of options, index options, single stock futures and index futures) in US. The days leading up to this event tends to be volatile.

The market often ‘rights itself’ the following week.

Commodities, used as a hedge against inflation amid the collapsing dollar, were the casualties last week as speculative money unwinds. The US dollar rebounded after the FED lowered interest rates by a lesser-than-expected 75bps to 2.25% and sounded a warning on inflation.

The CRB Index fell 8.32% last week on profit taking and de-leveraging activities.

While commodities could rebound in the immediate term following last week’s sell-off, it should be short-lived. Further de-leveraging activities could lead to more volatility in commodity markets in coming weeks.

Gain Financial Wisdom - - From Your TV.

2008-03-23T13:35:00.011+08:00

This article was written by Geoff Williams for Yahoo Finance:

It's no secret that you can learn something about the way money works by watching television programs like "Power Lunch," on CNBC, and "Money for Breakfast," on FOX Business.

But for those of us who don't read stock quotes and fund prospectuses for fun, watching those shows can feel like work. Sometimes, you want to just sit back and watch Andy and Barney outwit some small-town crooks and not think too hard.

Fortunately, if you want to enjoy a fun sitcom or a trashy reality show and still learn how to make money, you can. You just have to watch them with a slightly different mind-set.

If you really think about your favorite TV programs, you can pick up almost as many financial lessons as you could by watching Maria Bartiromo on CNBC.

Don't believe us? Then read about the money lessons in these eight classics.

The show: "The Cosby Show"

Channel: TV Land

What you can learn: See what family life can be like when both parents work hard to become successful, affluent professionals. The family goes through the trials of daily life while putting family first -- and managing to laugh, hug and drop lots of clever one-liners.

Money quote: In this famous dialogue from the pilot episode, Theo tells his dad that he doesn't aspire to make a lot of money like his parents. He wants to make just enough, like regular people. And so using Monopoly money, Cliff offers a classic lesson in economics.

Cliff: So how much do you expect to make a week for "regular people"?

Theo: $250.

Cliff: (pointing to the bed) Sit down. I will give you $300 a week. $1,200 a month. (Cliff hands the money to Theo)

Theo: I'll take it!

Cliff: And I will take $350 for taxes.

Theo: Whoa!

Cliff: Oh, yeah. See, the government goes for the regular people first. So, how much does that leave you with?

Theo: $850.

Cliff: OK, now you'll need an apartment because you are NOT living here. Now an apartment in Manhattan will run you at least $400 a month. (Cliff takes $400)

Theo: I'll live in New Jersey. (Theo takes back $200)

Cliff: Now you'll need a car. (Cliff takes $300)

Theo: I'll drive a motorbike. (Theo takes back $100)

Cliff: You're gonna need a helmet. (Cliff takes $50) Now figure $100 a month for clothes and shoes.

Theo: Figure $200. I wanna look GOOD.

Cliff: So, how much does that leave you with?

Theo: $200. So, no problem.

Cliff: There IS a problem! You haven't EATEN yet! (Cliff takes $100)

Theo: I can get by on bologna and cereal. (Theo takes back his $100) So I've got everything under control PLUS $200 left for the month.

Cliff: You plan to have a girlfriend?

Theo: For sure.

(Cliff takes the remaining $200)

Cliff: (pointing at Theo's empty hand): Regular people.

The show: "Ugly Betty"

Channel: ABC

What you can learn: It may not be "The Office," but it is life in an office, albeit one at a fashion magazine called Mode, and throughout the series money is often a subtext of the show.

In some cases, the show provides a subtle look at the class system: Betty Suarez is the sweet heroine of modest means, who is beautiful despite not being one of the beautiful people.

Many individual episodes, however, often feature slices of life revolving around finances. For instance, in the first season, Betty has to organize the finances of her publisher boss, Daniel, which leads to her eventually learning that some of her co-workers have falsified expenses; Daniel is yelled at by his father, Bradford Meade, who still owns the magazine, and gets his company credit card cut off for a week; Wilhelmina, the magazine's assistant editor, uses her company credit card expense account for a "butt lift." And on it goes.

Money quote: "A job is not about making friends. It's about making money and stealing office supplies. By the way, we're out of coffee filters." -- Hilda, Betty's older sister

The show: "The Simpsons"

Channel: FOX

What you can learn: You thought it was a cartoon, but if the animation were distilled into one oil painting hanging in an art gallery, the title might read: "A Fool and His Money."

Over the years, Homer Simpson has lost his family's life savings, become a grifter, been audited by the IRS, accepted a loan from his bartender Moe (who we learn is also a loan shark), and given up work for eight days so he can be the second person in line to get some football tickets.

And who can forget the time that, after attending a seminar where they learned to be smart shoppers, Homer took his family on an expensive trip to Tokyo? While there, they lost all their money.

Money quote: "Bart! With $10,000, we'd be millionaires! We could buy all kinds of useful things, like love!" -- Homer Simpson

The show: "The Colbert Report"

Channel: Comedy Central

What you can learn: Jim Cramer and Suze Orman? Mere pretenders, compared with the financial wizardry of Stephen Colbert, who has his finger on the pulse on Main Street America more than any other financial guru on television.

Oh, sure, you'll hear political commentary on "The Colbert Report," but there's also a wealth of monetary advice that admittedly, if followed, will get you followed by sheriffs and IRS agents.

Colbert's regular segments include "Bears & Balls," in which finance-related questions are asked, and he provides answers ("Buy gas. It's a sure-fire commodity with no risk except for the sure risk of fire.")

Then there's Colbert Platinum, in which the host thoughtfully showcases outlandishly pricey products that only the super-rich can afford. But that's OK. As Colbert points out, these segments are for billionaires. Cash-strapped millionaires should change the channel.

Plus, Colbert promotes the idea of being entrepreneurial, always hawking products based around his name. He encourages his viewers to buy wrist bracelets for a counterfeit cause like sore wrists, but the very real money goes toward helping worthy causes, most recently sending $170,000 to the Yellow Ribbon Fund to help injured soldiers and their families.

Money quote: "Saving the planet appeals to the wealthy -- because they own so much of it."

The show: "Sex and the City"

Channel: TBS

What you can learn: Carrie Bradshaw, Samantha Jones, Charlotte York and Miranda Hobbes are all living in the corporate world -- "Desperate Housewives" this is not. Financial lessons abound, particularly when following Carrie, who has trouble with the "living within your means" guideline.

Money quote: In one episode, Carrie learns she may lose her apartment, is turned down for a bank loan and realizes that during her lifetime, she has spent a grand total of $40,000 on shoes.

Carrie: I've spent $40,000 on shoes, and I have no place to live. I will literally be the old woman who lived in her shoes!

The show: "Two and a Half Men"

Channel: CBS

What you can learn: Money is always haunting the Harper brothers. Alan is a chiropractor, but has his finances tied up in alimony payments and child support. Charlie is a musician, but not the kind who makes platinum albums; he writes ad jingles.

After Alan's second divorce, he makes the wry observation that, "In my entire life, my dog is the only person I've slept in the same bed with that didn't sue me for alimony."

Money quote: The best example may be the episode in the first season where Charlie realizes he's spending far more than he's earning. In a heartfelt moment, he discusses his plight with his housekeeper, Berta, who is surprisingly supportive, reassuring him:

Berta: Well, you don't have to worry about paying me this week, Charlie.

Charlie: Thank you, Berta.

Berta: I'll just take this espresso maker and be on my way. Call me when things pick up.

The show: "The Office"

Channel: NBC

What you can learn: Michael Scott, the Scranton, Pa., branch manager of paper company Dunder Mifflin, is a case study for how not to manage one's finances professionally and personally.

For instance, in the one-hour episode titled "Money," Michael is deeply in debt, thanks to his penchant for making extravagant and unnecessary purchases, from a Porsche to bass fishing equipment and an $80 magic kit, which he planned to use to entertain potential clients. In the same episode, Michael takes on a second job as a telemarketer to bring in extra cash.

Even what Michael did in his youth, before he joined Dundler Mifflin, is a financial cautionary tale. As a young man, he admirably put aside money for his education while working at an Arby's restaurant. But his plans to go to college were destroyed when he lost his entire savings in a pyramid scheme.

Money quote: "Yes, money has been a little bit tight lately. But, at the end of my life, when I'm sitting on my yacht, am I going to be thinking about how much money I have? No. I'm going to be thinking about how many friends I have. And my children. And my comedy albums. I mean, I have a yacht, so I obviously did pretty well, money-wise." -- Michael Scott

The show: "The Apprentice"

Channel: NBC

What you can learn: In real life, just as on the show, there are co-workers who will demoralize their team and who will be happy to sell your soul if it means currying favor with the boss, who you will hate.

Yet there will be other staff members who you will take a bullet for, or even risk hearing, "you're fired," if it means protecting your workplace pal.

If nothing else, by watching the show, you can experience what it would be like to work for The Donald -- Trump, that is -- whose shoes are probably worth more than your mortgage.

Money quote: "I take solace in the fact that I have a higher IQ than the other 15 contestants, which just goes to show you that there's little correlation between IQ and success in lemonade sales."-- David Gould, who may have been a little frustrated about being the first contestant to be fired in the first episode of the first season of "The Apprentice."

Happy Easter.

2008-03-21T17:08:00.002+08:00

Here's wishing all readers a very Happy Easter!

Property Market Update.

2008-03-20T11:23:00.002+08:00

Reported by Channel Newsasia this morning:

Billion Rise - a company believed to be linked to Hong Kong property giant Cheung Kong Holdings - has put in the top bid of S$110.4 million for a residential site at West Coast Crescent.

This works out to S$305 per square foot per plot ratio for the 99-year leasehold parcel.

Analysts expect a break-even price of between S$680 and S$720 per square foot for a new condominium on the site. The units are expected to be marketed at around S$800 per square foot.

The next highest offer of S$108.9 million came from Tian Hock Properties, and the lowest bid was S$50 million from Scantech Development.

All in, the Urban Redevelopment Authority received 12 offers for the land parcel.

Consultant CB Richard Ellis said the strong response signals developers' confidence in the suburban segment despite the current lukewarm response to new projects.

Consultant Knight Frank expects the new condominium to yield about 300 units.

It believes the high level of interest for the site is because it is close to schools and has a good view of Clementi Park, West Coast Park and the sea.

The site spans 12,000 square metres and has a maximum permissible gross floor area of 33,600 square metres. This means that the proposed condominium could be built up to about 36 storeys.

The winner of the award is expected to be announced after the bids have been reviewed.

Market Update.

2008-03-19T09:48:00.003+08:00

This report was compiled by DBS Vickers this morning:

Stocks should start higher in reaction to Wall Street’s massive overnight gains after the FED cut interest rates by 75bps but upside for the STI remains cap at 2950 to 3000.

Maintain that a rebound towards this resistance level should be seen as an opportunity to reduce position. STI’s downward bias towards 2530-2650 remains intact.

Allco Reit has failed in its attempt to obtain a court injunction to fence off a downgrade by Moody's Investors Service. Moody’s has gone ahead to downgrade the Reit to Ba2 from Ba1, as well as signal the possibility of a further cut in ratings.

This comes less than two months after Moody’s downgraded it from Baa3 to Ba1. A ratings downgrade would have interfered with Allco’s fund-raising efforts, even as some of its debts are near maturity.

Allco’s current gearing is 44%, which is below the regulatory S- reit limit of 60%. Other Singapore Reits downgraded or placed on review for downgrade this year include Mapletree Logistics Trust and Suntec Reit. CapitaMall Trust Reit, on the other hand, was given a A2 rating by Moody’s.

In another sign of the weakening residential property market, the government has decided not to award a landed housing parcel in Jurong West because the bids were too low. The highest bid at just $77.80 psf for the 99-year leasehold site in Westwood Avenue was significantly below the market estimate of $200-$250 psf.

Conclusions:

With the STI having taken such a heavy beating in the past few months, investor confidence is naturally still low, which is why it is highly unlikely that the current rally can sustain and that we would probably see a downward bias soon again.

Personally, I am looking towards the STI to fall closer to the 2600 mark, failing which, I will probably wait until mid year, before I start buying into the market again.

For Allco Reit, the news must be very disappointing for its investors, as this throws in a lot of uncertainty since it also recently announced that it could be divesting its interest in its Australian properties.

I must apologise for having placed Allco Reit on my Stock Alert in recent times, but now is not the time to get emotional or sentimental, but to examine the facts at hand.

Allco Reit is definitely facing some hard times now, but so are 99% of all other stocks for a variety of reasons:

Financial stocks are suffering from the sub-prime crisis
Property stocks are suffering from the weakening property market
Transport stocks are suffering from high oil prices
Manufacturing stocks are suffering from high metal prices
China stocks are suffering from poor weather, high pork prices, inflation, etc

The point I want to make is this:

When times are bad, people will find all sorts of reasons to explain why it is so.

Don't get me wrong, I am not downplaying the problems faced by Allco Reit. Its uncertainties faced are indeed very real.

But until we allow for time to know the extent of the problem, I would advise investors against any rash selling which they might potentially regret later on.

Instead, if you really must sell, I would advise to switch buy to another undervalued Reit. Which one? In the current market, you can easily take your pick.

But for now, I am removing Allco Reit from the Stock Alert.

As for the government rejecting the low bid for the Jurong West landed housing parcel, no doubt it is a sign of the weakening property market, but it also signifies the combined effort by both government and developers to delay launches and sales so long as demand remains weak.

Property Market update.

2008-03-18T17:12:00.002+08:00

This report was compiled by DBS Vickers this morning:

Frosty February For Home Sales (NEUTRAL)

Where Have All The Buyers Gone?

URA released yesterday monthly price and sales data of new residential units sold in the month of February which continued to reaffirm our view on the uncertainty in the physical property market, translating to caution on the part of both developers and buyers, leading to overall soft sales of new units by developers, with new sales declining 47% m-o-m from 320 units in January to an anaemic 170 units in February.

Price Levels Generally Maintained.

Prices, however, were generally maintained at previous levels for now though given the small volume of sales for the month, this may not be indicative of the overall pricing trend – as developers that have booked good sales in the past year and have improved their balance sheet could have the luxury of maintaining their asking prices for the moment.

Playing The Waiting Game.

With the economic uncertainty arising from sub-prime concerns still weighing down sentiment in the property market, leaving both developers and buyers waiting on the sidelines for the near-term, no catalyst is in sight. The developers with more diversified landbanks and stronger balance sheets are at an advantage, as they can play this waiting game for longer – maintaining asking price levels while timing any new launches to cater to the market segment where demand is relatively strongest.

Buyers, on the other hand, sensing a potential dip in prices, are also waiting and holding out from committing to any purchases.

Maintain Neutral stance, Preferred Pick: Allgreen.

With the waiting game likely to be played out for at least another quarter, we maintain our Neutral stance on the Residential Property Sector, since overall economic fundamentals for Singapore remain healthy in the medium-term.

Our preferred pick in this sector remains Allgreen, given its well-diversified landbank with the majority in the mid-tier/mass-market segment, where we see stronger demand going forward. (BUY, TP S$1.66).

Market Update.

2008-03-17T10:21:00.002+08:00

This report was compiled by DBS Vickers this morning:

Investors should continue to stay defensive heading into 2Q. Our view that the STI has a downward bias to 2530-2650 remains intact. While minor oversold bounces do occur, it’s still a sell-into-strength market.

The clearest indication came last week when the FED’s USD200bil injection into credit markets triggered a 180pts gain from Tuesday’s low of 2794 to Wednesday’s high of 2976 that was all given back by Thursday.

Defensive plays such as telecom (SingTel, StarHub and M1) and consumer staples (SPH, SMRT, SingPost) should hold up well in coming weeks. Outside of these defensive stocks, other index heavyweights are likely to pull the STI lower towards 2530-2650.

The Singapore economy saw earnings rise but productivity dips for first time in six years. Labour productivity slipped 0.9% in 2007 while real earnings rose 4%. Jobless rate is down to a decade low of 1.6%.

The last time productivity had contracted was during the economic downturn in 2001. This time round, while there was healthy output growth, it failed to keep pace with the record increase in manpower.

