Char[9] - IPS Securex

The security solution provider listed on 2014 and quickly caught attentions among trader. It has implemented shares split in last two years due to overwhelming demand. The price rose quadruple in half year since IPO. After first shares split, it surged to three folds in six months again. Price seems to calm down after 2nd shares split.

Recently, the counter has seen some significant volume in transaction again. EMA 10 has cut above EMA20 with bullish candlestick. Shall history repeats, the counter could be shining star again. Immediate price resistance is 0.275. Historical height is 0.9. Immediate support is 0.186.

Mar[8] - Market Update

Crude Oil:

Although US crude oil inventory unexpectedly up 9mil barrels week on week, oil price refused to retreat. It has been moving well within rising channel as above. The Baker Hughes rig count released on last Thursday showed a drop of 15 oil rigs active in the US for the week ending March 25. 

Singapore:

STI couldn't break up from 2907 which was also the resistance on last Dec. Market sentiment calmed down after strong rally on week before, especially with the slump on oil price. Federal banker's hint about potential April hike could play another factor.

Market Calendar on coming week:

(SG: Singapore; CH: China; US: USA)

Mar[7] - DBS (Asset hunting)

COUNTER: DBS Group Holding Limited

OVERVIEW:
The household brand is one of the leading financial groups in Asia with over 280 branches across 18 markets. Headquartered in Singapore, it has growing presence in Greater China, Southeast Asia, and South Asia. Singapore government investment company, Temasek Holding is the major shareholder at 30%.

HIGHLIGHTS:
[1] On 2015, its total income crossed $10b mark and net profit hit $4.3b. Both were at record high with 12% year on year. Its cost-income ratio maintained at 45% and net interest margin (NIM) has hit 1.84% in 4Q15 which is highest in five years.

[2] Asset quality is resilient with non performing loan (NPL) maintained at 0.9%. Its capital position is comfortable after factoring in latest Basel 3.5 changes. At 12.4% Core Tier 1 capital, it has the highest capital adequacy level among its peers.

[3] Its CEO, Piyush Gupta estimates that even if oil price were to remain between US$30-40 range for 2016, non performing loans may not be more than $200m.

INVESTMENT THEMES:
[1] Incremental contributions from its bancassurance deal with Canadian insurer Manulife which is estimated to add $250m to profits in 2016. The deal is to capture growing insurance market in Asia.

[2] With the largest saving and current accounts in Singapore, it has the cheapest cost of funds and the biggest beneficiary of rising rates.

[3] Valuation is attractive. Current PB could translate to 2% of non performing loan which is double of current NPL (0.9%)

PRICE TREND:
The counter has been retreating from resistance at 16. Bargain hunting window presents in such correction phase. 

*** Note: Same counter has been mentioned in Aug[4] @ 2015 ***

Mar[6] - Market Update

Crude Oil:

After OPEC and Russia confirmed a meeting on mid April, market sentiment is getting more bullish on crude oil. It has broken resistance at USD40 last week. Next strong resistance could be USD43.

US:

Market welcomed news from Federal Reserve that rate hike could be scaled back in 2016. Also led by bullish oil, DOW JONES recovered lost ground since early 2016. It swung into black first time this year. 

Singapore:

Without rate hike on last FOMC, USD has been weakening. Generally Asia bourses were beneficiaries. STI moved back to 2920 which was the peak seen on Dec 2015. Current price translates to PE ~ 12. The mean value of PE range for STI is 15.4. 

Market Calendar on coming week:

(SG: Singapore; CH: China; US: USA)

Mar[5] - CSE (Survivor in Oil Glut)

COUNTER: CSE GLOBAL LTD

OVERVIEW:
In 1985, CSE commenced as a engineering project division of Chartered Electronics Industries, the electronics arm of Singapore Technologies (ST). It formed company in 1997 and listed in SGX two years later. Throughout a series of acquisition, it has transformed itself to be global organisation with over 1300 employees worldwide, such as US, Australia, China and India.

CSE offered integrated solutions to industries in Automation, Telecommunications and Environmental sectors. Recognized as one of the market leaders, it provides SCADA (Supervisory Control & Data Acquisition) systems to a wide range of industries, such as fire alarm, offshore, etc. It also develops, manufactures and sells electronics and micro processor monitoring equipment.

