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Top 3 Trading Ideas For The Week
Tradeable, Tradeable Ideas | 10 September 2014
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By: Tradeable
Articles (256)

Singapore’s stock market seem to have been on steroids the past week and a half. It was possibly playing catch up with US markets after markets there held their heads above record highs. In spite of that, many market analysts are starting to feel a bit giddy from the heights generated from the increased buying.

Even as markets on a whole are inching upwards, there is incredible need for investors and traders alike to sift through the garbage to find worthy investment assets. We look at the top three trading ideas that were generated over the past week and a half and give our own views.

1. Technical Rebound for the Euro

  1. The Euro appears to have been weakening against the USD since 8 May 2014.
  2. It has hit a new low of 1.3108 to the dollar. The chart’s RSI also looks to be deeply in oversold territory, indicating a possible entry point for investors to go long.
  3. A technical rebound looks to be on the horizon, offering short term traders a good return for the next two to three weeks.

Read More>>

What we think: Indeed, the Euro seems poised for a rebound. however, do not expect the Euro to go anywhere further north from here. Already rangebound since this idea was posted, I expect the currency to remain fairly weak. Why? I point my finger at the European Central Bank.

Last week, the Mario Draghi and his fellow European central bankers decided to lower the interest rates there. Already, deposit rates were negative (-0.1 percent), that is to say, banks had to pay the central bank to deposit money with them! The interest rate slash bought that negative figure further south to -0.2 percent.

Not to be outdone by negative deposite rates, Draghi announced that it would start to purchase asset-based securities (ABS) from October onwards. Does this sound familiar? Oh yeah, the US is currently doing it and it’s called Quantitative Easing. And what happens during QE? The domestic currency weakens! So don’t expect the Euro to be recovering to former levels any time soon.

2. Investing In Quality Retail Assets – Croesus Retail Trust

  1. Croesus Retail Trust (CRT) recently announced top and bottom lines that were above forecast.
  2. The better than expected performance was largely due to a positive surprise from CRT’s newly acquired malls that contributed significantly more.
  3. Shareholders can look forward to even better returns in FY15 as the newly acquired malls contribute for a full year.

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What we think: Croesus Retail Trust seems to have largely missed the gaze of dividend-loving investors. Despite enjoying a fairly bullish run since May this year, the counter has so far failed to recapture investors’ attention as it did during its IPO last year. This could be due to several factors, chief amongst them being the fact that the trust appears to be entirely foreign – finances denominated in the yen, holds only Japanese retail malls.

While this fear might not be misplaced, I feel that the discount placed on the counter is too high. As with the analysts at Phillips, other analysts also feel the counter is worth buying at its current price levels. As a sign that management is not resting on its laurels, they have come out saying that they look to acquire more malls to add to the trust’s portfolio.

True to their word, the trust recently announced the acquisition of One’s Mall in the Greater Tokyo region.

CRT's newest acquisition was made at a 5% discount and could be slightly yield accretive

I’d be on a look out for this one, more acquisitions would only mean better yield in the future. It already has a crazy yield of about 9 percent (based on $0.965)!

3. Isoteam: The Best Is Yet To Come

  1. ISOTeam announced its third consecutive year of record revenues. This has in turn boosted margins and gross profits.
  2. The company also only recently started giving out dividends to shareholders. This should spark some interest from dividend-hungry investors.
  3. Excellent growth opportunities as the government embarks on promoting resource efficiency. This should boost ISOTeam’s operations.

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What we think: ISOTeam’s repairs and redecoration segments in the public sector stands out as being very defensive and offering recurrent streams of income. Perhaps unknown to most investors, the demand for such services is very inelastic as it is protected by legislation. Currently, laws require the external walls of public buildings to be repainted at least once every five years.

With its counter parties being government agencies, the company also experiences low counter party risk. Above all it remains the only company with a license to apply for paint works with SKK and Nippon Paint Singapore in the public sector.

Inelastic demand, high barriers to entry (exclusive paint license), and low counter party risk. Nothing else further to add. Oh, did I mention it is the only company listed on the Singapore Exchange that does such a thing?

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ISOTeam  -- -- --   
Business: Engaged in the building maintenance & estate upgrading industry. [FY18 Turnover] Addition & alteration works (43.2%), Repairs & redecoration works (23.6%), others (21.4%), coating & painting (11.8%).

Insight: May-19, 9M19 revenue rose 62.8% with significantly... Read More

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