Retail sales in January rose 7.8% yoy. However, if adjusted for inflation, retail sales rose just 1.5%. Excluding motor vehicles, retail sales in January were 15.1% higher. The strongest increases were seen in sales of petrol, food and beverages, and at department stores and supermarkets.

President George Bush is meeting top US financial policy makers today, at a time of increased strains in credit markets, fears of a recession and Fed’s plan to bail out the latest victim, No. 5 US investment bank Bear Stearns.

Mr Bush acknowledged more starkly than ever that the economy had slipped into trouble, dogged by falling home prices and turmoil in financial markets. Mr Bernanke also unleashed a fresh warning about the gathering wave of home foreclosures, while pledging new regulations to limit the impact and crack down on predatory mortgage lending.

Worth $4 Million - - And Unable to Retire.

2008-03-12T16:39:00.001+08:00

See here for the full article on Forbes written by Carrie Coghill Kuntz, a certified financial planner and president of D.B. Root & Company Wealth Management in Pittsburgh.

I got a call from a newly "rich" executive. Having worked 60-hour weeks for years and now ready to retire at 55, he sold his business for $4 million. He was ready to live out his dream life and live off that tidy nest egg. The problem is, to do so--on $4 million--he must cut his standard of living.

It's the plight of the "mMillionaire" --the middle-class Millionaire.

Note: I personally don't belong to the class yet, but I'm not far behind which is why this article is particularly interesting to me.

Mansions and yachts are out. The mMillionaires who want to retire before age 65 or 72, find they must live in three- and four-bedroom homes and drive mid-priced four-door sedans and mini-vans.

They are your neighbors--millionaires who live middle-class lifestyles even though they may have millions in liquid assets.

These mMillionaires have between $2 million and $10 million of investable assets, beyond their homes. Many have sold businesses or inherited money, yet few believe they can retire and continue living the high life.

The key question facing the mMillionaire is, "Can I continue to live the way I am living for the rest of my life?" The answer for most of these millionaires is "no."

Just a generation ago, a person with $2 million or more in liquid assets would have had enough for a secure retirement. But not today.

Combine longer life expectancies and the rising costs of health care, food, transportation and property, and you have financial challenges ahead for the mMillionaire.

Note: This perhaps answers why I am unwilling to put all my money into high yield investments and simply take it easy. That said, retirement on $1m can be an option if one is willing uproot himself to a cheaper country with a lower standard of living. Unfortunately, that is in reality easier said than done.

When Social Security was passed 72 years ago, life expectancy was less than 70. Now it's well above that and may continue to rise with advances in medical treatment.

As a result, the mMillionaires in this high net worth class are finding they must scale back their lifestyles or delay retirement. That's something most of them, who are high-earners today, can't imagine.

For many of the executives and mMillionaires that I speak with everyday, this comes as a shock. Often their biggest obstacle is changing their own attitudes about what their wealth can afford them.

Some are reluctant to embrace projections about their nest eggs' staying power. They believe that lower expenses in retirement will offset inflation and lost income.

Even with no mortgage or tuition payments, many mMillionaires underestimate the effects of inflation, especially on the cost of health care services for the aging.

We find that people don't always want to confront bad news. There's no question that more people are accumulating wealth at an unprecedented rate.

They're living the good life, banking on retiring when they want to and continuing that quality through retirement.

What they haven't counted on is that retirement can be a 40-year experience and that conditions can change drastically.

In fact, in about 30 years, people will need more than $2 million to equal the purchasing power of $1 million today.

Many mMillionaires who are used to running businesses or managing others often want very specific answers on how to manage their middle-class millionaire status.

Unfortunately, there's no formula for long-term financial security. Everyone's needs vary.

But, there are certain principles that can guide the mMillionaire's actions. If you are an mMillionaire, congratulations.

But there are still a number of things you should keep in mind--ranging from managing your tax liabilities, to taking a really critical look at your investment portfolio (are you too heavily in tech stocks or consumer durables?), and of course guarding your estate, the nest egg you will leave behind.

Kuwait fund pulls out of bulk purchase of high-end homes .

2008-03-11T12:25:00.002+08:00

It allows options for 97 condo units at Goodwood Residence to lapse
By Joyce Teo, Property Correspondent for The Straits Times

A Kuwait bank fund that agreed in December to buy 97 units at posh Goodwood Residence for $818.4 million has let the purchase option lapse.

Kuwait Finance House has given no reason for the move, which could result in the firm having to pay developer GuocoLand multimillion-dollar penalties.

It could also be the first time a foreign institutional investor in Singapore has pulled out of such a deal, raising concerns that the property market, already hit by weaker sentiment, may be heading into a downturn. 'While the current market is cautiously optimistic, news of such a pullout might cause it to turn more cautious,' said Cushman and Wakefield managing director Donald Han.

GuocoLand did not provide a direct reason for the lapse but said in a statement yesterday that the private residential market in Singapore appears cautious.

The developer also said it is in talks with Kuwait Finance House, an Islamic investment bank, with 'a view to a grant of fresh options for units in the development'. The firm declined to comment further, citing ongoing talks. Kuwait Finance House also declined comment for the same reason.

Kuwait Finance House's huge deal was for 97 four-bedders ranging from 2,500 sq ft to 3,900 sq ft at the former Casa Rosita site in Bukit Timah Road, near Newton Circus. The condo has 210 freehold units on a large 24,845 sq m site fronting Goodwood Hill. The Kuwait fund's purchase would have been the single-largest purchase of residential units under construction in Singapore.

Kuwait Finance House had agreed to buy the units at a median price of $3,200 per sq ft (psf), which would have set price benchmarks for the area. Industry sources said the price was way too high, considering that bulk purchases typically come with a discount.

Said an industry source who declined to be named:

'If it were to have bought at an average of, say, $2,700 psf last December, it would still be a record for the Newton Circus area.'

'If it had held on for 15 to 20 years and leased the units for up to a 5 per cent yield, it may have been able to justify the deal. But if it had wanted to buy and sell, why didn't it bargain for a rock-bottom price as the property had not been launched?'

It is believed that Kuwait Finance House was keen on flipping the units as they were marketed in Dubai recently, but the sale campaign was unsuccessful.

Another industry source, who declined to be named, said: 'The pullout may be due to the terms of the deal. The buyer could have realised that it had bought at a higher-than-expected price, had problems flipping the units and wanted to cut its losses. 'It could also reflect the current market and the possibility that the property market may stagnate in the next two to three years.'

The stale market appeared to have led GuocoLand to put off the launch of Goodwood Residence, scheduled initially for the first quarter. Many developers are following suit, delaying launches until keen interest returns to the sector, which is in the doldrums with buyers and sellers staying on the sidelines.

A GuocoLand spokesman said: 'We would be tapping selected overseas markets when we decide to launch Goodwood Residence at a later date.'

It added in its statement that the expiry of the options will not have any material financial effect on its net tangible assets per share or earnings per share for the financial year ending June 30.

Conclusion:

Retail investors sometimes assume that the big funds' actions and decisions are always right. That assumption is not true.

Joyas Int. Holdings IPO.

2008-03-10T11:28:00.000+08:00

Closing date of application: 11 March 2008
Commencement of trading: 13 March 2008

Established in the 1991, Joyas Int. Holdings is principally engaged in the design, manufacture, packaging, and sale of metal gift products, jewellery products, as well as packaging and other items. Their principal place of business is Hong Kong while their production facilities are in Shenzhen, PRC.

Their customers include International established brands, designer labels, and major corporations (for corporate gifts) in Europe, U.S., and Asia. They also sell their own metal gift products under their own propriety brand name "Argent" through their franchisees' retail outlets in PRC and Hong Kong.

Key Growth Plans:

They intend to expand and upgrade their production facilities to increase their production capacity to one million pieces a month.
They intend to enter into Australian, Eastern European, and other markets, having already registered their "Argent" brand in Australia.

Key Risk Factors:

They do not have long term contracts with their customers.
They are adversely affected by the rise in metal (key raw material) prices.

Financial figures

Intended IPO price: $0.29
No. of shares available for public offer: 1m
No. of shares available for placement offer: 27.8m
Total post invitation share capital: Approx. 107.5m

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

FY2006
Revenue: $27.8m
Profit: $4.0m
NAV: 0.1303
EPS: 0.03675
EPS % Incr: 5%
PE ratio: 7.9x
Price: 0.29

2QFY2007
Revenue: $30.7m
Profit: $3.8m
NAV: 0.1452 (incl. IPO proceeds)
EPS: 0.0355
EPS Incr: -5% (Est.)
PE Ratio: 8.1x
Price 0.29

Dividend policy: No fixed policy.

Conclusion:

Most PRC small cap manufacturing stocks that use metals as raw materials tend to trade at 6X PE, hence this IPO is rather overpriced.

What is worse is that its growth has been quite flat over the past three years. Naturally, I do not think this one is worth considering.

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.

4Q Earnings Review by CIMB-GK.

2008-03-07T09:46:00.000+08:00

This Singapore Strategy Report was compiled by analyst Kenneth Ng for CIMB-GK on 5th March 2008:

4Q07 earnings review.

Expectations of a recession have only started to be built into estimates, post 4Q-results. There were generally more companies that disappointed this season. The ratio of companies that beat expectations against those that missed dropped from 1.08x (in 3Q) to 0.48x (in 4Q).

Our STI EPS upgrade/downgrade momentum has clearly swung towards downgrades. 4Q was the first quarter when we had overall EPS cuts. We trimmed CY08 EPS by 1.9%, with the EPS downgrades fairly spread out across sectors. We expect 2008 EPS growth of 13%.

Big-cap earnings resilient; China stocks sprung numerous disappointments.

The results season differentiated the men from the boys. In the long list of companies that disappointed, S-chips featured prominently. With many of the S-chips showing that they could not cope well with inflationary pressure in recent quarters, there is cause for short-term concern on S-chips.

Across the Singapore stock universe, we are more comfortable with big-cap stocks at the moment.

We cut our end-2008 STI target from 4,100 to 3,480; expect 2H08 to be better when property sentiment stabilises.

At 2,919, the STI is now trading at 12.6x 12-month forward rolling P/E, cheap by historical standards. Although valuations have fallen to historical trough levels, we believe the STI could stay de-rated at least through 2Q08, until the extent of US woes on Singapore job growth becomes clearer.

Our view is that Singapore has remade itself sufficiently to ensure that asset prices do not peak out at 2008. However, with lots of supply looming, investors need to see more clarity on demand before confidence can return. Our STI target is based on a top-down approach, setting it based on a bottom-up process that implies 13.5x CY09 P/E. Recession-era P/E ranges from 12x to 15x while boom-time P/E ranges from 15x to 18x.

Maintain Neutral.

The STI has less commodity-driven earnings than its ASEAN-4 peers and we do not expect it to outperform its peers in the short term. For our top picks, we are inclined towards:

deep-value stocks;
high yields;
3) commodity offerings;
4) safer proxies for Singapore’s construction boom.

We see deep value picks in DBS, Keppel Land, Swiber and United Engineers. We consider DBS, Mapletree Logistics Trust, SembMarine, StarHub and United Engineers as stocks that will provide yield support to the portfolio.

We replace our plantation pick, Golden Agri, with Indofood Agri. We remain bullish on the Singapore construction sector but prefer exposure through crane leasers that continue to deliver (Tat Hong) or material suppliers (Hong Leong Asia).

4Q07 review: The start of EPS downgrades

4Q07 earnings review.

Expectations of a recession have only started to be built into estimates, post 4Q-results. There were generally more companies that disappointed this season. The ratio of companies that beat expectations against those that missed dropped from 1.08x (in 3Q) to 0.48x (in 4Q).

Our EPS upgrade/downgrade momentum has clearly swung towards downgrades. 4Q was the first quarter when we had overall EPS cuts. We trimmed CY08 EPS by 1.9%, with the EPS downgrades fairly spread out across sectors. We now expect 13% growth for the market. We are currently still 2% above consensus.

At 2,919, the STI is now trading at 12.6x 12-month forward rolling P/E, cheap by historical standards. The concern is that the round of EPS downgrades has only just begun.

Banking & finance.

4Q07 results for DBS and UOB came in below expectations mainly because of unexpected investment-related write-downs.

OCBC reached our numbers on strong loan growth, rising margins and buoyant wealth management / insurance income. At the key operating cash earnings level, all three actually met expectations. Our EPS downgrades were mostly driven by more cautious assumptions for fee income.

Manufacturing.

Chartered Semiconductor was once again the key culprit driving EPS cuts. Although sales were in line, margins contracted rapidly while financing costs and investment income fell short.

Venture was within expectations but we still trimmed estimates to factor in lower growth expectations in this uncertain environment.

The smaller tech stocks generally missed expectations because of cost pressures.

SPH was within expectations.

Offshore & Marine.

The sector disappointed for the first time in a long while. Keppel Corp had learning pains at its Brazil yard as losses from the Petrobas P-52 project dragged down its O&M operations. Keppel drove the bulk of our EPS downgrades for the sector.

SembMarine resolved its forex issue but results fell short because of tax provisions. We prefer SembMarine to KepCorp now that SembMarine’s order-book guidance is more optimistic.

SCI faces some drag from a slower utilities division.

Property.

City Developments was ahead of expectations on stronger-than-expected recognition of residential profits.

CapitaLand had large revaluation gains.

Smaller developers that saw their earnings pushed back to 2008 included Bukit Sembawang (deferred launches) and United Engineers (recognition).

Sentiment is currently not with the sector as residential sales volume are slow and commercial capital values retreat but valuations of the big caps are now at 13-39% discounts to RNAV.
Telecommunications.

Mostly in line, with StarHub being the slight outperformer in the season. StarHub did better in holding on to margins, as revenue grew through ARPU.

SingTel continued to grab mobile market share. EPS cuts for the sector came mostly from lower margins, on signs that competition has started to nibble margins.

Transport & logistics.

SIA and NOL had good quarters. The key positive for SIA was passenger yields.

NOL benefited from better liner and logistics performances.

Sector EPS downgrades were minor, factoring in higher fuel price assumptions.

Please see the full and detail report here.

Property Market - Up or Down?

2008-03-06T10:28:00.000+08:00

The Singapore Property Market has gone quiet of late - thanks to the spillover effect from the stock market - with current property transactions having fallen drastically as compared to last year.

Naturally, most prospective buyers are hoping for property prices to fall so that their dream home purchase would be more affordable.

However, my feeling is that these people are going to be disappointed if they are expecting prices to fall significantly below current prices in the near term of the next year or two.

My opinion is that current demand is subdued only because of the twin illusions of hope and fear (that prices will fall further), when in truth, current prices are actually fundamentally well supported.

Without mentioning the Integrated Resorts, F1, or even the Youth Olympics, these are the factors that support my opinion:

Mass market demand is still strong, albeit for now.

There were 3,500 applicants for the recent DBSS public housing project City View @ Boon Keng, meaning that it was 4x oversubscribed despite initial reservations that it was overpriced.

Property developers unprepared to lower their launch prices.

Mr. Kwek Leng Joo, Managing Director of City Development, remarked on 28 February 2008:

Even if the market recovery should take place a little bit later than expected, I think we'll be OK.

In short, the group can afford to delay launches of new residential projects if necessary to ride out the current weak sentiment.

Clearly, Mr. Kwek's opinion is that the current weak sentiment will be short-lived. That is not to say that he cannot be wrong.

Rental Yield remains strong at 4% to 5%.

As Singapore's population continues to grow, many residential landlords continue to enjoy high rental yields.

At the same time, housing loan interest rates have fallen to below 2.5% currently.

This creates a situation whereby the mortgage repayment would probably be lower than the potential rental, which will ultimately lead to an increase in demand for properties for existing and prospective landlords.

Construction and land costs are still high.

This means that new property launches will definitely have a high minimum price in order for the developers to earn a minimum profit.

On the other hand:

There is of course the possibility that property prices will start to fall.

That will happen if some of the smaller property developers or retail speculators who are over leveraged, start to lose their nerve and decide to sell their properties are whatever offer price.

However, once that starts to happen, because I feel that current demand has not disappeared as much as that it is just apprehensive, it is more likely than not that buyers will then start to slowly trickle back into the market.

This will then provide the price support once again.