HIGHLIGHTS:
[1] Amid recent global economy slowing down especially in oil industry, the counter registered its FY2015 with revenue and profit at $412m and $34m which is down 1% and 3% year on year. Gross margin maintained at 28%.

[2] In geographical segments, Americas and Europ/Middle East/Africa saw increasing revenue at 6 and 8% year on year, but being offset by Asia-Pacific which down 15% year on year. It was mainly attributed to lower revenues in Australia, coupled with unfavorable exchange impact due to weakening of Aus Dollar.

[3] Its major revenue (80%) came from Oil & Gas industry. FY2015 saw this segment contributed revenue at $333m which is up 4% year on year.

[4] As a result of achievement of project delivery, operating cashflow registered at $41m, up 283% year on year. It is currently in net cash position with $54.2m and low gearing ratio at 22%.

INVESTMENT THEMES:
[1] Valuation is undemanding as below

[2] New acquisition of CC American (operated in US energy industry) should contribute extra earning at 0.06 per shares for FY2016. The management indicated that mining activities in Australia and Canada seems to be picking up.

[3] In Singapore, CSE is one of the suppliers to NCS-MHI consortium that won $556m ERP 2 contract awarded by the Land Transport Authority (LTA).

PRICE TREND:

Chart[8] - China Everbright

Upper chart shows that buyers could be positioning in the counter as volume is significant with price moving upwards. Lower chart shows that price rebounding from EMA20 and breaking EMA10. Trader could take entry ~0.51 and target profit at ~0.54 which is upper band of Bollinger Band. Shall price break down to 0.49 (middle of Bollinger Band), trend could be pointing down.

Mar[4] - Market Update

Crude Oil:

Another bullish week for crude oil. It has broken resistance at 38. Market tended to believe oil production has been slowing down in US. Further push is pending on concrete action about production freeze among OPEC and Russia.

US:

Led by optimistic sentiment in oil price, DOW broke the resistance ~1713. It is looking bullish now.

Singapore:

Despite oil price rally and announcement from Europe Central Bank (ECB) to expand monetary stimulus, STI was actually moving sideway last week. Market could be focusing on FOMC in coming week.

Market Calendar on coming week:

(SG: Singapore; CH: China; US: USA)

Mar[3] - Triyards (Laggard into rally)

COUNTER: Triyards Holdings

OVERVIEW:
Headquartered in Singapore, the counter is an engineering and fabrication solutions provider focused on the offshore oil & gas industry. With its experience in delivering vessels and complex projects, it has established as a front runner under the "TRIYARDS" brand in the fabrication of liftboats and other oil & gas related assets in South East Asia (SEA). It owns and operates fabrication yards in Vietnam, Singapore as well as engineering facility in Houston, US.

HIGHLIGHTS:
[1] Its FY2015 results ended by Aug 2015 saw full year revenue and profit up 2% year on year. Its latest quarter results 1Q2016 ended by Nov 2015 saw revenue jumping 38%. Excluding one off gain registered on 1Q2015, this quarter net profit actually up 30%. The significant improvement was mainly due to new projects secured in FY2015.

[2] It has healthy account book with gearing ratio ~52% (Total debt/Equity) and interest coverage at 10. The counter doesn't need to fulfill any significant loan in following one year.

[3] Its orderbook backlog rose from USD230m in FY2014 to USD464m in FY2015. By latest quarter, it has registered backlog at USD564m. These contracts were secured from diversified client base such as CPC Corp (Taiwan state-owned oil&gas company), TORI (Taiwan Ocean Research Institute) and two more from Europe countries. The management indicated intention to look for tendering opportunity in North America. It focus on fabrication of liftboat which occupies 50% of revenue.

INVESTMENT THEMES:
[1] Current price translates to undemanding valuation at PB ~0.47 and dividend yield ~2.2%. Its dividend payout has been consistent throughout current crisis period for offshore & marine sector. Current PE ~4 is undervalued considering its steady growing of orderbook which is hardly seen among its peers.

[2] Most research houses rated the counter > 0.55 based on >6x of PE. Current shares price represents 20% of growing room.

[3] IEA (International Energy Agency) cautioned that oil glut might not be recovering soon. However, it said that the market may have finally 'bottomed out' amid recent remarkable recovery in oil price. Shall investor position into offshore counters which has been suffering the headwind, Triyards might be one of the proxies with visible growth prospect yet achieving amazing execution records the tough period.

