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Headliners (Cosco, Hyflux, Tiger Airways, Keppel Corp, Yangzijiang, Man Utd, Technics Oil)
Headliners | 26 August 2011
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By: Jade Lee
Articles (97) Profile

DBS Vickers Cut Earnings Forecast For Cosco, Hyflux & Tiger Airways
DBS Vickers Securities (DBS Vickers) has cut the full-year earnings forecasts for several industries, taking examples of COSCO Corporation (Singapore), Hyflux and Tiger Airway. The brokerage said COSCO’s let-down was in its margin decline across all segments including offshore. The brokerage has cut its profit forecasts for COSCO for FY12 by 18%, translating to a full-year forecast of $246m. Meanwhile, a fire at Hyflux’s plant in Magtaa, Algeria, in late July has pushed back its commissioning by nine months, leading DBS Vickers to cFederal Reserve Chairman Ben Bernanke said that the purpose of QE II was to depress the yield on US Treasuries. Before the Fed can even start with QE III, S&P did the Fed a favour by downgrading the sovereign rating of the US. The move resulted in a market confusion with huge intraday swings that even the speculators could do nothing about but to join in the fray.

After three weeks, the situation has more or less stabilized and the effects of the downgrade should wane off. There are a lot of funds with nowhere to go, as deposit rates with banks are too low, stocks may fall further and gold has become too speculative. As a result, money has gone to Treasuries simply because it is still the safest until another economic superpower emerges.

The American society is very divided by political inclinations but almost everyone is sure that the US economy is not positive. The US economy is recovering but the steps are gradual. Investors expect QE III in the future but nobody can be certain when that will happen. As companies are still making profits, it is not important that there is no QE III for the time being.

Republican presidential candidate Perry of Texas criticized the Fed for printing money, which is equivalent to high treason. The reason for him saying that is to prevent the Fed from launching the QE III, which is bad for the Republicans presidential bid if the US economy recovers. The only reason that US did not fall into a double-dip recession is because of QE II but the finger is now pointed at the Fed and President Obama for not being able to help the US economy.

Investors should not sell during a correction because it is unlikely that he/she will buy back even when the share price is a lot lower. There is no more belief in the stock market after a big correction and the attention is likely to be shifted elsewhere and not the stock market hence attention will only be shifted back to the stock market only when prices have rallied. How many investors can take the stress? If you cannot take the stress, reduce your portfolio because there are not many Warren Buffett in the world. He is starting to buy shares once again.

The bigger the correction, the better the long-term value because people like Li Ka Shing are also buying. We should not follow him because he has deep pockets and the long-term conviction to ride out corrections.

A lot of companies are reporting better-than-expected profits but share prices are falling because of the Europe and US problems. It is a test of investors’ will and determination.

Gold prices are surging but oil prices are falling: gold prices rise because funds have nowhere to park their money; and oil prices are falling because storage cost is high and slowing demand will also hit oil price.

If oil prices were to fall even further, China will step in to buy because it has a lot of US Dollar and will also need oil to grow its economy.

Lately, HK-listed Singamas Container (formerly listed on SGX) reported a sterling set of results but its counterpart who had earlier wanted to list on the Hong Kong Stock Exchange (HKSE) gave up plans to do so due to bad market conditions. Although the container shipping business is not doing well, container players are still doing well.

There were rumours that China’s government-linked funds came in to support the market. The other piece of good news is that China did not raise interest rates although inflation was higher than expected. The lending business to the Chinese public is such a lucrative deal so much so that China Mobile wants a piece of the business with its Rmb300 billion in hand.

Chinese Vice Premier Li Keqiang brought good news to Hong Kong when he said that RQFII will be launched, but skeptics say that benefits are minimal because only Hong Kong securities firms with operations in China will benefit from this Rmb20 billion deal while the policy to allow Mainlanders to buy ETFs will only benefit the blue chip stocks through the exchange traded fund and not individual stocks.

Although there is no direct buying of Hong Kong stocks, there have been other discreet ways that Mainlanders have been using to buy Hong Kong stocks. Upon the announcement by Li Keqiang to strengthen financial market ties, the HKSE, together with its China counterparts, immediately set up a joint venture company to deal with related businesses while Hong Kong will have more Rmb-denominated investment products.ut Hyflux’s FY11 profit forecast by 24%. Meanwhile, Tiger Airways suffered severe cuts in its profit forecast, as analysts expect heavier bleeding in the second quarter. This comes as it reported slow passenger numbers for Jul-11 in light of the grounding of its Australian operations. DBS Vickers now expects Tiger to post a net loss of $10m for its FY12.