Li Heng Chemical Fibre IPO.

2008-03-05T10:18:00.000+08:00

Closing date of application: 10 March 2008
Commencement of trading: 12 March 2008

Established in the 2003, Li Heng Chemical Fibre is principally engaged in the manufacture and sale of high-end nylon yarn products under their brand names "Liyuan" and "Liheng" in the PRC.

Their two production facilities in Changle City, Fujian Province, PRC, are strategically located amongst clusters of textile and garment manufacturing industries, which are their main customers, and related supporting service industries.

Their products are:

Their revenue and profit have been registering 91.2% and 93.3% growth respectively over the past 3 years.

Key Growth Plans:

They are embarking on expansion plans to increase their production capacity at their current production facilities from 144,000 metric tonnes currently to 257,000 metric tonnes by 3QFY2009.
They intend to construct a polyamide chip plant so as to reduce their reliance on external suppliers.

Key Risk Factors:

Polyamide chips are their main raw material, accounting for 92.8% of their total production costs - hence they are reliant on their suppliers until their plant is constructed.
Their Executive Directors will continue to hold 51% of its total share capital after the IPO, hence their actions will have a direct effect on the share price.

Financial figures

Intended IPO price: $0.80
No. of shares available for public offer: 10m
No. of shares available for placement offer: 390m
Total post invitation share capital: 1,700m

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

FY2006
Revenue: $332.4m
Profit: $93.6m
NAV: 0.0792
EPS: 0.055
EPS % Incr: 125%
PE ratio: 14.5x
Price: 0.80

2QFY2007
Revenue: $565.9m
Profit: $185.6m
NAV: 0.2156 (incl. IPO proceeds)
EPS: 0.109
EPS Incr: 98% (Est.)
PE Ratio: 7.3x
Price 0.80

Dividend policy: No fixed policy.

Conclusion:

Based on its numbers, Li Heng is comparable to the leading SGX textile stocks such as Shina Sky, Fibrechem, and Sinotech Fibre, instead of the smaller companies such as C&G and Foreland.

As such, it deserves to trade at a higher 12-15x PE. However, because it has a relatively short operating history, having only been established in 2003:

Li Heng should trade at a Fair Value of $1.30 or 12x PE only.

Probability of getting allotted for the IPO - FAIR

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.

Roxy-Pacific Holdings IPO.

2008-03-04T09:10:00.000+08:00

Closing date of application: 10 March 2008
Commencement of trading: 12 March 2008

Established in the 1967, Roxy-Pacific holdings is a Singapore-based specialty property and hospitality group.

Property Development:

The development and sale of residential properties typically comprising small to medium size residential developments such as apartments and condominiums targeted at middle to upper middle income segments.
For competitive positioning, our Group places an emphasis on unique designs.
Between 2004 and 2007, our Group developed nine projects and sold 279 units of small to medium sized developments, mainly in the eastern region of Singapore, including St. Patrick's Loft and Axis@Siglap.

Hotel Ownership and Property Investment:

They own the Grand Mercure Roxy Hotel and 51 retail shops at The Roxy Square Shopping Centre.
The Grand Mercure Roxy Hotel (“Grand Mercure”) is a major asset and is managed by international hotel operator, Accor Group.

Key Competitive Strengths:

They have been developing properties since 1967, and having experienced several cycles in the property market, have an established track record and reputation.
They are one of the more active developers in the Eastern area of Singapore, with an in-depth familiarity and a land bank of 30,422 sqm for 8 prospective developments there.

Key Risk Factor:

The risk of the Singapore Property Market bull run coming to a halt in the near term.

Financial figures

Intended IPO price: $0.30
No. of shares available for public offer: 7m
No. of shares available for placement offer: 126m
Total post invitation share capital: 636.56m

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

FY2006
Revenue: $48.8m
Profit: $5.2m
NAV: 0.0726
EPS: 0.0081
EPS % Incr: 138%
PE ratio: 37x
Price: 0.30

2QFY2007
Revenue: $84.9m
Profit: $15.4m
NAV: 0.1149 (incl. IPO proceeds)
EPS: 0.0242
EPS Incr: 196% (Est.)
PE Ratio: 12.4x
Price 0.30

Dividend policy: No fixed policy.

Conclusion:

Based on its numbers, Roxy-Pacific is comparable smaller property developers which only focus on the Singapore property market such as Eastern Holdings, Sing Holdings, which typically trade at 10-12x PE.

As such, Roxy-Pacific should trade at a Fair Value of $0.30 (IPO price) or 12x PE only.

And with the market downturn pushing stock prices down to low valuations, it actually makes more sense to buy already listed property stocks instead, since they offer lower valuations, longer listed history, and include dividend payouts.

Probability of getting allotted for the IPO - FAIR

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.

Set and Adjust your Investment Aim.

2008-03-03T22:00:00.000+08:00

-Advertorial-

Greed is something that investors often feel on their own experience. Greed has no top, no point of satisfaction. But that's not the true aim of investment. It's clear for everyone that the investment aim is profit. Real and tough competition starts when there's a profit from risky hot penny stocks, micro cap stocks or small cap stocks.

However, if that same investor had been asked what type of gains he'd like to see from the stock just before an actual investment was done, he'd almost certainly come up with a number far less than 1000%.

If you've decided on buying a stock, you better set realistic and specific targets of when you will sell it. Trading small cap stocks is a very careful process. Whether it is after an increase of 50% or 200%, you should know them and stick to them.

As SmartMoney.com reports, since most smallish companies don't have the global revenue of General Electric, they're supposed to suffer when the U.S. economy sputters. There're more factors that may keep you hesitating as an investor. Still, the risk can and will be the path to your success, if you act smart.

If you trade small cap stocks, it is not so dangerous to set a target sell point at 40 or 50%, then increase this if the stock starts rocketing toward 100% gains. But be smart enough not to use the stock's move as an excuse to throw your original targets away and hold out for 200% and 300% profits.

In other words, the bottom line must always be to focus on achieving gains that you are happy with, and that are in line with your original expectations for the shares. It's always better to act on expectations, not hopes.

Market Update.

2008-03-03T13:30:00.002+08:00

This daily review was compiled by Lim & Tan Securities on 29 February 08:

Business Times today carried a story on banks tightening financing for property investment deals, attributed to 2 factors:

Turmoil in the global financial markets.
Funding of mega projects like the two integrated resorts currently under development at a combined cost of >S$10 bln.

The article also talked of banks extending smaller loans for income producing assets, relative to
valuation, 60-65% vs 75% a year ago. Covenants are also becoming tighter, as are interest margins, which are wider by 50-100 basis points.

Comments:

1. The above has important implications for various segments of the property / construction sector, as well as the banking sector.

2. The anticipated pick-up in M&A activity in the REIT sector may not materialize anytime soon. The sector has drawn speculative interests in recent times, specifically Allco Reit and Macquarie Prime. Thanks to revaluations to take into account the buoyancy of 2007, their book NTAs have also been jacked up significantly, making it even more difficult for potential buyers to pay up, especially now that financing is getting difficult.

3. This also helps explain why Macquarie Prime is meeting resistance close to the 2006 high of $1.28, despite a higher revalued NTA of $1.61 per unit vs $1.16 at end ‘06. (We will therefore stick to those with not just good management, but also strong parentage, like CMT, and the lowly geared ones with financing all lined up in case good buying opportunities crop up, like Parkway Life.)

4. En-bloc deals will become even scarcer, as sellers’ asking prices remain high relative to what prospective buyers are today prepared to pay.

5. Local banks, on the other hand, are expected to benefit from higher margins, also as competition from foreign banks lessens, in the aftermath of the credit crunch.

February 08 Portfolio.

2008-03-02T10:17:00.000+08:00

Hi everyone..

My deepest apologies for being gone for so long. My affairs took longer to settle than expected, but here I am back just in time to deliver -

My current stocks holdings as of 29 February 08.

Pan United
Sarin
Yongnam
Taisin
Sinotech Fibre
Eastern
Lifebrandz
Sihuan
China XLX
IFS
FujianZY
Sing Inv
UIS
China Sports
Fibrechem
HLN Tech
China Pplus
ARA
Yongnam W121214

The February 08 portfolio value of $418,200 is a increase of $30,077 (or 7.8%) over the January 08 portfolio value of $388,123. I did not make any purchases or sales this month.

These are the key Portfolio Changes.

I did not receive any dividends for January 08.

Conclusion:

The recent company results were promising in general, with the majority of singapore and chinese companies enjoying continued growth and dividend payouts, except for some chinese companies which were affected by increasing pork prices and the recent snowstorms.

All in all, the fundamentals continue to remain sound for Singapore and Asia, although the stock market continues to be affected by the U.S. situation. As such, the general consensus is that we will probably experience a quiet 1HFY08.

This will allow me the time to properly digest all the company reports, and to consider making some switches and additions to my portfolio.

For now, I am considering:

A direct switch from Lifebrandz to FrivenCo at 4.5cts because it is a similar retail penny stock but with better potential.
Reducing my holdings in Yongnam because its results were slightly below my expectations, mainly because it did not announce any dividend payout despite exceptional profit growth.

S-Shares: Scouring for Market Beaters.

2008-02-24T12:57:00.002+08:00

This research report was compiled on 22 February by DMG & Partners:

China stocks have taken a huge beating since its peak in October 2007, with many stocks losing over half its value. There was a flight to quality as the global economy started to wobble. With S-shares falling below 10x P/E, investors have started to notice this group of typically high growth stocks, which has rallied over 10% within this month.

In this paper, we have identified a few fundamentally strong stocks which are trading at attractive valuations – low P/E, high ROE and steep discount to peers.

A powerful 2007.

S-shares in general have tended to be more volatile as compared to the broader market. Using the PrimePartners China Index (PPC Index) which tracks the movement of 25 SGX-listed China stocks as a benchmark, it is apparent that these China counters are high beta plays relative to the Straits Times Index (STI).

During the first 10 months of 2007 when the STI rallied by almost 30% to 3,906, the PPC Index was far more impressive in registering a 70% jump to 318.46 for the same period.

What goes up…

The sell-down that ensued, however, hit these China stocks badly as well. After reaching their peak in Oct 07, the PPC Index changed direction and dived 44% to hit 177 in end-Jan 08.

In comparison, the STI had somewhat managed to redeem itself by chalking up “only” a 23.7% fall. Both indices, however, had given up whatever gains they had made for the whole of 2007.

The newly set up FSTE ST China Index (FSTC Index) during Jan 08 which comprises of 50 S-shares also had a bad debut as it plunged 24.5% for the month. Quite a few stocks were trading at 4-5x prospective P/E.

Making a comeback.

Nevertheless, the recent recovery in these S-shares has been nothing short of spectacular. While the STI inched up 4% for the month of February so far, the FSTC Index shot up 10.2% while the PPC Index appreciated 11.3%.

Given the renewed interest in the China-based companies, we will be highlighting some of the companies worth looking at.

Please see the full report here for DMG's stock recommendations.

Rising inflation across Asia mauls S'pore Reits.

2008-02-23T12:53:00.002+08:00

Published in today's Straits Times here:

Trusts may still get big lift from higher rents, higher hotel rates, say analysts
By Goh Eng Yeow, Markets Correspondent

Soaring inflation across Asia has sucked the life out of real estate investment trusts (Reits), whose high-yielding dividends have made them wildly popular among investors in recent years.

Reits, in general, have fallen about 32.5 per cent in value from their peaks last year, but those with assets in inflation-prone economies, such as China, have fared even worse, according to financial portal Shareinvestor.com.

CapitaRetail China Trust, for instance, has fallen 52 per cent in four months, as inflation in China galloped to 7.1 per cent - its highest level in over a decade.

Reits are financial instruments investing in real estate like shopping malls, office buildings and hotels.

Investors can buy units, which are much like shares, offering attractive dividend yields of 6 per cent to 8 per cent derived from rents.

This is far higher than the 1.5 per cent interest on one-year fixed deposits at a bank.

Historically, a low interest rate environment has been good for Reits - if accompanied by low inflation.

Take CapitaMall Trust, the first Reit listed in Singapore. Its assets include the Tampines Mall and Junction 8 shopping centres.

It received an overwhelming response from investors when it listed six years ago, rising from just 96 cents in July 2002 to a record high of $4.32 in July last year. Inflation played its part by staying at a benign 1 per cent.

As the consumer price index, however, surged from 1.3 per cent in June to 4.4 per cent in December, CapitaMall slid 20 per cent over the period.

The inflation pressure is unlikely to abate in the near future.

Last week, the Government revised its estimates upwards to between 4.5 per cent and 5.5 per cent for the year, from an earlier forecast of 3.5 per cent to 4.5 per cent.

So, while fears of a United States recession are causing much grief among investors as they watch the value of their growth stocks evaporate, inflation is becoming a big threat to those with high dividend-yield plays like Reits.

One trader explained: 'A Reit may offer 6 per cent in dividend yield. But if inflation is running at 4.5 per cent, the actual yield an investor is getting is only 1.5 per cent.'

To compensate for the lower return, an investor will demand a lower price for the Reit, which escalates the pressure on its share price.

Still, analysts have not stopped promoting Reits, despite their lacklustre performance, to clients.

Morgan Stanley made a case last month with a report arguing that investors had wrongly penalised Reits with concerns over acquisition growth and credit-tightening conditions.

Investors have ignored the 'organic' boost Reits may get from higher rents as leases expire and hotel rates are jacked up during peak periods.

Citigroup noted on Tuesday that while there may not be a clear growth strategy for Reits this year, some are trading at hefty discounts to their net asset values, despite offering single-digit or even double-digit dividend yields.

'This makes Reits potential takeover targets, if they have loose shareholding structures,' it added.

Its top picks include Ascendas Reit, Suntec Reit and Parkway Life Reit.

A Week-long Hiatus.

2008-02-20T11:28:00.000+08:00

Dear readers,

I am sorry to inform you that I will have to take about a week off from this blog to attend to some personal business.

I should be able to return to blogging sometime on Tuesday or Wednesday next week. I will try my best to provide the occasional market update until then, but no promises.

Samko Timber IPO.

2008-02-19T13:08:00.000+08:00

Closing date of application: 21 February 2008
Commencement of trading: 25 February 2008

Established in the 1978, Samko Timber is a leading Indonesian timber processing company and one of the top 5 tropical hardwood plywood producers globally.

They have approx. 450,000 ha of natural forest concessions and approx. 125,000 ha of industrial forest plantations.

Their production facilities include:

7 timber processing plants
1 fibreboard production plant
10 satellite veneer plants
1 power plant
2 chemical glue facilities

Their products include:

Primary and secondary processed timber products
Harvested logs
Chemical glues of several types and grades

In 2006, they had an estimated domestic plywood market share of approx. 32%.

Their products are sold to customers all over the world, and export sales accounted for 32% of revenue for FY2007 YTD.

Key Risk Factors:

Indonesia suffers from rather frequent natural disasters, and their business will be adversely affected by such occurrences.
Thier export business could be adversely affected if environmental groups are successful in lobbying government bodies to restrict imports of timber products not manufactured exclusively from renewable sources.

Financial figures

Intended IPO price: $0.55
No. of shares available for public offer: 3m
No. of shares available for placement offer: 180m
Total post invitation share capital: Approx. 684.6m

Note: Unaudited 8MFY2008 figures were available in the prospectus.

FY2007
Revenue: $250.8m
Profit: $8.5m
NAV: N.A.
EPS: 0.0124
EPS % Incr: -50%
PE ratio: 44.3x
Price: 0.55

8MFY2008
Revenue: $301.8m
Profit: $9.5m
NAV: 0.4123 (incl. IPO proceeds)
EPS: 0.0139
EPS Incr: 12% (Est.)
PE Ratio: 39.6x
Price 0.55

Dividend policy: No fixed policy.

Conclusion:

Some investors have an aversion to Indonesian stocks because of the political and natural instability suffered by the country.

But in the instance of Samko Timber, there are other issues at hand.

Firstly, I do not know why its PE Ratio is so high. Is it because the company feels that its stock should be valued based on its NAV of $0.41, thus setting its IPO price at a 34% premium to NAV?