PRICE TREND:
The counter has been showing resilient price movement throughout past 6 months although oil price has hit its 10 years trough. As a laggard to recent rally among offshore counters, value hunting window is still opened.

*** Note: Same counter has been mentioned in Jul[3] @ 2015 ***

Chart[7] - Local Banks

It was an exiting week for local blue chips as most were facing strong rally. Buyers over the past few months might be seeing light in end of tunnel! This round we combine valuation (fundamental analysis) and major resistance lines (technical analysis) in the following counters. Let use P/B ~1 as the min target (as price is still attractive) and dividend yield closer to 3% as the bonus (price tends to be less attractive). Investor could decide whether to enter or exit from the counters accordingly. Similar method could be applied on other counters as well. For potential sellers, it would be wise to spread exit points instead of one, because you might not want to miss any surprise that market brings you.

DBS:

Buyer has been in upper hand over seller, as the uptrend followed with significant volume. Current price is still below its book value. Room for value hunting is limited as of now. 

OCBC:
Similarly, the counter is under bullish trend. It has broken resistance at 8.03 and 8.52. Immediate resistance is 8.85. Buyer shall wait for a retreat. However there is not selling signal from trend yet.

Note:
Net asset value = entity's value - entity's liability 
P/B < 1 means price is under net asset value.

Mar[2] - Market Update

Oil:

US government's Energy Information Administration announced that US crude oil inventory rose to 578 million barrels last week, but output fell for six straight weeks to 9 million a day. It showed that US oil production fell to its lowest level since Nov 2014. The news gave a boost to crude oil this week. It has broken resistance ~ USD34.5. Next immediate resistance would be USD38. 

Gold vs USD:

US has been producing confusing economy data. Manufacturing PMI has been falling but unemployment rate has been staying low. Movement of gold and USD index showed that market were betting on longer period till next rate hike from US Fed. However on last trading day, a better non-farm payroll out beat market expectation. A U turn were seen on both Gold and USD index. 

Singapore:

Regional market has been rising strongly over last week. STI was one of the bullish index among the rest. Led by domestic banks counter, the index broke up resistance ~2763 decisively. It is heading to next immediate ~ 2894. Considering the upward movement of crude oil on last trading day, STI could follow suit on coming days. However rate hike worries could return soon. Next FOMC meeting is on mid March. 

Market Calendar on coming week:

(SG: Singapore; CH: China; US: USA)

Mar[1] - Centurion (Visible growth in sight)

COUNTER: Centurion Corporation Limited

OVERVIEW:
The local company started its business in optical storage media industry and listed on SGX in 1995. Following a reverse acquisition exercise in 2011, it successfully diversified into the accommodation business. As at March 2015, its portfolio consists of 14 operational accommodation assets totaling 45,662 beds. 9 of them are worker accommodation assets in Singapore and Malaysia. The rest are student accommodation assets in Australia and UK. It develops, owns and operates these dormitory assets. On 2015, it has ceased its operation in optical storage media industry.

HIGHLIGHTS:
[1] FY2015 saw full year revenue and net profit from core operation rising 24% and 14% year on year. The major contribution was due to expansion of both student and worker accommodation assets.

[2] It is in position with net liability of $50m due to partial loan maturing by Oct 2016. Management indicated sufficient cash resources and banking facilities (aggregate of $213m) to meet the financial need. Its interest coverage is 4, thus earning is enough to cope with interest expense.

[3] Net asset value per share rose to 0.54 from 0.52 year on year. Current trading price represents undemanding valuation at P/B 0.7 and P/E 8. Dividend yield is 4%. .

INVESTMENT THEMES:
[1] Looking forward, there are totally 4 worker dormitories in project pipeline in Singapore and Malaysia by 2018. One of these is WestLite Papan which is located near to Jurong Island. It shall be completed by June 2016.

[2] CSL Selegie (domestic student hostel) completed final refurbishment on Oct 2015. Its location is easy access to SMU, Lasalle Colleague, etc. Management expects healthy occupancy in 6 to 12 months.

[3] The management indicated ambition for further strategical investment thus creating more value to shareholders.

PRICE TREND:
Price has been finding support ~0.35. Due to thin trading value, price is moving side way.

*** Note: Same counter has been mentioned in Sep[3] @ 2016 ***