Jun[8] - Market Update

Europe Market
Last Friday saw horrible selling across major Europe indices. Generally, market has been moving up in early week due to earlier polling result that BREMAIN was leading. Actual voting outcome pulled down most indices thus wiped out the gain over few days in the week. Market showing a "shocked" sign. Few support line would be tested in coming weeks.

US:
Triggered by BREXIT, DOW JONES retreated from its historical high range (>18000). Similarly, a "shocked" sign was seen instead of any bearish trend. Few US economic data (as shown in calendar below) will be released on coming week. Market attention could be drawn into potential rate hike on July instead.

Singapore:
STI has been hovering around 5 years trough region (<2900). Minimum downside could be hit by BREXIT.

Market Calendar on coming week:
(SG: Singapore; CH: China; US: USA)

Jun[7] - SGX (benefit throughout bull/bear market)

COUNTER: Singapore Exchange Limited

OVERVIEW:
The counter operates an integrated securities exchange and derivatives exchange in Singapore and related clearing houses. It provides listing (IPO), trading, clearing, depository, market data, etc. Security products includes stocks, business trust, REIT, ETF, notes, etc. Derivative products comprise of foreign exchange and interest rate products, commodities, forwards contracts, etc.

HIGHLIGHTS:
[1] Latest financial results saw stable earning quarter on quarter and year on year.

[2] Year to date earning of 2016 is set to beat last year record with improvement across major segments.

[2] The counter is in net cash position without any borrowing. Debt/Total equity is 0. Company policy is to distribute 80% of earning or 0.2 per shares as annual dividend, whichever is higher.

INVESTMENT THEMES:
[1] Current valuation: PB ~ 8.5 || Dividend yield ~ 3.8% || PE ~ 21 
     
[2] Although STI has been riding its up and down trend throughout past 5 years, the counter has been generating stable earning with increasing dividend. Thus recent turbulent in market provide hunting opportunity.

[3] On May 25, the counter announced its exclusive discussion with Baltic exchange regarding to acquisition bidding of the latter. The deal could complement SGX's current derivatives business, especially freight derivatives.

PRICE TREND:
The counter has been moving back to its average price range throughout past one year. Immediate support is 7.3 followed by 7. 6.67 is three year trough, which also represent one of its highest dividend yield at 4.2%.

Jun[6] - Market Update

Singapore:
While US and Japan central bank hold on respective monetary policies, market sentiment was volatile due to mixed polling survey about "BREXIT from Europe. STI was declining ~ 3% amid last week amid such eventful period. Downward trend is intact as refer to below chart. Immediate support is 2727.

From historical perspective, STI is trading under attractive region as valuation is low (PE ~ 11, PB ~1.1). In non technical term, it is cheap.

Market Calendar on coming week:
(SG: Singapore; CH: China; US: USA)

Jun[5] - Review on STI constituents

The following counters were shortlisted for their attractive valuation.(PE<20 and consistent dividend payout throughout the years).

A. ComfortDelgro [Public Transport] -- 2016 May[8]
Shall local Bus Contracting Model be fully implemented, the counter would be benefited with high cash flow which might return to investors in special dividend. Besides, the counter is having historically high dividend growth rate at 8% annually.

B. DBS [Banks] -- 2016 May[3]
It is interesting to see bank counter being traded under its net asset value. From the chart, it failed to break up 16 (~0.97 P/B). Shall this resistance line be broken, it would change into a strong support instead.

C. OCBC [Banks] -- 2016 May[1]
The counter is marginally trading above its net asset value. Current dividend yield is near to its historical high (>4%). Its recent acquisition of Barclay branch at Hong Kong would be new contribution in future earning.

E. STI ETF [Index] -- 2016 Jan[5] & Jun[6]
The index used to be range bound between PE 10 to 15. Current valuation is in the lower range. The corresponding yield is at historical attractive range as well.

Jun[4] - Market Update

Singapore:
Last week, STI was neutralised between a first half bull and second half bear. Downwards resistance line persists. Upcoming "Brexit" and FOMC will be major themes on market. Interestingly, a financial eventful period coincided entertaining EURO 2016. Investors shall get ready with volatile weeks ahead. "Ole...Ole.."

Market Calendar on coming week:
(SG: Singapore; CH: China; US: USA)

Jun[3] - Keppel Co (Shall oil stablize)

COUNTER: Keppel Corporation

OVERVIEW:
With a global footprint in close to 30 countries, the company consists mainly of following entities:
Keppel Offshore & Marine (O&M) - one of the world leaders as offshore oil rig provider.
Keppel Land - property developer across Asia region.
Keppel Infrastructure - invest, own and operate energy related infrastructures.
Keppel T&T- services provider in logistics and data centers in Asia-pac & Europe
Keppel Capital - Asset investment and management.

HIGHLIGHTS:
[1] Latest results as below. Property segment was the major bright spot among others. Major contribution came from China.

[2] Its major O&M client, Brasil Sete has filed for bankruptcy. The counter had made $230m as provision for projects involved. Meanwhile, it is being sued over unlawful conspiracy over the projects in US courts. The counter denied the allegations.

[2] Short term loan can be fulfilled by its cash & deposit. Total debt stood ~$8b which translates to Gearing (total debt/equity) < 70%.

INVESTMENT THEMES:
[1] Current valuation: PB ~ 0.9 || Dividend yield ~ 6%
                                 PE ~ 12 (shall Q1 earning be maintained throughout 2016)
     
[2] Based on projection by Energy Information Administration (EIA), oil glut will be easing on second half of 2016. It could be the the time frame to review offshore & marine related counters for now. Currently, the counter looks attractive with its trading price under its net tangible asset (NTA) per share - $6.16. Recent bull run on crude oil price could further raise risk appetite among investors.

[3] Over next three years, it has about 3000 - 4000 property units to be launched annually  in China, and 2000-3000 units in Southeast Asia, notably Indonesia and Vietnam. This could be the major driver of earning in following quarters.

PRICE TREND:
Current price movement is in side way channel. Immediate support is ~5.58. three years trough, 4.8 represents ~7% dividend yield.

Jun[2] - Market Update

Dollar vs Gold:
Following a series of economy data released from US by last week, market has cast its vote on the rate hike decision to upcoming FOMC meeting (15 June). Dollar index plunged concurrently with strong rebound of Gold. Unconvincing economy results have pushed market attention to safe heaven, gold.

Crude Oil:
Although US crude oil inventory declined for two consecutive weeks, latest OPEC rejection on further production freeze has put a cap on the recent run of crude oil. According to Energy Information Administration (EIA) forecast that new balance of crude oil could be hit by this year.

Singapore:
This was another silent week for local index. Downward channel still intact.

Jun[1] - Cash Cows

Amid current poor market sentiment, cash rich counters could become the most comfortable shelter for investors. Consistent dividend payout translates to attractive yield in long term. The following counters deserve the consideration for their common characteristics: Net cash position with dividend yield>4%

[A] Talkmed (Medical sector)- refer to 2016 May[6], 2015 Dec[5]

[B] CSE (Technology sector) - refer to 2016 Mar[5]

[C] Venture (Manufacturing sector) - refer to 2016 Feb[5]

[D] OCBC (Banking sector) - refer to 2016 May[1]