Even so, the NAV for such biological asset companies tend to be overestimated because they tend to compute their trees as assets, whereas my opinion is that they should only be considered assets AFTER they are sold.

Secondly, Samko has a profit margin of only 3.1% - i.e. for every $100 of revenue they only earn $3.10 of profit.

Considering those factors, I would prefer to avoid this IPO.

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.

2008-02-18T15:17:00.002+08:00

This weekly commentary was compiled by DBS Vickers this morning:

STI range bound from 2650 to 3300 - Sell into strength near 3280

We continue to believe that the 2650 level represents a ‘worst case’ scenario for the FTSE ST Index while rebound upside is capped at 3300. Our base case scenario is for the US economy to slow down to as low as 1% growth during 1H before picking up to 2.5% in 2H.

A range bound pattern between 2650 to 3300 should develop in coming month(s) until data shows the effect of the 125bps by the FED and the US stimulus package filtering down into the economy.

Investors should:

1. Position into recovery plays (e.g. Banks, properties, construction, S-chips) when the STI falls closer to 2650. As the index is currently at 3088 and closer to the upper resistance of 3300 compared to the lower support at 2650, a trading stance is preferred over ‘buy and hold’ for long positions.

2. Take profit as the STI approaches 3300 and switch to defensive sectors (e.g. Telecom, REITS) on the way down.

Although January’s sell-down to 2746 has largely factored in a 1H US recession scenario in terms of magnitude, the time factor has not panned out fully. Rising inflation and continued concerns about the US economy should limit STI’s short-term rebound target at 3300.

Singapore government has revised 2008 GDP outlook from 4.5%-6.5% down to 4%-6%. Our technical worst-case scenario of 2650 is nearly identical to 2683 derived using regression modeling.

Taking STI’s recent low of 2746 and a rebound potential not exceeding 3300, the technical rebound that started from Jan 22nd is about 2/3 done, with less than 6.9% upside in the most ideal or optimistic scenario.

While the STI currently still offers a modest upside potential with immediate support at 2963, we prefer a trading stance (as compared to buy and hold) for longs and will choose to sell-into-strength should the index heads towards 3280.

There will be opportunity to accumulate near 2650 as the sideways consolidation pans out.

Anticipated SSEC recovery should lift S-chips

Among the small caps, we eye the China plays. As the snowstorm subsides, the recovery work is currently under progress. After touching a low of 4195 in early February, we believe that the Shanghai Stock Exchange Composite (SSEC), currently at 4497, has the potential to rebound further to 4900 (38.2% upward retracement), maximum 5150 (50% upward retracement).

Trading picks to ride on the anticipated SSEC recovery are China Hongxing, China Sports, Celestial NutriFoods, China Fishery and Ferrochina.

Building, materials stocks benefit from construction sector growth

Construction stocks could also come into focus following a strong 4Q07 sector growth of 24%, up from 20% in 3Q07. DBS Research believes that the biggest beneficiaries of the increased infrastructure spending are the building material suppliers: HL Asia (TP: $4.30, BUY) and Pan United Corp (TP: $1.16, BUY). Technically, HL Asia (currently $2.98) should test $3.41.

Budget 2008 Highlights.

2008-02-18T15:10:00.002+08:00

Compiled by DBS Vickers this morning:

A pro-individual budget

Sharing the surplus.

Budget 2008 is a well balanced and measured budget which addresses the immediate concerns of slower growth and higher inflation while putting strategic emphasis on enhancing the competitiveness of the economy.

Backed by a strong fiscal surplus, the key highlights in this budget are:

A) Distribution of growth dividends amounting to S$150-$600 each for all Singaporeans equating to S$865m, and

B) no cut in personal income tax but there will be a one-off tax rebate of 20% up to a maximum of S$2000 which will cost the government S$380m.

No corporate tax cut.

As expected, the government did not propose any corporate tax cut this year, which remains at 18%. For corporates, the focus of the budget is about moving towards a knowledge based economy.

Measures such as the tax deduction for R&D activities done in Singapore and R&D incentive for start-up enterprises will make Singapore a more attractive location for foreign companies to do R&D here.

Neutral impact on the stock market.

Except for the abolishment of the estate duty tax, Singapore’s 2008 budget offered little surprises. The removal of the estate duty tax will provide a boost for the wealth management industry and will lend support to high end property prices, benefiting Bank stocks and high-end property plays.

UOB (TP: $20.80, BUY) is DBS Research’s top pick among the banks and our preferred high-end property plays are SC Global (TP: $3.19, BUY) and Wing Tai (TP: $3.14, BUY).

Other beneficiaries for the equity market are few, as the pro-individual budget may not spur higher domestic spending, given the inflationary environment.

We remain Neutral on the stock market, which is trading at P/E of 13.1x(FY08F). While this is lower than the average of 15x for the past seven years, we remain cautious given that ongoing downgrades in GDP and EPS growth for Singapore equities have yet to run its full course.

Rising inflation and continued concerns about the US economy should limit STI’s short-term rebound target at 3300. The Singapore government has revised 2008 GDP growth estimates from 4.5%-6.5% down to 4%-6%.

Our technical worst-case scenario of 2650 is nearly identical to 2683 derived using regression modeling.

A down market has its upsides for young people.

2008-02-15T00:05:00.000+08:00

See the full article by Anna Kamenetz at Yahoo Finance here:

Sometimes what seems like bad news can be turned into good.

All the recent talk about the faltering economy certainly seems to fall into the bad-news category. Housing prices had the biggest decline ever, the U.S. and international stock markets had some very dark days, 17,000 U.S. jobs unexpectedly "disappeared," and many experts feel that we're heading into a recession.

But there's reason for young people to look on the bright side.

In fact, beginning your financial life during an economic correction or downturn can be a preferable thing in many ways.

Here are a few of the positives:

1.) We won't expect to get rich quick.

Economic dramas shape an entire generation's beliefs about the nature of the economy and the risks involved. Just ask your grandmother, who experienced the Depression and is probably still saving rubber bands.

If you're in your 20s or early 30s, your living memory consists of a nearly unprecedented runup in stock market values -- the tech bubble of the 1990s. Bubbles by definition get people excited about making lots of money, fast.

Thanks to the Internet, millions of people were able for the first time to pick, follow, and trade stocks for themselves. Unfortunately, the common outcome could be summed up by the title of film critic David Denby's book: "American Sucker."

An affluent, well-connected New Yorker with ties to top stock analysts, Denby lost over one million dollars gambling on tech stocks.

Investors like Denby, who try to get rich quick by picking individual stocks, exemplify what is known in the investment world as "dumb money."

It's nearly impossible for you and me to beat the market consistently. And commissions, as well as trading and research costs, tend to eat up your returns if you try. It's a great lesson to learn by example -- not by experience.

You can also learn some lessons from the downturn of the housing market. In the past decade, it became much more common for first-time homebuyers to borrow big and hope to flip within a few years for huge appreciation -- 50 percent and up.

But if you buy a house these days, you'd better love that city and that neighborhood, not buy more than you can afford, and be prepared to hold onto it for a long, long time.

2.) We'll get real about consumption.

Think about this: Consumer spending increased every year for the past 16 years. That's the longest buying binge Americans have ever gone on.

This spending increase was largely fueled by the runup in house prices, which allowed home-owning Americans to borrow against the cost of their homes. Consumer credit also expanded markedly over the past decade and a half.

For those of us in our 20s, this may mean that our parents borrowed against their home to send us to college or to pay for vacations or other luxuries while we were growing up. It also means that credit cards have always been there to fill the gap when we wanted a pair of shoes or a restaurant meal. Young people have been spending 16 percent more than they earn in recent years -- not a sustainable situation.

Well, now the credit market is tightening. As long as house prices are falling, not rising, home-equity loans will be harder to get. And in the general atmosphere of a recession, out-of-control spending tends to slow down as everybody tightens their belts.

For example, this past holiday shopping season was the weakest in five years.

But did it really hurt your celebration with friends and family if the presents were a little less lavish?

3.) We'll buy on the cheap.

The current scary economic environment should not cause you to stuff your money under a mattress. The stock market may not be the best way to make a fast buck, but it is still the best long-term investment for your money; market returns average 7 percent to 10 percent over the long term (although your mileage may vary based on investment costs.)

And the "long term" means decades, not a few years.

Even with the recession in 2001-02, stock prices never really corrected to historical norms, which means they may still have a ways to fall. According to David Leonhardt of "The New York Times," the stock market is currently "overvalued" by 10 percent, relative to historical norms.

And in a recession, the market sometimes plunges more than it should because of the mood of the investors, rather than because of underlying economic indicators.

That's bad news for people who are retiring now or in the near future.

Your grandfather might have had a million dollars if he cashed out last year, and only $800,000 today.

But it's good news for the average 25-year-old.

You have most of your stock-buying ahead of you. You'll ideally be putting 10 percent to 15 percent of your salary each year into a retirement savings account that's invested in stocks. If stock prices go from "overvalued" to "undervalued", you're essentially buying in at a discount -- and you have plenty of time to see your investments appreciate.

As for the housing market, some are predicting prices will sink 25 percent to 30 percent in the next few years. At best, prices could remain flat while they catch up with rents.

Before the bubble, the monthly costs to rent a home were roughly comparable with the monthly costs to carry a mortgage. These days, in New York City at least, the same apartment that rents for $2,500 may sell for $650,000 -- $3,800 a month after a 10 percent down payment.

So my advice (which I'm following myself) to would-be homebuyers is to watch and wait and keep your eye out for a bargain. Make a lowball offer and, again, you'll leave plenty of room for appreciation.

The next few years are going to be a real economic education for us all.

Market Update.

2008-02-14T14:28:00.002+08:00

Compiled by DBS Vickers this morning:

A surprisingly strong reading on retail sales and upbeat earnings from Applied Materials and Coca-cola boosted US stocks overnight. January retail sales rose 0.3%, beating the consensus forecasts of a 0.3% drop.

Coupled with the report of corporate earnings that topped expectation, worries that a weakening consumer could send the already struggling economy into a recession were soothed. Both Dow Jones and S&P gained 1.4%.

As opposed to strong retail readings in US, Singapore's 4Q07 GDP was weaker than expected, fell 4.8% in the 4Q07 from 3Q07 compared to an initial estimate for a 3.2% decline. For 2007, the economy expanded 7.7% after expanding by 8.2% in 2006.

Singapore's economy is now forecast to grow between 4%-6% in 2008 compared with the previous growth forecast of between 4.5% and 6.5%.

Yongmao Holdings IPO.

2008-02-13T15:29:00.000+08:00

Closing date of application: 19 February 2008
Commencement of trading: 21 February 2008

Established in the 1992, Yongmao Holdings designs and manufactures a wide range of towercranes and towercrane components and accessories sold under its brands including Yongmao and Suncrane in PRC.

Yongmao is also a subsidiary of SGX-listed crane supplier Tat Hong, which will continue to own 74.4% of its total shares after its listing.

Their towercranes are sold to customers all around the world, and are used mainly in construction sites, infrastructure projects, and in the shipbuilding industry.

Revenue breakdown by market:

PRC - 22%
US and Europe - 29.9%
Asia (excluding PRC) and Middle East - 48.1%

Key Competitive Strengths:

High barriers to entry - new entrants to this industry need a high level of expertise and experience, high capital investment, and a strong track record.
Other than sales, they also offer technical advice, after-sales maintenance services, and training for their customers.

Key Growth Plans:

They are constructing a new manufacturing facility to be completed by end 2008, which will then double its production capacity.
They will introduce a new product - their 5th series of towercrane known as the crawler crane - by end 2008.

Key Risk Factors:

Their business is cyclical and typically dependent on the fluctuations of the construction industry.
They are susceptible to the price fluctuations of steel and other components which are key raw materials.

Financial figures

Intended IPO price: $0.35
No. of shares available for public offer: 3.8m
No. of shares available for placement offer: 107.75m
Total post invitation share capital: Approx. 443.8m

Note: Unaudited 1QFY2008 figures were available in the prospectus.

FY2007
Revenue: $54.9m
Profit: $11.7m
NAV: 0.098
EPS: 0.0263
EPS % Incr: Exponential rise
PE ratio: 13.3x
Price: 0.35

1QFY2008
Revenue: $125m
Profit: $30.5m
NAV: 0.153 (incl. IPO proceeds)
EPS: 0.0687
EPS Incr: 160% (Est.)
PE Ratio: 5x
Price 0.35

Dividend policy: No fixed policy.

Conclusion:

Unlike the usual small cap china companies, Yongmao has the advantages of having a strong parent company in Tat Hong, and a business that has high barriers of entry.

Because of that, I believe that Yongmao should trade at the higher end of valuations for typical small cap stocks.

Yongmao should trade at a Fair Value of $0.68 or 10x PE only.

Probability of getting allotted for the IPO - 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 - Singapore Budget Preview.

2008-02-12T11:13:00.000+08:00

Compiled by DBS Vickers this morning:

The government will be announcing its fiscal result for FY2007 as well as the budget for FY2008 this coming Friday.

The key thrust in this year’s budget will not be significantly different from previous years. Amidst a backdrop of growing downside risks to growth and escalating inflation, the forthcoming budget will focus on sharing the fruits of growth, helping the lower income group cope with the escalating costs of living and enhancing the competitiveness of the economy so as to provide the platform for stronger growth in the years ahead.

Stronger than expected fiscal position

As of Sep07, or the end of the first fiscal half, the operating revenue of the government totaled SGD 21bn, about 64.8% of the budgeted amount. On the other hand, operating expenditure registered SGD 12.4bn, about 37.6% of the projected amount.

Given the slowing growth momentum, revenue collections in the second half of the fiscal year is expected to moderate. Nonetheless, thanks to the strong surge in revenue in the first half, total operating revenue (which also includes fees and charges) for FY07 could still surprise on the upside at about SGD 37.3bn, versus the projected SGD 32.4bn.

Meanwhile total expenditure appears on track to achieve the targeted SGD 33bn given the usual surge in second-half spending This will bring the primary balance to around SGD 4.33bn, against a projected SGD 640mn deficit.

Given the significant special transfers - comprising of the GST Offset Package, Medical Endowment Fund, Workfare Income Supplement Scheme etc – of about SGD 2.07bn and a projected Net Investment Income (NII) of SGD 2.02bn, a surplus of about SGD 4.28bn is expected.

Expect a generous budget

With the buoyant revenue collections and a better than expected surplus, we expect a generous budget for 2008, topped with significant transfers to offset the high costs of living and to lower business costs.

Possible cuts in personal income tax…

The key measures to be announced would probably be cuts in the personal income tax, the last cut in personal income tax was in 2005, from 22% to 20%. Top tier personal income tax rate, presently at 20% could be aligned more closely to the existing corporate tax rate of 18% in order to make Singapore a more attractive location for top foreign talents.

Personal income tax rates for other income-tax brackets could also be reduced accordingly to help alleviate the problem of escalating costs of living for the middle and lower income groups.

….Ang Pows for the lower income group to offset inflationary pressures

However, many Singaporeans, especially the lower income group pay no income tax. To alleviate burden of rising costs of living on this income group, the budget is expected to be “spiced” substantially with inflation offset measures. Items such as rebates on service and conservancy charges and rental, Workfare Income Supplement (WIS) scheme, utilities rebate, top up of the Comcare Fund, Public Transport Fund and many other social assistance schemes are likely to be featured.

Essentially, it may be similar to the GST Offset Package announced last year, but perhaps with a bigger amount, thanks to the better than expected fiscal position.

Corporate tax cut unlikely.

Following last year’s 2pct cut in corporate tax rate to 18%, we do not expect another cut in corporate income tax this year. However, the budget is expected to include measures which are targeted at enhancing the competitiveness of businesses.

We expect rebates to lower costs and grants/subsidies to upgrade the capability and competitiveness of businesses, especially the small and medium enterprises. With that in mind, further increase in the employers’ share of the CPF contribution is unlikely given that such a measure will increase the wage costs and depress margin at a time when growth is most likely to slow further.

Implications for the stock market

No cheer from the budget. Unlike 2007, we do not expect the budget to have any impact on the stockmarket, given the remote possibility of a corporate tax cut. The upcoming budget is likely to be pro-individual, given ongoing concerns of rising inflation and the fact that pro-business measures had been employed over the past few years.

