Singapore stock market news :

Tat Hong issues profit warning, DBS downgrades call, CIMB and CSFB maintains Outperform calls :

DBS downgrades to fully-valued with target price S$0.62 :

Tat Hong alerts investors that its 3QFY09 earnings would be lower yoy, blames on forex losses and lower equipment sales. We have already imputed the weak earnings in our FY09-10 forecast, which are 16%-32% below consensus. Our TP is revised down to S$0.62, based on lower multiple of 0.8x P/NTA. This implies a 10% downside from current share   price. The stock has appreciated 20% since our upgrade in November. We advise investors to take profit now. Downgrade to FULLY VALUED.

CIMB maintains Outperform with lower target price of $0.90 :

To account for the adverse currency impact as well as slower demand,

we have cut our forecasts by 14-22% for FY09-11, mainly for its trading business,

which includes spare parts. We also reduce our forecasts for its rental segment by about 7%, to be conservative. Despite the above, we believe TAT’s longer-term fundamentals remain good, as management has been proactive in increasing its business resilience by developing its rental business, while taking measures to reduce trading inventory during this downturn. Management and the Ng family have also been purchasing TAT shares in past months, underscoring their confidence in the business. We maintain Outperform, albeit with a reduced target price of S$0.90 (previously S$0.93) following our earnings reductions. Our target is still based on 0.8x CY09 P/BV.

CSFB maintains Outperfom with target price S$0.95 :

These events were anticipated, and have in aggregate, driven our recent earnings downgrade. We have factored in a weaker 2H09, both on a HoH and YoY basis, as we expect equipment sales, contributing an estimated 30% of total revenue in 2H09, and 24% of total profit, would fall 54% YoY and 57% HoH. This suggests that downside risks to our FY09E forecasts, as well as that of consensus, are limited. We therefore believe that management has been conservative in issuing the profit guidance announcement, and also note the fervent insider buying activities since Aug. 2008. Near term, however, we believe that Tat Hong’s shares could see weakness from profit-taking, given the strong 73% rally since Oct. 2008. We continue to view Tat Hong as well-leveraged into construction sector demand across Asia, which is expected to remain strong over the medium term, given its operational scale, a clear growth strategy, and strong balance sheet. Tat Hong currently trades on 0.8x P/B, at a-fifth of its historical high of S$3.42 in Nov. 2007, about 35% to its historical lows (of 0.5x P/B), and with a 10.5% dividend yield support.

rooney

Singapore stock comments

Singapore listed stock Ferrochina has been sold down heavily despite posting a positive set of financial results for 2Q08 on 14 August.  Subsequently, stock price fell from 1.29 to a low of 0.925….down a whopping 28.3% within 5 trading days.

I usually do not use fundamental analysis (FA) to trade stocks but would  prefer to combine FA with TA (technical analysis).

Some of the technical indicators that i am using such as CCI, MACD, W%, RSI are telling me to be alert to a potential rebound. I would be looking at 1.02 as a near term resistance. It has been tested twice but failed to close above this level.  To me, a close above 1.02 will indicate potential more upside since this near term resistance is taken out.

One may ask how can one knows if 1.02 can be successfully take out?

The answer is…..I will never know for sure, so I will usually take a small position when 1.03 is triggered and wait till 430pm and see if price is still above 1.02 then may add more as market moves closer to the end of the day.

With Dow Jones powering up more than 100 points tonite, there is a good chance that 1.03 may be triggered……no point guessing though I shall just sit back and wait.

happy trading

rooney

4july2008

Hong Kong dry-bulk shipping line company Maritime Capital Shipping has
decided not to proceed with an initial public offering (IPO) in the Singapore Stock Exchange due to weak sentiment for the Singapore stock market in recent weeks.

A report quoted the CEO of Maritime Capital Mr. Mark Harris saying “The performance of the global equity markets has deteriorated sharply in the last few days and equity markets have closed for IPOs, regardless of the underlying fundamentals of the company.” Mr. Harris did not say when or whether the company might reconsider listing plans.

After witnessing the “failure” of some of the recent IPOs in Singapore share market, most investors would find it hard to jump into another IPO. Most recent Singapore IPOs have tanked on day one of listing and are still trading below their respective IPO prices. The last count is that 15 of the 18 new companies whose shares are listed in the Singapore stock exchange this year are now trading below their offer prices.

After the recent sell off in the broad market, some recent IPOs are trading at 3-4 times FY08 earnings…….it’s no wonder new IPOs are finding hard convincing investors to subscribe to them at 4-5 times FY07 earnings.

If you are value investors, do some homework yourself on some of the recent IPOs where stock prices have fallen to 3-4times FY08 earnings. Monitor their 2Q08 results and track if these companies are on track to meet consensus estimates or the forecast FY08 earnings given during IPO. If they are on track, then the next question is WHEN is the right time to accumulate …….this is when Mr. Chart’s technical indicators and analysis come into play

Happy Hunting!