Wednesday, September 28, 2011

Unable to post for the time being

I have been extremely busy with school and settling in that I feel I will not have much time to post for the foreseeable future. Thanks to all readers and commenters thus far.

Friday, September 9, 2011

Divested Mapletree Industrial

Queued and sold MIT at $1.195 today, giving about a 25% profit after accounting for dividends.

Sold as it's approaching resistance at 1.20 and I'm betting that the downside risk is much more than the upside potential at current prices. Hence, decided to take profit off the table.

At $1.20 MIT's yield is at 6%, commensurate with A-REIT but with higher gearing. Thus I think MIT has gone a tad over-valued.

There are better deals out there and I will be looking to put some capital into other counters should their prices fall and value emerge.

Thursday, September 8, 2011

ST Engineering: Analyst report

Protect your portfolio! This should be the best time to buy STE for its defensive
quality in the face of volatile markets.
Indeed, its share price has outperformed the
market by 11% in the last three months. With little room for sharp depreciation in
the US$, we are hanging on to hopes of earnings surprises, which we believe can
offer re-rating catalysts. Consensus expects the US$/S$ to hover at S$1.18-1.20
into 2012, which would have a negligible (1% or S$6m) impact on STE’s PBT in
the worst case. In fact, we believe current valuations of 15x CY12 P/E (below its
average trading band of 16x during the previous crisis) have priced in fears of US$
deterioration and macro uncertainties. No change to our earnings estimates, target
price of S$3.61 (still based on blended P/E, DCF and dividend yields).
• Zero order-book risk. Unlike its conglomerate peers with substantial exposure to
the offshore & marine space, STE’s order book (S$10.8bn) is secure with almost
zero risk of cancellations as 40-50% of its contracts are defence-related.
Commercial contracts are mostly from long-term customers with strong financials
including Fedex, American Airlines and Japanese airlines. STE has also been
chalking up orders from all segments worth about S$1.5bn YTD.
• MRO recovery intact. More than 1,500 narrow-body aircraft (delivered in 2009-
2010) could be scheduled for “C” checks (18-24-month cycle) starting 2H11,
affirming our view that the MRO recovery is on track.
• High yields and cash-rich. STE offers a safe refuge with its fairly attractive
dividend yields of about 6%, only slightly lower than the 7% from telcos and REITs.
The yield is also backed by a solid balance sheet as it continues to generate net
cash (S$220m as of 1H11). It is also one of two companies in Singapore with an
AAA rating (the other being Temasek) from Moody’s.

Unscathed. This should be the best time to buy STE for its defensive quality in the face
of volatile markets. Indeed, its share price has outperformed the market by an average
of 11% in the last three months while other offshore & marine/conglomerate stocks are
down about 10% relative to the market. We believe a solid balance sheet with a netcash
position, a secure order book and below historical average trading valuations
could be its winning factors.

Taken from here

I didn't know ST Engineering was a AAA rated company alongside Temasek.

Funny that analysts should start praising ST Engineering for it's defensiveness now. I would have thought that all counters will drop in a bear market. Maybe, he who drops least, wins. lol!

Again, it all boils down to one's money management.

Wednesday, September 7, 2011

UK Pound Sterling against Singapore Dollar

Period of extreme volatility in the forex markets too. Pound Sterling and Euro have declined precipitously against the Singapore Dollar as I write this. Pound to 1.929 and Euro to 1.69. The former is a historical low (yet again), the latter is not too far away from it's historical low at 1.55-ish.

Swiss National Bank has also publicly stated it will intervene in the forex markets to keep EUR/CHF at a maximum of 1.20, which led to EUR/CHF to drop to... you guessed it... 1.20. It's also dropped to 1.40 against the Singapore Dollar.

Interestingly enough, the US dollar has risen against the Singapore dollar. Now stands at 1.211.

Long term prognosis for these beleaguered western currencies? Heal, relief or comfort?  I have no idea, but it doesn't look too good. As far as I know, currency exchange rates in the long term are very based on macroeconomics.

Let me try my hand at this.. In a fictional world with two countries only, A and B:

1.) If A's inflation rate is 4% whilst B's is 6%, ceteris paribus, A's currency will strengthen against B's.

2.) Again, if country A's money supply rises slower than B's, ceteris paribus, A's currency will rise against B's. This is because B has essentially more numbers chasing after the same amount of goods.

3.) If country A's interest rates are higher vis a vis country B's, ceteris paribus, A's currency will strengthen against B's.

4.) If country A's current account deficit is bigger vis a vis country B's, ceteris paribus, A's currency will decline against B's. This is because A owes B more money than B owes A. Hence, A has to supply the market with more A$ to buy the limited supply of B$. Supply of A$ increases, Demand for B$ increases, B$ appreciates.

5.) If country A's government is constantly facing unrest and hostility whilst B's government is keeping the peace, B's currency will rise vis a vis A's.

6.) If country A's public debt is bigger as compared to B's, A's currency will decline. This is because a large debt encourages inflation, which brings us back to point 1.

7.) Market Sentiments (duh)

8.) Expected Central Bank actions w.r.t. interest rates, money supply easing etc

Look at Britain vis a vis Singapore. Point 2, 4, 7 and 8 I believe are to blame for this decline.

The sun never sets on the British Empire? Hmm....

But you know what? This is GREAT! This leads to lower cost of education for me, and a cheaper European holiday for my fellow countrymen. Majulah Singapura!