Focus will be on the 4Q and final GDP growth rate for 2007, as well as its forecast for 2008, to be released this Thursday. With the deteriorating growth environment, there’s downside bias to our current growth forecasts of 6.5% for 2008, vs 7.5% for 2007 (preliminary estimate).

Budget has no impact on the stock market in previous years, except for 2007

We tracked the performance of the stock market for pre and post budget rallies. 2007 was the only year where there’s evidence of a pre-budget rally (+3.5%) and post budget rise (+1.5%) in the STI index, spurred by the cut in corporate tax rate and rise in employer CPF’s contribution which was positive for the property market.

Prior to 2007, the budget failed to inspire the market, while and in the bear years of 2001 to 2003, the stockmarket slided after the budget.

How hard work and thrift can build a good fortune (supermarket chain).

2008-02-11T15:00:00.001+08:00

There is a nice article in today's Straits Times Life! section where an interview was done with Mr. Lim Hock Chee, Boss of the Sheng Siong supermarket chain.

This humble and grounded man shares how he managed to build his business from a single provision shop to a chain of 21 supermarkets, and how he manages to maintain a prudent lifestyle despite being a millionaire many times over.

A former farm boy has ensured that the Sheng Siong supermarket chain is winning heartlanders with 'lower prices, shorter queues, fresh food, and excellent service'.

He is known as the towkay who drives a lorry.

For Mr Lim Hock Chee, managing director of supermarket chain Sheng Siong, thrift is more than just a word, it is a way of life.

He has built a chain of 21 outlets which embodies this philosophy too, by selling groceries for less.

This is the man who was once quoted as saying: "I don't believe in luxury. Why have two beds when I can sleep in only one? Or have two coffins when I can be buried only in one?"

But last year, he reluctantly traded in his humble set of wheels for a swanky Lexus 460 at the suggestion of the company's executive director, Mr Tan Ling San.

Mr Lim says in Mandarin: "He said I shouldn't be seen driving a lorry since I represent the company. If I do so, people might think the company is 'ill-treating' me."

Looking embarrassed, he adds: "I still feel very ill at ease. All the money came with the help of my employees, but I wear and drive better than them."

He is referring to $40 unbranded short-sleeved shirts, such as the one he is wearing at this interview.

"This is very good already," he says. "In the past, I wore $10 ones from CK in Chinatown." That's CK department store in People's Park Complex by the way, not Calvin Klein.

He adds: "My trousers used to cost no more than $20. As long as the size fits, I'll wear them. Now, my most expensive pear costs $85."

For the record, he wore a long-sleeved shirt and tie for the photo shoot.

With greying, crew-cut hair and a slight pot belly, the 46-year-old looks a good five years older.

He is married to Lee Moi Hong, also 46, who is a director in the company, and they have three sons and a daughter aged between 13 and 23.

His eldest son is studying finance at Reading University in the United Kingdom, and the rest are still schooling in Republic Polytechnic and Marsiling Secondary School.

The family used to live in a 1,500 sq ft space above his headquarters cum warehouse in Woodlands, because it was more convenient to keep watch on the goods stored there after dark. Now, security guards do that job.

The family has moved to a five-room HDB flat in Hougang, but the space is still kept as a "rest room" for him during the work day.

He has that salt-of-the-earth air of a self-made millionaire, and is someone who is more at home sipping a cup of coffee in a kopitiam than chilling out in a wine bar.

Ask him what he enjoys doing in his spare time and the self-confessed workaholic gives you a blank look.

It is only after some prodding that he offers "watching wuxia films like Tsui Hark's Seven Swords" and "reading chinese classics and management books" as answers.

The busy boss doesn't use a Blackberry either. When he needs to jot down notes or list appointments, he turns to his trusty 555 notebook , which fits nicely into the front pocket of his shirt.

On the cover of the latest one is written neatly, "Nov 1, 2007" in Chinese, the day he started using that particular notebook.

"I used to change notebooks every month, but then I realised it was too wasteful. So now I'll use a fresh one only when I have filled up every page," he says.

For such a thrifty man, it comes as somewhat of a surprise that he wears a Rolex watch. Smiling bashfully, he says it was a gift from a supplier in 2000, to thank him for hitting a certain sales figure.

He gave it to his younger brother. "Why wear a watch when you can check the time on your mobile phone?"

But it found its way back to him last year. He says with a hearty laugh: "My brother kept it all this while and gave it to me as a kind of long-service award. I didn't know it was the same watch and was so touched that he had bought such a nice gift for me."

Small player, big heart

Those who have worked with him says he is a driven, hardworking man who believes in treating the employees well.

His staff get one free meal every day - a buffet-style one for those who work in the Woodlands headquarters and boxed meals for the rest. These are prepared in a central kitchen.

Mr Tan Cheng Kwan, 38, Sheng Siong's assistant general manager who is in charge of supermarket operations, says: "He always has the employees' interests at heart and will go out of his way to help anyone who has problems at home, like giving cash incentives to those with young kids on a case-by-case basis."

"He feels that only when the employee is happy at home will he then be able to concentrate at work."

With just 21 outlets, Sheng Siong is considered a small player in a market dominated by the big boys such as NTUC FairPrice (over 200 outlets), Shop N Save (over 45 outlets) and Cold Storage (over 30 outlets).

But its growth in recent years has been nothing short of phenomenal.

in 1985, Mr Lim and his brothers Hock Eng and Hock Leng, ran a provision shop in Ang Mo Kio measuring just 1,400 sq ft.

Back then, the shop's daily takings were only about $2,000. By 1988, it was well over $19,000 a day.

Now, Sheng Siong has about 3,000 employees and group turnover last year exceeded $580 million, compared with a modest $45 million in 2000, when the chain started its rapid expansion.

The family-run chain plans to list in two year's time.

The secret to its low prices is the way it maximises its profit margins by constantly challenging itself to churn out higher turnover per sq ft of retail space, Mr Lim says.

"For example, if we can make $10 instead of $4 for every sq ft of retail space, we can cut costs effectively and offer very reasonable prices to customers," he says.

One way of doing this is to provide speedier service so that more customers can be serviced in the same period of time.

And he is quick to stress that he does not believe in checking out the competition all the time.

"Rather than waste time comparing ourselves with others, why not look at how you can improve yourself instead?"

He is keen to dispel the myth that low prices come at the expense of quality.

"We have been able to keep our prices low because we are increasingly going directly to the product source, thus eliminating the middlemen," he explains.

Although Sheng Siong has only six housebrands, a small selection compared to over 500 at FairPrice, he says it is growing this segment of its business.

No one should doubt his resolve, especially not this son of a pig farmer, whose chinese name literally means "lucky star" and whose nickname is Ter Bak (Hokkien for prok) because he used to sell pork.

Took vocational path

Born in 1961, the fifth of nine children grew up first in Jurong, then later in Lim Chu Kang and Punggol, when his Dad turned to rearing pigs.

At the height of the business, the family had 3,000 pigs and lived on a sprawling 90,000 sq ft farm.

When he was in Secondary 3 at Chinese high School, he decided to quit and do a two-year car mechanic course at the former Jurong Vocational Institute (JVI).

"I was struggling in English, managing just 20 or 30 marks," he says. "The water pump in our farm often broke down, so I figured if I learnt how to fix cars, I could help fix the pump too since the mechanisms were similar."

It proved to be the right decision because he thrived at JVI, staying in school every day to study and excelling in the practical aspects of his course.

The training has stayed with him all these years and until a few years ago, he was Mr Fix It at Sheng Siong, doing everything from sorting out power trips to welding the handles on trolleys to make them more sturdy.

With a sad expression, he says: "There are other people who do the welding now. I can't do everything myself. And because I drive a Lexus now, I can't do the dirty jobs such as clearing the garbage because that would mean getting the car dirty too."

After national service, he helped out at the farm for two years before he was forced to look for something else to do when the Government started phasing out pig farms in the 1980s.

In 1984, when the farm was stuck with excess pork, he and his newly-wed wife rented a stall at the small Savewell Supermarket at Black 122 Ang Mo Kio Ave 3 to sell chilled pork.

She was his neighbour in Punggol and they were matchmade by her sister-in-law.

Nine months later, the Savewell owner was in financial difficulties and asked if Mr Lim was interested in taking over an outlet for $30,000.

Although he was offered a stall in Bedok, which had the best location in the chain, he decided to stick with Ang Mo Kio as he was familiar with the "uncles and aunties" in the neighbourhood. His father poured in $200,000 and Mr Lim roped in two of his brothers.

They changed the name of the 1,400 sq ft store to Sheng Siong, which means "rising" and "vegetable" in Chinese.

He says: "That was actually the worst location because it was located at the foot of a slope and was not visible from the main road. On top of that, we had to climb up and down the stairs whenever we had to unload goods."

To attract customers, he and his siblings would carry heavy items for them up the stairs. This was the beginning of Sheng Siong's tradition of "excellent service", Mr Lim says proudly.

We were very worried that the business would go bust, so we did everything without thinking too much," he says, adding that the brothers each drew a monthly salary of just $800 until 1995.

Now, he earns more than $20,000 a month.

And go bust they did not. The business grew and started giving the big players a run for their money.

The biggest expansion in the company's 22-year history was between 2000 and 2005, when 14 new outlets opened islandwide, including in Jurong, Bedok, Serangoon and Clementi. Sheng Siong at Tekka Mall, which opened in 2003, is the largest outlet, occupying 45,000 sq ft.

The expansion happened despite the economic slowdown following the 9/11 terrorist attacks in 2001, and the Sars epidemic in 2003.

Flashing his usual wide grin, he says the supermarket business is unique as it thrives under all economic conditions, good and bad.

"After 9/11, rentals went down and we seized the opportunity to open more stores," he says.

"Then when people stayed away from restaurants during Sars, we enjoyed brisk business because more people started buying food to cook at home."

The chain has now become a household name and even has its own TV show, The Sheng Siong Show, which made its debut last May. The game show, hosted by Kym Ng and Dasmond Koh, is into its second season and airs on Channel 8 every Saturday at 8pm.

It features a children's talent competition and a lucky draw that promises $1 million worth of prizes.

Business went up by about 20 per cent after the show started airing, Mr Lim says.

Sheng Siong's philosophy has always been to provide "speedy service, low prices and good quality" to its customers, he adds.

"In the early days, we used this tagline to motivate our staff: 'You have to queue to buy 4D, you have to queue in a bank, but you don't have to queue in Sheng Siong'," he says.

"I can tell you we have the fastest cashiers in Singapore. If we don't let our customers queue, then we are already ahead of our rivals."

Asked what is the most difficult part of running a multi-million-dollar business, he ponders for a while before replying: "Maintaining our cordial family ties is not easy."

Currently, two of his brothers, three of his sisters, two sisters-in-law and one brother-in-law are working in the company.

His father, who imparted values such as thrift to his brood, in the chairman of the company but is not involed in the day-to-day running of the business.

Mr Lim adds: "Of course there have been disagreements and arguments among the siblings. Sometimes, I've also thought of quitting."

"That is why I hope we can be listed soon, so that we can keep Sheng Siong going without disintegrating, like so many other family-run businesses."

The interview winds yup and the board secretary invites this reporter to try their catered staff lunch, which happens to be a sumptuous steamboat buffet spread featuring crabs, prawns and scallops that day.

Mr Lim declines to join in, mumbling about a slight pain in his leg.

Then, after saying goodbye, he walks away in brisk, firm steps, no doubt forgetting his pain as he heads for his beloved office, where his supermarket empire awaits.

Ten Traits That Make You Filthy Rich.

2008-02-11T10:24:00.001+08:00

See full article at Yahoo Finance here:

Saving money isn't all about whether or not you know how to score screaming bargains.

It has more to do with your attitude toward money.

Just think of those who don't fit the filthy-rich stereotype. People like Warren Buffett.

As explained in the book The Millionaire Next Door by Thomas J. Stanley and William D. Danko, personal finance has as much to do with people's traits as it does with money.

Many millionaires, in fact, have frugal ways.

Understanding how personal traits can influence your finances is an essential ingredient for building wealth.

Here are 10 key traits:

1. Patience

Patience is one of the most important traits when it comes to saving money.

This means waiting until the first wave of product hype has passed, keeping a car for an extra few years before getting another one and waiting until something you want fits into your budget instead of putting it on credit.

Patience is often the difference between creating savings and being in debt. Having the patience to wait until you find a good deal is a cornerstone of good finances.

2. Satisfaction

When you're satisfied, there is no reason to spend money on nonessentials. The sole purpose of commercials is to make you believe that buying a product or service will make you happier, wealthier, better looking or improve whatever isn't bringing you satisfaction.

People spend because they want to capture the excitement shown in advertisements. When you are satisfied with what you have and your life (not trying to live like those on TV), your finances will be in a lot better shape.

3. Organization

Being organized can make you more productive and ensure that all the many issues pertaining to personal finances are addressed.

It means not paying late fees, not buying two of everything, knowing deadlines that can affect your finances and getting more done in less time. All these can greatly benefit your finances.

4. Discipline

You need the discipline to continue to save money for specific, long-term goals every month.

Personal finance isn't a way to get rich quick, but is a disciplined execution of your lifetime plans.

5. Reflectiveness

It's important to be able to look at your financial decisions and reflect on their results.

You're going to make financial mistakes. Everyone does.

The key is to learn from those mistakes so you don't make them again, or recognize if you keep repeating them.

6. Creativity

The economy and our earnings don't always match our expectations.

Unexpected developments wreak havoc to elaborate financial plans. When this happens, changes are needed to deal with the new circumstances. Creativity is essential to accomplish this.

Creativity allows you to make something last longer rather than purchasing it when you don't have the money. It means juggling money to stay out of debt rather than simply paying with a credit card.

It means finding a cheaper alternative when money is tight.

In these ways, creativity plays a large role in keeping finances in order.

7. Curiosity

Having curiosity helps you learn, study and improve yourself.

The curiosity of wanting to know more, to take the time to study and then take what is learned and put into practice is an important process that is driven by curiosity.

8. Risk-Taking

To build wealth, one needs to be willing to take risks. This doesn't mean uncalculated risks.

It means weighing all the options and taking calculated risks when appropriate.

The stock market has risks involved, but over the long term, history shows that it provides good returns on money that is invested wisely. Those who fear risk altogether end up saving money in accounts that likely lose money to inflation in the long run.

9. Goal-Oriented

The importance of setting and working toward goals is obvious. If you don't know where you are going, it's difficult to get there. It helps your personal finances immensely if you have money goals and are motivated to reach the goals that you have set for yourself.

Those who lack goals don't have a road map to take them to the financial destination they want.

10. Hard- and Smart-Working

Creating wealth and staying out of debt rarely comes about without a lot of hard work.

Many people might hope that the lottery will solve all their financial problems.

The true path to financial freedom, however, is to work hard to earn money while educating yourself to continue to have more value and increase your salary.

Conclusion:

You may not possess all of the above traits. But knowing them can help you make changes so that you nourish the ones that you have and obtain the ones you're missing.

Ultimately they will help you with your personal finances and create a plan to accumulate the wealth you desire.

Happy Lunar New Year.

2008-02-06T16:04:00.000+08:00

Here's wishing all readers a very happy and prosperous 2008 ahead!

Market Update.

2008-02-06T10:51:00.000+08:00

Compiled by DBS Vickers this morning:

STI could test the 2900 level in the current session. Still, we continue to assign only a 10% chance for the STI to fall below the 2650 level. 2650 should be the bottom for the current correction in a worst case scenario.

Last night’s tumble on Wall Street was triggered by a much weaker than expected January ISM non-manufacturing index (41.9% against consensus of 53%), which ignited fears that the US economy is already in a recession.

This worry is not ‘new’ because the recent sell-down to 2746 was also already driven by a ‘1Q recession scenario’ in US. If the historic drop in the ISM survey is reflected in other upcoming data, the Fed would not wait that long to cut rate. The next key data report will be January retail sales, due for release February 13.

Short-term traders who are holding onto long positions over the past few sessions may choose to par down holdings but investors should hold onto and add new positions in the event that the STI tests the 2650 level because we continue to see the index heading back towards 3300 once the correction ends.