Keppel-Linked Norwegian Associate to Merge With Floatel
Keppel Corporation plans to raise its stake in Floatel International, an Oslo-listed company and take it private by merging its associate Aqua Pellenteqsue with Floatel. Floatel owns and operates accommodation vessels for workers on an offshore oil rig. Keppel intends to convert shares in Aqua to shares in a newly combined company. The deal will cost an estimated NOK923.5m ($204m). Keppel said that the merger was proposed in view of “the long-term attractiveness of Floatel’s business, which generates a recurring and stable cash flow secured through term contracts with reputable customers”.

Yangzijiang Assures Investors About Convertible Bond Issue Again
Yangzijiang Shipbuilding (Holdings) sought to assuage investors for the second time in a month, about its financial assets and a potential convertible bond issue. It maintained that it had “no immediate convertible bond financing plan in the pipeline”. It also assured investors that it had a conservative approach to investing in its held-to-maturity financial assets. As at 30 Jun, Yangzijiang held $1.89b worth of fixed rate instruments offered by banks and trust companies. It clarified that more than 50% of its existing order book of about US$5.52b comes from orders that were locked in before the financial crisis struck.

Manchester United To List On SGX As Early As September
Manchester United may list on SGX as early as next month. Owned by billionaire Malcolm Glazer, the club has hired Morgan Stanley and JPMorgan Chase to help manage its US$1b Singapore stock market listing, sources with direct knowledge of the situation said. According to Reuters, the England’s most successful club hopes to raise as much as US$1b from the IPO, which it hopes to complete by the end of the year, with media reports suggesting that around 25-30% of the club will be sold. Short on cash, Glazer had completed a successful GBP 504m bond issue early last year, but despite that, GBP 478m of debt had piled up by the end of March this year. Analysts also voice skepticism about whether investing in the club will bring good returns given that the club is debt-laden and the objective is to pay off those debts.

Technics O&G Bags Deals Worth $8.5m
Technics Oil and Gas has been awarded two contract engineering (CE) deals worth a total of $8.5m, to fabricate structural module for a Malaysian client and the construction of a power generation modules for FPSO (floating production, storage and offloading) Petrojarl Cidade Itajal. According to Robin Ting, executive Chairman and Group Managing Director, the group has been consistently securing contracts in 2011 so far and they are pleased that this momentum in order flow continues. “Given our recent successes in EPCC (engineering, procurement, construction and commissioning) and CE projects in several countries in the region, we are witnessing higher interest level and support from large multinational corporations, while we maintain strong ties with key customers.”

Jade manages and oversees a portfolio of stocks which are mainly focused on the mining and property sectors at Shares Investment.

Please click here for more information about this author.

COSCO Shipping Int'l (S)  -- -- --   
Business: Engaged in shipping and other logistics services. [FY18 Turnover] Logistics (69.7%), property management (11.9%), Shipping (9.5%), ship repair and marine related activities (8.9%).

Insight: Mar-19, FY18 revenue jumped 340% to $163.7m and gr... Read More
Hyflux  -- -- --   
Business: Provides integrated water management & environmental solutions. [FY17 Turnover] Municipal (82.5%), industrial (16%), others (1.5%).

Insight: Mar-19, 9M18 revenue sank 75% due to lower enginee... Read More
Keppel Corp  -- -- --   
Business: [FY18 Turnover] Infrastructure (44.1%), offshore & marine (O&M) (31.4%), property (22.5%), investments (2%).

Insight: Apr-19, 1Q19 revenue rose 4.1% underpinned by high... Read More
Yangzijiang Shipbuilding (Hldgs)  -- -- --   
Business: Co is one of the largest non-state owned shipbuilders in China. [FY18 Turnover] Shipbuilding (58.1%), trading (32.8%), investments (6.7%), others (2.4%).

Insight: Apr-19, 1Q19 revenue jumped 26.8% to Rmb6.3b due t... Read More
Technics Oil & Gas  -- -- --   
Business: Co is a full service integrator of compression systems & process modules serving mainly the O&G sector. [FY14 Turnover] Contract engrg (46.4%), procurement svcs (33%), engrg, procurement, construction & commissioning (20.6%).

Insight: Nov-15, FY15, Co rebounded strongly back to the bl... Read More

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