Subsales may spike again as projects near completion.

2008-02-05T11:08:00.000+08:00

Prices could soften if 'specuvestors' are forced to offload properties
By Kalpana Rashiwala

Speculative activity took a breather in Q4 last year as the number of subsales as well as their share of total private home deals were down sharply from the preceding two quarters of 2007.

However, many in the industry are wondering whether subsales will again spike closer to the physical completion dates for some high-profile projects sold substantially on deferred payment (DP) schemes.

Among the projects that will be keenly watched are The Sail @ Marina Bay, The Coast (at Sentosa Cove), The Grange, and The Suites at Central in the Devonshire Road area, all of which were sold amidst much hype.

The first two projects are scheduled to receive Temporary Occupation Permit (TOP) next year and the latter two, this year.

The coming wave of subsales - if there's one - may not be so much a reflection of speculative froth in the market but rather of buyers seeking to offload their units before the DP expires.

Those who bought their properties on DP schemes would typically have paid 10 or 20 per cent of their purchase price to the developer with the next payment (of 75 per cent or 65 per cent, respectively) deferred till the project receives TOP. By TOP, the developer would collect 85 per cent of the sale price.

Such buyers can shop for a bank loan until closer to the project's TOP date.

However, buyers who picked up multiple units in some of these developments on DP schemes and are still sitting on them may not be able to secure sufficient housing loans to foot the bills when the projects obtain TOP.

Banks may turn cautious over advancing loans for multiple property purchases. Some, for example, may only be prepared to lend up to 70 per cent - based on their credit assessment and servicing ability of the borrower - instead of 80-90 per cent, of the purchase price of the property or its current value, whichever is lower.

These 'specuvestors' may find that it makes more sense to sell their units in the subsale market before they receive a big bill from developers.

Such subsales, while apparently 'forced' by the difficulty of finding enough housing loans, could still yield handsome gains for such investors - given the huge rise in upmarket home prices.

However, if a sizeable number of such properties come on the subsale market, some sellers may be willing to accept below-market values. This will clip developers' pricing power when they sell new projects in nearby locations.

Already, BT understands that some individual investors, anticipating 'dumping' from speculators, are teaming up to snap up some of these units at below-market prices.

Jones Lang LaSalle's head of research (South-east Asia) Chua Yang Liang reckoned that some buyers who purchased units on DP during the initial launches may begin to review their options around five to six months ahead of TOP.

'Supply of such properties in the subsale market could potentially increase from the latter half of this year, which could potentially see prices easing,' Dr Chua said.

Of course, it may be a different story altogether if sentiment in the high-end market picks up again.

A lot will also depend on the holding power of those who still have units they've bought from developers. Some may not face problems getting housing loans, because they have the ability to service them. Such buyers may just go ahead and pay that big instalment when the project receives TOP.

Another factor that will bear on the extent of 'forced' subsales is the profile of buyers in each project - the mix of those who bought units with a view to living in them, and those who purchased with an eye on flipping before the project's completion.

A seasoned property agent told BT that a condo in the East Coast area receiving TOP soon recently saw several buyers offering their units at prices considerably below what was being achieved just a few weeks ago - before the stock market plunge.

Then there's another theory. While we may see a flurry of subsales for projects sold in the past on DP, it will be a different story going ahead.

With no new projects approved by the authorities for DP schemes since DP was scrapped in late October 2007, new launches going ahead will attract fewer potential speculators. This is because those who buy into projects without DP schemes know they will have to make regular progress payments to the developer and in all likelihood have to obtain housing loans.

'You'll see more genuine buyers in the market,' as ERA Realty Network divisional director Andrew Soh said. 'Developers may still be able to maintain current prices, or even achieve higher prices. But instead of weeks, it may take them months, or even years, to sell out projects.'

'As new project launches attract fewer speculators, I may have to sell physical homes and not just paper (options),' he quipped.

Market Update.

2008-02-04T10:40:00.000+08:00

Compiled by DBS Vickers this morning:

We are placing a higher 60% chance for STI to rally to 3384 from here.

As compared to a 30% chance of a fall to 2650 before bottoming out.

And only a 10% chance for a fall below 2650.

Here’s why:

1) Determination in keeping the US economy afloat ahead of the November election.

2) Hit by the mortgage crisis, US bond insurers could benefit from possible bailout plans.

3) Local banks should be lifted by the “sell on rumor, buy on news” syndrome.

4) US indices (Dow, S&P500) and London’s FTSE turned above their respective 15-day moving averages to finish at their highest level since the January 22nd surprise rate cut by the FED. Asia bourses could follow suit.

5) The SSEC is due for a technical rebound off 4177-4200 and this could pull Asian bourses higher.

PM Lee cautioned that inflation in the first half of the year could be as high as 5%, or even more. Earlier government estimates last November had put inflation at between 4 and 5% for the whole of the first quarter of 2008.

However, the government would not move to control food prices, nor would it subsidise 'essentials'. Instead, he recommended practical measures, including diversifying the nation's food sources and buying generic house brands.

China has approved the launch of two stock-focused mutual funds to raise up to RMB14bn, in an apparent bid to stop the local stock market from sliding further.

The CSRC suspended the approval of new stock mutual funds five months ago for fear of feeding an over-heating stock market. But now, poor market sentiment has started to take its toll.

Property prices unlikely to fall yet even if launches have been stalled.

2008-02-03T11:36:00.000+08:00

Published in The Sunday Times Invest Section today:

Large developers can still hold out, but some may be more open to slightly lower offers.
By Joyce Teo
Property correspondent

Sentiment in the property market is lacklustre, showflats are quiet and developers are delaying launches. So there is a chance that prices will head down, right?

Wrong.

While stock market volatility and fears of a United States recession have sent many property buyers to the sidelines, developers have not lost their nerve yet.

Prices for post-Chinese New Year launches are unlikely to head south over the next three months, consultants said.

"Major developers are financially strong, so buyers can't expect price cuts at launches," said Knight Frank director of research and consultancy Nicholas Mak.

Even if the stock market suffers, the property market tends to lag behind by two to three quarters.

Usually, property prices fall only when there's a recession or general weakness in the labour market, said Mr Mak. Singapore is not facing either of those scenarios and they are not expected to arise, he added.

But individual sellers and some smaller developers could find themselves in a barrel in the months to come if buyers stay home.

Developers certainly have an ample supply of projects for launches, having picked up a slew of sites during the boom times in the past two years.

Whilst many can delay launches, those with 99-year leasehold sites might not be able to hold out for long, said a developer.

Still, even if developers are unwilling to cut prices, they could be more willing to negotiate in today's more subdued market.

"Officially, their prices remain at the levels seen last year, but they could be more open to serious but slightly lower offers," said Savills Residential director Ku Swee Yong. However, he does not expect them to budge by more than 5 per cent.

Farrer Court

And there are still buyers out there looking for homes. Take the situation at the 618-unit Farrer Court. Owners there will receive their collective sale proceeds early next month and not all would have bought a home yet.

Time for homebuyers to do their homework

Figures from the Urban Redevelopment Authority (URA) show that private home prices shot up 31.2 per cent last year - way up from 10.2 percent in 2006 and very close to the spurt seen in the 1996 peak year.

High-end property prices have far exceeded the 1996 peak while mid-tier homes are on par, noted one mass market watcher.

Mass market property is a different story. Prices are still below the last peak and good buys could pop up, Mr Ku said.

HDB Flats

This segment remains supported by HDB resale flat prices, which rose 17.5 per cent last year, the fastest growth since prices shot up by 25 per cent in 1996.

Buyers need to do their homework and look for properties in "good" locations, with easy access to public transport. They could consider fairly new, completed condominiums near an MRT station, said Mr Ku.

They might even look at suburban landed homes, said Mr Ku, who feels those in the Upper Thomson Road to Mandai Road are still undervalued.

As for new mass market launches, the 99-year leasehold Waterfront Waves in Bedok Reservoir has done fairly well. 80 of the 148 units have been sold, with prices remaining at $690 to $870 per sq ft.

I think buyers are slowly gaining the upper hand - if they do not already have it," said Chesterton International's head of research and consultancy, Mr Colin Tan.

"For every buyer, there are many sellers right now. But their expectations are different, there is still a wide gap in between and no sales are taking place."

Nevertheless, if the stand off lasts longer than expected, some developers and sellers could panic and slash prices so as to draw in buyers, said market watchers.

These are likely to be the very small developers or new entrants facing a credit crunch, they said.

"Singapore's property market is still bullish."

"The external factors affecting it are actually good because they have stopped the market from overheating," said a seasoned property investor.

"Developers were selling at tomorrow's prices. Now, they might have to ask for today's prices."

January 08 Portfolio.

2008-02-02T10:06:00.000+08:00

These are my current stocks holdings as of 31 January 08.

Pan United
Sarin
Yongnam
Taisin
Sinotech Fibre
Eastern
Lifebrandz
Sihuan
China XLX
IFS
FujianZY
Sing Inv
UIS
China Sports
Fibrechem
HLN Tech
China Pplus
ARA
Yongnam W121214

The January 08 portfolio value of $388,123 is a decrease of -$139,960 (or -26%) over the December 08 portfolio value of $525,083. I did not make any purchases or sales this month.

These are the key Portfolio Changes.

I did not receive any dividends for January 08.

Conclusion:

Typically, I would have done most of my buying in a month like this, where stock prices are falling to increasingly attractive valuations. My reason for not making my purchases was because I had just invested a significant amount of my cash into a business venture (to be kept private), and thus my cashflow is temporarily limited.

And as much as I would have loved to buy into some cheap stocks, it is equally important not to overstretch yourself and to invest within your means.

I understand why some of you technical analysts might disagree with my continued bullish stance when the technical indicators suggest that we could be possibly at the start of a long term downtrend.

But the basis on my investment strategy has always been built on bottom-up investing:

An approach which de-emphasises the significance of economic and market cycles.
The attention is focussed the specific company instead of the industry or economy as a whole.

In short, this means that I really don't care whether the market is going up or down.

I only care about buying stocks if I feel that they are undervalued enough to provide me with a good margin of safety and long term potential upside.

As such, my opinion is that the current market offers great buying opportunities for specific select stocks, and I look forward to picking up some good stocks as soon as my cashflow is freed up.

Stock Alert Update.

2008-02-01T00:20:00.000+08:00

The heavy correction has punished a lot of stocks, but one of those most heavily punished is Allco REIT.

It has fallen more than 50% from $1.40 in May 06 to $0.67 currently (see chart below).

At $0.67, Allco REIT is trading at an amazing 50% below its NAV of $1.34, offering a yield of 8.93% based on FY2006 payout of $0.0598.

Its yield is set to rise because its FY2007 net income is expected to reach at least $0.10 per share based on its 3Q results thus far.

As such, I am placing Allco REIT on the stock alert with a buy at $0.67 at 50% below NAV.

That said, I want to add that Allco REIT has been falling on very heavy volume recently, which is not a good technical indication - thus I would prefer to stagger my buys just to be on the safe side.

Market Update.

2008-01-31T10:25:00.000+08:00

Compiled by DBS Vickers this morning:

With the next FED meeting still 2 months away, attention will turn to corporate earnings in February. Bank stocks and the amount of CDO asset write-downs come into focus. FY results for DBS and OCBC are scheduled for release on 15 February and 21 February respectively.

STI’s rebound from 2746 has fizzled out at 3168 last Friday, just a hairline below the technical resistance at 3180. Pressure from banking stocks ahead of their FY results should weigh down on the index. Disinterest inflicts small cap stocks ahead of the Lunar New Year holiday shortened week.

The FED cuts interest rates by an expected 50bps and investors have responded: by “buying on rumor and selling on news”. The 200pt intra-day rally that fizzled out with the Dow ending 37pts lower suggests that concerns about the health of the US economy remains despite the 125bps reduction in FED funds rate during the past 2 weeks.

Speculation about the downgrade of bond insurers helped fuel the late session profit taking. US 4Q GDP slowed to a weaker-than-expected pace of 0.6% against consensus of 1.1%. The next key economic data will be January non-farm payrolls scheduled for release this Friday.

The IMF is cutting its forecast for the global economy in 2008. It now expects growth of 4.1% from an estimated 4.9% in 2007, largely on the heels of weakness in the U.S. economy.

UBS warned it will post a record loss in 2007 due to higher than expected write-downs linked to risky sub-prime holdings while BNP Paribas reported a 42% fall in preliminary fourth-quarter net profit, weakened by write-downs.

Oil rebounded 69cts to USD92.33. After the bell, Amazon shares fell after the company’s issued a forecast that was below expectations.

Market Update.

2008-01-30T15:12:00.000+08:00

Posted by Oldman at shareinvestor yesterday:

As the weeks go by, I am getting more and more bullish given the amount of doom and gloom postings and media reports. I believe that the bearish megatrend will only start when everyone else is bullish. Now, everyone is on their guard and those who wanted to sell, have already sold.

All it takes now is some good news and then, there will be panic buying instead of panic selling, as those sold will want to buy back to ride the next wave. I still think that the STI will break 4,000 this year.

No one truly knows the market direction. Don't believe anyone who tells you that they know as they are likely to be just fooling themselves. Don't try to make a fool out of Mr Market as chances are, Mr Market will make a fool out of you.

Posted by Starry at sgfunds yesterday:

Subprime? IMO, the current downturn was never because of sub prime.

Don't bother about timing. Try to pick up any good stocks that has good value. I think there is going to be a few months of this opportunity, so good to accumulate. This is a consolidation period before the market sky rockets up. This happen all the time before the bull era comes to an end.

Property related stocks and oil related companies are good.

The Richest People You've Never Heard Of.

2008-01-29T23:56:00.000+08:00

This article was compiled for Forbes by Louis Hau.

You might think enormous wealth guarantees instant notoriety.

It doesn't. Some of the world's richest people manage to stay below the detection of the public despite being worth billions. We're not talking about being famous and reclusive. We're talking about being flat-out unknown among the masses.

Sure, most people know of billionaires like corporate financier Carl Icahn, Hong Kong business magnate Li Ka-shing and Italian media mogul and former Prime Minister Silvio Berlusconi.

But what of Susanne Klatten? Or Birgit Rausing? Or John Sall? They've got the kind of money the rest of us can only dream of. And yet here's betting that you've never heard of them, even if you're familiar with the companies or products that made them wealthy.

John Sall - SAS

Sall, worth $4.4 billion when Forbes last valued his fortune in September 2007 as part of our annual Forbes 400 rankings, co-founded privately held software giant SAS, where he remains executive vice president.

Susanne Klatten - BMW, Altana

Klatten is a member of Germany's Quandt family, which owns a controlling stake in automaker BMW. She also owns 50% of German chemical company Altana.

Forbes last estimated her fortune in March at $9.6 billion as part of our annual billionaire rankings. Although that was before she received half of the proceeds from Altana's $6 billion sale of its pharmaceutical business to Nycomed last year.

Birgit Rausing - Tetra

And Rausing? She and her three children have a combined fortune of about $11 billion after inheriting ownership of packaging giant Tetra Laval. Never heard of Tetra? Ever slurp down a refreshment from a juice box? That's them.

Peter Buck - Subway

Sifting through the names of obscure billionaires can invite some surprises. For example, take the case of Peter Buck. No, not the guitarist from R.E.M.--this Peter Buck lent a family friend $1,000 in 1965 to start a sandwich shop. Today, the result is Subway Restaurants.

You'd think that being co-founder of a fast-food giant would gain you some name recognition. But it's probably safe to say that few people not named Jared have ever heard of Buck.

Bradley Hughes - Public Storage

Much the same could be said about Bradley Hughes. No, not the PGA golfer from Australia. Like Buck, Hughes started a business that you've probably heard of. It has 2,100 locations in 38 states. If you're an incurable pack rat, you might be a customer.

Give up? Hughes is the founder and chairman of Public Storage.

Vladimir Kim - Copper Mining

Then there's copper-mining magnate Vladimir Kim, who cuts an unlikely figure on a lot of different levels.

The guy's worth a cool $5.5 billion, making him the richest person in the post-Soviet republics outside of Russia. He's also a lot wealthier than Silicon Valley billionaires Meg Whitman, Jerry Yang and John Doerr, despite the presumed geographic disadvantage of hailing from Kazakhstan.

And Kim is the richest ethnic Korean on the planet, with a fortune that far surpasses even that of Samsung Group Chairman Lee Kun-Hee.

Despite managing to stay virtually unnoticed by the rest of the world, even press-shy billionaires will occasionally surface in the public eye. Sometimes it's by choice. Sall, a fan of Barack Obama, co-hosted a fund-raising event in Chapel Hill, N.C., last year for the Illinois senator and Democratic presidential hopeful.

At other times, the rich but unknown get dragged into the spotlight. Klatten was the target of a complaint last year from Altana shareholders who argued that she had received preferential treatment when the company sold its pharma business. A Frankfurt court eventually dismissed the complaint.

Far more embarrassing was the September airing of a German TV documentary detailing the Quandt family's personal ties to Nazi propaganda chief Josef Goebbels and its use of slave labor at a battery factory during World War II. A few days later, the family, which had remained silent on the matter for years, issued a statement saying it would fund research into its wartime past.

Clearly, not even massive wealth can shield a billionaire, even one as discreet as Klatten, from scrutiny like that.

Air of uncertainty and caution lingers on.

2008-01-29T13:15:00.000+08:00

From the Straits Times yesterday:

Market looks to Fed for economic outlook and expected rate cut
By Lee Su Shyan, Assistant Money Editor

Investors may have breathed a sigh of relief after surviving a tumultuous week, but no one feels that they are out of the woods yet.

One dealer said: 'The markets are all over the place. We are not sure if this week will be the same.'

After the wild swings of last Monday and Tuesday, the Dow Jones Industrial Average closed 1.38 per cent down last Friday, ending at 12,207.17 points. However, for the week as a whole, it ended higher.

The weakness of the Dow may impart some early-week jitters to the Straits Times Index, which rose just 55.23 points last week to close at 3,159.48.

Giving a boost to the markets before the Chinese New Year, however, could be the two-day Federal Open Markets Committee meeting over tomorrow and Wednesday, at which a cut of a half percentage point is expected.

This will come on top of a 75 basis point cut in the federal funds rate to 3.5 per cent last week, the first time in more than 20 years that such a big cut has been made.

With a rate cut on the cards, analysts will focus on what the committee says about the global and United States economic outlook, given the housing crisis in the US, losses by banks and the troubles of bond insurers.

'The longer the volatility continues, the more likely it is that there will be real effects on the economy,' an analyst in the US was quoted as saying by Agence France-Presse.

On Friday in the US, there will also be the release of the non-farm payrolls data for this month, which is seen as an important indicator of whether jobs - and hence the economy - are growing.

Other than the US factors having an impact on the Singapore stock market, there could also be concerns about the Republic's economy slowing down.

Prime Minister Lee Hsien Loong had said last Friday that Singapore's economic growth was forecast at between 4.5 per cent and 6.5 per cent this year as there is uncertainty over the US economy, compared with 7.5 per cent last year.

One dealer said: 'We will have to see how the market reacts to the growth rates.'

Meanwhile, the reporting season for the year ended Dec 31 is gathering pace, and to date, the prognosis is good.

So far, only 13 companies have reported their full-year results. Not one has recorded losses.

This handful of companies, including real estate investment trusts, managed a total of $842.8 million in group profits, up 38 per cent from what they made previously.

Among the firms reporting their results this week is the Keppel group of companies, which includes Keppel Land as well as parent Keppel Corp.

Keppel Corp is expected to put in a strong performance on the back of continuing revenue from its various contract wins in the oil rig industry.

Centraland IPO.

2008-01-28T16:51:00.000+08:00

Closing date of application: 30 January 2008
Commencement of trading: 01 February 2008

Established in the 1995, Centraland is a property developer in Zhengzhou city, the provincial capital of Henan Province, one of the most populated provinces in PRC.

They are principally engaged in the development and sale of residential and commercial properties. In addition, we also derive rental income through leasing some of our properties.

Their current property developments are:

Guoling Shanshui (果岭山水), a self-contained, high-end integrated property development targeted at middle and higher-income purchasers.
J-Expo (金智•万博商城), their 1st commercial property project, a building for the wholesale of commodities such as mobile phones, stationary, accessories, cosmetics, and household goods by wholesalers.

Key Competitive Strengths:

They are experienced in Zhengzhou city and able to identify and acquire land at good locations there.

Financial figures

Intended IPO price: $0.50
No. of shares available for public offer: 5m
No. of shares available for placement offer: 240m
Total post invitation share capital: 1,845m

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

FY2006
Revenue: $54.6m
Profit: $9.0m
NAV: 0.0697
EPS: 0.0049
EPS % Incr: 300%
PE ratio: 102x
Price: 0.50

2QFY2007
Revenue: $59.6m
Profit: $7.0m
NAV: 0.1221 (incl. IPO proceeds)
EPS: 0.0038
EPS Incr: -22% (Est.)
PE Ratio: 131.6x
Price 0.50

Dividend policy: No fixed policy.

Conclusion:

Besides the typical risks associated with small cap PRC companies, most of the recent small cap china property stocks have not been doing well.

Companies such as Sunshine Holdings, China Yuanbang, and China New Town are all trading significantly below their IPO price.

The biggest concern from a fundamental point of view is that property development involves massive cash outlays, which these companies typically have to borrow. And since these companies do not have a long enough history, investors would naturally tend to avoid them for more established companies.

Moreover, Centraland does not even have a recent history of consistent revenue and earnings growth. Its IPO price is pegged at 131.6x FY07 PE and approx. 4x NAV.

Needless to say, Centraland is an obvious AVOID for me.

Probability of getting allotted for the IPO - 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.

An alternative reason for the recent selldown.

2008-01-25T14:57:00.000+08:00

Compiled this morning by Lim & Tan Securities research:

The shocking news of the 4.9 bln euros fraud committed by (not even a high-flier) trader of Societe Generale (SocGen) raises some interesting points:

The unwinding of trading positions by SocGen probably explains the pronounced weakness of the European markets on Monday, along with Asian markets.

Bernanke may therefore have miscalculated by cutting the fed funds rate by 75 basis points on Tuesday, after “watching” the sell-down of European / Asian markets on Monday when the US markets were closed for a holiday.

It also helps explain why European Central Bank’s chief Trichet was still talking of inflation risks, when reacting to the Fed cut. (Only the Bank of Canada followed Fed’s cut, while Bank of England expressed support.)

Whatever the case, Bernanke cannot undo what he did on Tuesday, which would have severe repercussions on stock markets the world over.

Thankfully, the US$145 bln stimulus package proposed by President Bush, has been endorsed by the Republicans and the Democrats alike, a rare but significant display of bi-partisanship during this presidential election year.

Wee Hur IPO.

2008-01-25T08:50:00.000+08:00

Closing date of application: 28 January 2008
Commencement of trading: 30 January 2008

Established in the 1980, Wee Hur provides building construction services in Singapore and acts as the management or main contractor in construction projects for both private and public sectors.

Their major current projects are:

As of 9 December 2007, they have an order book of S$239m based on secured contracts.

Key Risk Factors:

They are solely dependent on the construction industry in Singapore, and the Singapore economy.
The Singapore construction industry is highly competitive, and Wee Hur does not seem to possess any major competitive edge.

Financial figures

Intended IPO price: $0.25
No. of shares available for public offer: Approx. 2m
No. of shares available for placement offer: Approx. 81.5m
Total post invitation share capital: Approx. 321m

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

FY2006
Revenue: $80.6m
Profit: $2.8m
NAV: 0.063
EPS: 0.0087
EPS % Incr: 80%
PE ratio: 28.7x
Price: 0.25

2QFY2007
Revenue: $91.2m
Profit: $11.5m
NAV: 0.103 (incl. IPO proceeds)
EPS: 0.0358
EPS Incr: 300% (Est.)
PE Ratio: 7x
Price 0.25

Dividend policy: No fixed policy.

Conclusion:

A typical small cap construction company trades at 10x PE, so based on that:

Wee Hur should trade at a Fair Value of $0.35 or 10x PE only.

Unfortunately, the public float for this IPO is extremely low, and in the current weak market environment, it might be better for those interested to wait and to buy it off the secondary market instead.

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.

China Allows Domestic Banks to Invest in Singapore.

2008-01-24T09:45:00.000+08:00

China will let its commercial banks invest in Singapore stocks and funds, signaling that the government is widening the scope of its overseas investment program.

The nation reached an agreement with the Singapore authorities for investments by Chinese banks under the so-called qualified domestic institutional investor, or QDII program, the China Banking Regulatory Commission said in a statement posted on its Web site today.

China will "soon'' sign similar agreements with the U.S., German and Japanese governments, the statement said without specifying a timeline.

The Chinese government is expanding investment destinations for its QDII program after four funds offered by fund houses posted combined losses of 11.8 billion yuan ($1.6 billion) in the fourth quarter of 2007. China's industry watchdog announced on Dec. 17 it will let the nation's banks invest in U.K. equities, the first expansion of banks' QDII funds outside Hong Kong.

Today's release didn't say when QDII funds can start investing in Singapore. The Singapore Straits Times Index has dropped 4 percent so far this year. The FTSE ST China Index, a measure tracking 50 so-called S-chips of Chinese companies in Singapore, has plunged 31 percent during the same period.

"The move will broaden the investment base for Singapore stocks and widen its appeal,'' said Nicole Sze, a Singapore- based investment analyst at Bank Julius Baer & Co., which manages $350 billion in assets worldwide.

"The well-run S-chips will probably be the key beneficiaries.''

Note: This is why I advise and prefer to buy into the market leaders at this present moment.

Singapore's central bank said in a separate statement today that it may work with the Chinese regulator on "other areas of cooperation.''

Approved in April 2006, the QDII program has granted the country's banks, fund managers and insurers more than $40 billion in quotas to purchase products such as overseas equities, government and corporate bonds, and fixed-income instruments.

STI Update.

2008-01-23T14:44:00.000+08:00

This technical commentary on the STI was released by AM Fraser Research yesterday.

Note: I do not necessarily share the view of this commentary, but it is useful to know what the key support and resistance levels are.

Key support - 2610-2620

Next support - 2500 (half way mark of 2003 bottom and Oct 2006 peak)

Minor resistance - 2814 (38.2% mark)

Major resistance - 2915 (2007 low)

STI 2747 at around 2.45pm today(yesterday) is down 1084 points or 28% from 3831 peak.

Next major support after the decisive break of 2915-3000 yesterday and today is the 2600 area (2618 May 2006 high (old STI 2666) and 2618 (Jan 2000 high 2583).

The 38.2% retracement of the 5 year bull run from 1170 in March 2003 to 3831 last October at 2814 has also been broken. But there seems to be a rebound back to around 2814.

The half way mark is 2500, which would mean almost 35% crash from 3831 peak. Around 2600, the loss will be 32%.

Previous crashes in 1987, 1997-98 and 2000-2001 saw the old STI down between 53% to 62% from peak to trough, spread as short as within the fourth quarter of 1987 to as long as 20 months from Jan 2000 to Sept 2001.

The Asian crisis period saw the STI losing 62.4% from 2130 in 1q07 to 800 in Sept 1998.

The October 1987 crash saw the old STI bottoming out at 597 in December after its August peak of 1288, down 53.7%. The long-drawn fall from 2583 peak in Jan 2000 finally bottomed out at 800 after 9-11.

If the present crisis leads to a global financial crisis of the scale of the Asian crisis of 1997-98, then we could look at another protracted fall with the bottom seen not earlier than mid-year or even later.

Hopefully this crisis does not drag on too long well into this year and continue into 2009.

We do not expect the final bottom to be as terribly low as the 3 previous periods in 1987, 1997-98 and 2000-01:

Which could translate into an STI of 1800 or even lower if the 53% to 62% crashes recur.

Re-living the past correction.

2008-01-22T09:36:00.000+08:00

If you're feeling down.

If you're feeling blue.

If you're sick and tired of seemingly endless falling stock prices.

Then instead of cursing and swearing or wallowing in self-pity, you might want to:

Check out the posts I made last August here during the last severe correction.

I read through the posts last night, and they certainly helped to provide some perspective in these crazy and difficult times.

The Great Singapore Sale.

2008-01-21T12:55:00.000+08:00

Lately, I've been asked by many people whether it is a good time to buy stocks now, and if so, which stocks would be worth buying.

But before I go into that, I feel that I should state this disclaimer:

The sub-prime crisis currently faced by the American economy is very, very real, and so is the threat that it could potentially send the U.S. into a recession, and the rest of the global economy along with it.

If that were to happen, then we would experience a situation whereby stock prices would be falling lower over the next few years.

If you believe that the above scenario is more likely than not, then obviously it would be better to completely stay away from stocks for the next few years until the recession has done its damage.

In which case, you should probably stop reading from here and ignore the rest of this post.

But if you believe that the global economy is in good stead, that these difficult times are only temporary, and that 2008 will still be a good year for Singapore equities, then here are some of the stocks that I believe are worth considering.

Index and large cap exposure:

With the STI Index having corrected some -20% from its 3900 high, it might be more convenient for one to buy a Singapore equity fund or even the STI ETF to gain from the broad Index rise.

Personally, my preference remains for UIS (see here).

UIS remains on the stock alert with a buy at $1.67 at 20% below NAV.

These two other stocks also remain on the stock alert because I believe them to be undervalued.

Sing Inv is revised to a buy at $1.55 at 10% below NAV.

IFS is revised to a buy at $0.685 at 30% below NAV.

Property exposure:

The property sector was one of the worst hit recently, with stocks prices falling to levels unseen since 2005. At present:

Capitaland is trading at only 7x PE at $5.89 (below its 16x historical PE).

City Development is trading at only 17x PE at $11.70 (below its 40x historical PE).

Ho Bee is trading at only 3x PE at $1.30 (below its 15x historical PE).

Eastern is trading at only 2x PE at $0.175 (below its historical 12x PE).

For the past few months, I had advised against investing in property stocks because I believed
that it would be difficult for property companies to maintain or grow on their record earnings for 2006/7.

But at such low valuations, I am going to change my mind and say that it might be worth a calculated risk to invest in property stocks now.

My favourite would be Eastern, not because I am vested in it, but because it offers a very good 9.7% yield at current price.

As such, I am putting Eastern on the stock alert with a buy at $0.18 at 80% below Fair Value.

China exposure:

Many china stocks are undervalued at the moment, but I prefer to invest in market leaders at this point because of their better fundamentals, being bigger and more stable, and offering better governance. Also, they will be the first to recover if and when the market resumes its uptrend.

My picks are as follows:

Sinotech Fibre is revised to a buy at $0.64 at 55% below Fair Value.

Fibrechem is a buy at $0.845 at 50% below Fair Value.

Celestial is a buy at $0.675 at 60% below Fair Value.

Sihuan is a buy at $0.67 at 50% below Fair Value.

Additionally, I think it would be worthwhile to look at Inter Roller - a company with a strong monopolistic position in its industry.

Inter Roller is a manufacturer of baggage roller systems used in airports. It has facilities in Singapore and Malaysia, and subsidiaries and offices in UK, HK, UAE, and PRC providing full project management, operations, and maintenance service support.

Inter Roller usually trades at a historical 12x PE, but at present, it is only trading at 6x PE and offering a very good 7.4% yield.

As such, I am putting Inter Roller on the stock alert with a buy at $0.525 at 50% below Fair Value.

SwissCash victim conned by Merc-driving associate.

2008-01-20T23:42:00.000+08:00

This article was published in today's The New Paper (see here):

Good friends lose $42,000 to alleged fund scam.

The promised returns sounded too good to be true.

Invest in this fund and get back three times the investment in just 14 months.

That's what Mr C S Chew was told by a business associate.

So the 34-year-old assistant sales manager put in almost $13,000 in the Swiss Mutual Fund and was promised monthly payouts between 15 and 25 per cent.

But all he got back was $2,750.

Also known as SwissCash, it is an alleged scam in Malaysia and China.

Mr Chew is not the only victim.

He got his friend, Mr H K Chen, who is in his 40s, to also invest in the fund.

Mr Chen, who owns an assembly line business, didn't get back a cent from his wife's $31,500 investment.

Said Mr Chew: 'I feel guilty having introduced them to it.'

The two men have known each other for eight years.

Mr Chew found out about SwissCash from a business associate, known as Anthony, whom he has been friends with for about five years. He also introduced Anthony to Mr Chen's wife.

Said Mr Chew: 'I believed Anthony as he said he had invested in the fund for two years. He assured me the fund was stable and the returns are guaranteed.

'Also, Anthony looked like he was successful. He dressed well and drove a Mercedes Benz.

'He told me that over $1 million was placed in the fund through him by various people.'

Promised returns

Mr Chew began with a first deposit of $1,648 in March last year, with promised returns of 15 per cent a month.

In April, Anthony told him the returns would go up to 25 per cent, but only if he put in more money.

So Mr Chew invested another $11,146.

However, he suspected something was amiss when the SwissCash website was no longer accessible in mid-August.

When asked, Anthony told Mr Chew to wait for a few days as the server was down.

Then, the monthly payouts stopped and Anthony gave Mr Chew one excuse after another.

Mr Chew filed a police report in October.

Last month, The New Paper reported that music teacher G Joseph, 59, lost about $1,500 after putting US$2,000 ($2,700) into SwissCash.

In 2006, two Malaysian datuks and six others were placed in remand by Malaysian authorities. They helped in investigations into SwissCash, reported The Business Times.

In China, police found that 170,000 people had placed 1.36 billion yuan ($268 million) with SwissCash, Xinhua news agency reported.

More than 3,300 organisers and core members were arrested in 14 provinces and cities last year.

Two men were charged.

Credit Suisse: Lie low till next quarter.

2008-01-18T10:15:00.000+08:00

The Singapore stock market will continue its wild swings for the next few months - so keep clear.

That was the health warning from Credit Suisse's head of Asian equity research, Ms Fan Cheuk Wan, who believes that bourse will stabilise and start to head north in the second quarter.

She estimates that regional markets will end the year 21 per cent higher than where they are now.

She said Asian markets are at an advanced stage of the bull market, where the easy money has already been made and where valuations are "no longer cheap".

Regional markets have been hammered by non-stop bad news about the sub-prime crisis and United States recession worries over the past few days.

This "perfect storm" is the reason why investors fled the market in a panic, resulting in volatility that has roiled regional bourses, including Singapore's, said Ms Fan.

The good news, though, is that "we are now approaching the trough of the market correction", with at most a "single-digit per cent downside for the region", she said.

Ms Fan expects the US sub-prime crisis and other problems to persist in the second quarter, however, which means "no imminent upside", and so no real incentives for investors to enter the market now.

In fact, investors should batten down the hatches and sit tight until the second quarter, which she believes will offer "better opportunities" for bargain hunting.

By then, the full effects of the sub-prime crisis will be clear and the US Federal Reserve will also have outlined its plans for the faltering American economy.

Further cuts in US interest rates - inevitable, says Ms Fan - will boost equity markets, including Singapore's.

Investors will also have a clearer idea if a US recession is imminent, she said.

Good picks then would be "market leaders in their respective sectors" with "good fundamentals in their domestic markets".

Ms Fan said companies such as Keppel Corp, DBS Group, and CapitaMall Trust should give investors a "good upside potential".

Other picks include firms in "environmental protection and alternative energy" such as Hyflux, or food producers.

Ms Fan also warned investors off export-oriented counters, such as semiconductor and technology stocks, especially now.

Market Update.

2008-01-17T12:37:00.000+08:00

These articles were published in the Straits Times today:

IMF warns subprime crisis losses 'may be higher'

The United States subprime mortgage crisis will likely produce deeper problems than expected because not all market players have 'come out clean' about their losses, the International Monetary Fund said.

'Some analytical work modelled on conservative assumptions suggests that potential losses may be higher and further capital injections are likely,' Mr Manmohan Singh and Mr Mustafa Saiyid wrote in an IMF report.

'Most banks in the United States have not yet marked their assets to genuine transaction prices,' the report said on Wednesday.

Some market participants 'have come out clean such as a few US hedge funds that have written off the value of all junior notes issued by its structured vehicles,' the report said.

The global markets turmoil that erupted last year amid rising defaults on US subprime mortgages was in part due to a lack of appropriate measures to evaluate the risk of new financial products.

Subprime mortgages - home loans given to people with poor credit histories - were packaged into structured securities such as collateralised debt obligations, of CDOs.

Following the collapse of the US subprime market in mid-2007, market worries about the exposure of the structured securities to the subprime crisis caused a credit freeze that made many market players use valuation models that no longer worked in the meltdown, the report said.

Recent moves by financial institutions to bring off-balance-sheet structures like CDOs on the balance sheet are not at explicit 'transfer prices' and thus 'may not be a full reflection of potential losses'.

The IMF report suggested that market participants seek to regularly put a portion of their complex structured securities on the market to obtain a valid valuation.

Some market players 'increasingly relied on ratings as a measure of default risk and inappropriately compared them to those on plain vanilla corporate debt, which has different sensitivities to market conditions'.

US banks clamp down on lending

Stung by billions of dollars in bad debts, US banks are clamping down on lending standards, making borrowing costlier for the consumers and companies that are the best hope for keeping the limping economy out of recession.

Economists are increasingly worried that reluctant banks plus skittish borrowers create a recipe for economic disaster, and even aggressive interest rate cuts by the US Federal Reserve may not be enough to prevent a downturn.

'It's a vicious cycle. As banks tighten up lending standards, credit is harder to get, which is worse for the economy, which makes banks tighten up more,' said Mr Ray Soifer, chairman of bank consulting firm Soifer Consulting.

'Fed rate cuts will have some impact, but cutting rates by itself does not improve the availability of credit.'

The central bank's Beige Book survey of economic conditions released on Wednesday showed that both business and consumer lending activity slowed from mid-November through December, with most regions reporting tighter credit conditions.

Banks have reason to be concerned about credit quality as US consumers struggle to stay current on a growing pile of debt.

American Express Co, which traditionally focuses on wealthier consumers less exposed to an economic slowdown, said that delinquencies suddenly ticked up in December.

Citigroup Inc, which is raising at least US$14.5 billion (S$20.7 billion) of new capital and cutting its dividend to help repair its balance sheet, said fourth-quarter credit costs for US consumer loans jumped because of rising delinquencies in credit cards, mortgages, and auto and personal loans.

Borrowers with clean credit histories will still find lenders willing to push money their way, but the easy money that kept the economy rolling in recent years has dried up as banks, hobbled by the US subprime mortgage mess, scramble to shore up their balance sheets.

Deutsche Bank estimates that losses from subprime mortgage loans will reach US$300 billion to US$400 billion, of which one-quarter will probably fall on the banking sector.

'We are more optimistic than some observers who have predicted a major credit crunch as a result of writeoffs on subprime loans,' they wrote in a note to clients.

'At the same time, however, we expect the balance sheet repairing process to reduce banks' inclination to extend new credit, resulting in higher lending rates and tighter lending standards.'

Pay now, pay later

There are already subtle signs that consumer credit terms are tightening, and that could be particularly painful for the US economy because consumer spending accounts for more than two-thirds of economic activity.

Credit card issuers are mailing out fewer solicitations, according to Credit Suisse research. The credit card industry mailed out 595 million offers in November, 3.0 per cent lower than October and 11.0 per cent below a year ago.

Loans from auto dealers have not kept pace with the Fed's interest rate cuts. The average interest rate on new car loans was higher in November than it was in August, even though the central bank lowered benchmark overnight rates by three-quarters of a percentage point over that period. It has since reduced them a further quarter percentage point.

Wobbly financial markets aren't helping matters either. In the asset-backed securities market, where consumer loans are typically packaged and sold, investors are demanding richer compensation for taking on risks. That is raising borrowing costs for lenders, and they will no doubt seek to recoup those expenses, Credit Suisse analyst Mr Gary Balter said.

Federal Reserve data show that household debt grew at a 7.0 per cent annual rate to a whopping US$13.6 trillion in the third quarter of 2007. However, the growth rate slowed from the first half of the year, primarily because the housing market downturn has reduced demand for mortgage-related debt.

On the corporate side, loan volume for companies with high credit ratings remains robust, in part because businesses are relying less on other funding avenues, such as commercial paper. But junk-rated companies are expected to borrow less in 2008 than they did last year, because banks and investors are much less interested in taking that risk.

'Some businesses will now decide to wait before making capital purchases. Banks are tightening up on credit, and consumers and businesses are more worried about the economy, too. Clearly the probability of recession is higher,' said Mr Chris Chmura, chief economist at consulting firm Chmura Economics & Analytics in Richmond, Virginia.

Market Update.

2008-01-16T10:52:00.000+08:00

Here are some views shared by Oldman at Shareinvestor with regards to the current market condition:

On 14 January 2008 -

It is good at this time to think hard about Warren Buffett had said in the past about inactivity being an intelligent way to invest. We don't need to be an all season player. We can play our own game....and, play only when the market conditions are right. We can ignore Mr Market's interests to ask us to play his game.

For me, I only invest in stocks that have a high margin of safety. This means that I don't park my money in the hottest stocks around. In fact, most of my money is in truly boring stocks. When the market is bearish, I continue collecting these stocks. I do this because like you, I think the megatrend is still bullish. Take care.

------------

"I call investing the greatest business in the world because you never have to swing. You stand at the plate, the pitcher throws you General Motors at 47! U.S. Steel at 39! and nobody calls a strike on you.

There's no penalty except opportunity lost.

All day you wait for the pitch you like; then when the fielders are asleep, you step up and hit it."

"The stock market is a no-called-strike game. You don't have to swing at everything--you can wait for your pitch. The problem when you're a money manager is that your fans keep yelling, 'Swing, you bum!'"

- 1999 Berkshire Hathaway Annual Meeting

On 15 January 2008 - Stocks I will avoid in a downturn

In the event of a worldwide economic downturn, I will be extra careful with the following types of stocks:

1. Companies that are highly leveraged. These companies are leveraged because they have bought assets with borrowed money. If these assets start depreciating in value, it may affect its balance sheet and maybe even, its viability, esp if the company is small.

2. Companies that manufacture goods for the American marketplace. Once demand starts tapering off, it may not be that easy for factories to reduce their overheads within a short period of time. As a result, their P&L will be likely to be affected.

3. Oil related companies. When demand is reduced, the need for oil is likely to ease.

4. Property and property development companies. When the stock market falls, it is likely that property values will also fall in tandem, though not immediately.

5. Retail related companies. Sooner or later, if there is a worldwide economic downturn, it will affect Singapore's retail businesses.

As for me, since Feb 07, I have moved my fundamental stocks into those with a higher margin of safety....which in my definition are those with no borrowings and whose assets, which are mainly cash or cash equivalents, is more than its market capitalisation....and its core business is for free.

Though I am still bullish, given such uncertain times, it is better to invest with a higher margin of safety.

Market Update.

2008-01-14T16:19:00.000+08:00

This weekly commentary was compiled by DBS Vickers this morning:

Stay cautious this week, as the market is likely to continue its downward bias. The play on recent IPO listings has waned while S-chips could suffer more downside amid concerns about margin pressures as investors unwind.

The impact of the credit crisis on the corporate earnings of US financial companies will be accessed. Expect financial companies to announce more losses stemming from their exposure to mortgage-related investments.

Citigroup releases results on Tuesday, JP Morgan Wednesday and Merrill Lynch on Thursday. The releases of December US PPI and CPI will also shed more light on inflationary pressures given the weakening USD.

Trading interest during the past 2 weeks centered narrowly around selective recent IPO listings KTL Global and First Resource as well as crude palm oil (CPO) plays. However, short-term interest among recent IPO plays has waned. Our CPO preferred pick First Resource surged briefly beyond the maximum short-term technical potential of $1.90 (peak of $1.95 or +30% gain) before succumbing to profit taking.

Inflation and margin pressure worries weigh down on S-chips

While commodity related stocks rode on escalating raw material prices, manufacturers are suffering from higher input costs. S-chips were also sold down last week as investors grew increasingly worried about the impact of escalating oil and commodity prices on profit margins.

Concerned about public anger over escalating prices of basic necessities, the Chinese government will introduce partial price freezes on basic commodities such as gas and oil while price rises for water, petrol, heating, public transport and school fees will be banned.

To contain inflation, the Chinese government could also allow the RMB to appreciate. But this will also make Chinese exports less attractive. DBS Research expects the RMB to appreciate 10% to 6.7 against the USD this year.

Another source of S-chip weakness is the potential unwinding of long positions. While property and bank stocks started to weaken at the start of 2H last year and the technology sector has been weak for a long while, S-chips enjoyed a 4Q07 rally on optimism of QDII fund inflows.

S-chips may be more heavily owned compared to the other groups. Given the current market uncertainty, S-chips are more prone to weakness should nervous investors decide to adopt a ‘sell now buy back later’ strategy.

Textile and fiber (T&F) stocks were sold off in the latter part of last week on concerns about the impact of high oil price. China Sky broke below the technical support of $1.84 on Friday, turning this level into a resistance point. There is downward bias towards $1.43 to 1.53.

Fibrechem also broke below its technical support of $1.26 last week and traded as low as $1.04. The stock could drift towards $0.94 before rebounding. T&F stocks China Sky, Fibrechem, C&G Industrial and Sino Techfibre are now trading below their 200-day moving average.

Rising oil price could also impact PET bottle manufacturer Full Apex and chemical plays such as SP Chemical, whose raw materials are oil based. Shares of Full Apex and SP Chemical are also trading below their 200-day moving averages.

Escalating soybean price have taken their toll on the shares of Pine Agritech and Celestial Nutrifood, corn price on Luzhou Bio-chem and China Sun, live pigs on People’s Food.

Synear could be affected by a combination of rising pork, flour and packaging materials prices. Technically, the stock is struggling below its 200-day moving average while the 60-day moving average has just cut below the 200-day moving average, indicating a weakening technical trend. The stock looks in danger of falling below $1.50.

Price competition is also another factor to watch for. China Hongxing could face increasing competition against its larger competitors Li Ning and Anta. The recent equity rising exercise has also diluted EPS. The stock is currently trading at a FY08F PE of 22.5X. The technical trend looks weak. It dipped marginally below the 200-day moving average on Friday and looks in danger of falling below $0.845 down towards $0.71.

Substantial shareholders reducing stakes on several prominent S-chips also marred the week:

1. Baring Asset Management ceased to ba a substantial shareholder of Yangzijiang following the sale of 8.45mil shares.

The stock finally cracked down below its recent low of $1.85 last Friday.

2. Legg Mason’s stake in Jiutian Chemical is reduced to 6.72% through the sale of more than 7mil shares.

The stock plummeted below Nov07 low of $0.42 last Tuesday on worries about margin squeeze for its key product DMF following price cuts by major competitor Hualu. Technical resistance is now at $0.34.

Short-term overhang pressure is likely to put a price cap on the stock given the high average daily trading volume of 38.3mil shares last week. This is higher than the average volume 17.7mil shares over the past 60 trading days. Avoid the stock until the overhang tapers off.

3. JF Asset Management reduced its stake in Celestial Nutrifoods by 6.5mil shares to 7.86%.

The stock had been weighed down by concerns about escalating soybean prices on margins.

On a less somber note, DBS Research’s positive view on the hospitality sector. CDL Hospitality Trust gained 6.25% for the week to $2.55. The current construction boom saw Lian Beng reporting a nearly 4-fold increase in 1H08 earnings to S$8.1mil as revenue gained 23% to S$106.3mil. However, affected by the weak market sentiment, the stock was sold off on news.
Construction plays could be a sector to position into once market sentiment improves.

Straits Times Index Technical Outlook

While the market breadth indicator slipped further to -33.7, the reading is still not low enough to signal a market bottom. Typically, an index bottom occurs after the indicator falls to -60 to -100 and starts to exhibit positive divergence against the ST Index. There are currently no signs of that development at all.

The newly launched FTSE ST Index broke below the 3300 psychological support on Friday.

We maintain our view that the index should head towards 3000 by the end of 1Q.