Market and Politics
War is never a good thing for the equity markets. And so DJ dropped 200 points last night, Nikkei too a muted sell off. SG will be opening next, which i think will be possibly down too at the end day? Oil price came up and so is gold, and likewise USD dipped. European Central Bank President Draghi, who spoke on Wednesday morning that he is confident that inflation and wages will rise as the economy improves. He doesn't feel that there will be a big impact from U.S.-Chinese trade tensions but the effect on confidence could be important.
Putting personal thoughts on Trump aside, this volatility does bring about some swings in the market, allowing buyers and sellers to fulfill their positions. Still not forgetting the current global market is stronger than before with solid GDP and other economic data, it is 1 of the reasons why market may continue to rally. Thus buying on dips will prove to be an excellent strategy.
Yet on the other hand the risk of buying on dips is that the current bull market is coming 10 years old since 2018. In every cyclical market cycle, the bears come after the bulls. Which also loosely translated that there should be a major correction/crash expectedly. As to when will that be, my guess is as good as yours.
Trading on blue chip shares should still be the way to go. It ensures liquidity and confidence. Should any major sell off occurs, holding on to a bluechip is still much better than anything else. That said, there are some bluechips like SPH that may be suitable for speculators only (readership has been on a decline, Q results are usually down')
Sharing my 2 cents in a private email to my clients and friends. Feel free to share with me your thoughts too if any
- Expect some profit-taking and risk aversion amid escalating global geopolitical tensions after US President Trump threatened missile strikes against Syria
- Oil-linked stocks could gain as crude surged 2% to a 3-year high of US$66.82/bbl.
- Technically, the STI has closed the breakdown gap at 3,485 but remains trapped within the broad downtrend channel between 3,375 and 3,520.
- Signed an In-flight entertainment and connectivity maintenance agreement with Thales for an undisclosed sum, to support SIA's fleet of A350 XWB aircraft for an initial 10 years.
- Trades at 21.4x forward P/E with 4.1% dividend yield.
- MKE has a Hold with TP of $3.50.
*Kim Heng Offshore & Marine
- Secured a one-year charter contract for two anchor handling tug/supply vessels from a leading oil major in Malaysia for an undisclosed amount.
- Loss-making and trades at 0.84x P/B.
*Grand Banks Yachts
- Eastbay 44 luxury boat will make its debut at the 2018 Singapore Yacht Show on Apr 12-15.
- Since its European debut in Jan, it has sold 12 units of the latest Eastbay model.
- Trades at 47x trailing P/E and 1.21x P/B.
- Its aerospace arm secured $510m new contracts in 1Q18, ranging from heavy maintenance to engine wash.
- This is 54% lower than the orders won in 1Q17.
- Trades at 20.7x forward P/E with 4.1% dividend yield.
- MKE has a Buy with TP of $4.15.
- Sold 0.3m Global Infotech (GIT) shares for Rmb3.8m (RM2.3m) or Rmb11.20 each.
- To recap, the group intended to monetise up to 19.2m GIT shares after it ceased to be an associate.
- The transaction is estimated to book a net disposal loss of RM0.68m.
- Trades at 0.53x P/E.
*Lippo Malls Retail Trust
- New tax regulations are expected to negatively affect future DPU as service and utilities recovery charges will now be subject to 10% withholding tax.
- On a proforma basis, the new regulations would cut FY17 distributable income by 7% to $90.2m, while DPU would fall to 3.19¢ (-7.3%).
- This implies a pro forma yield of 8.4%. Last traded at 1.18x P/B.
- Received a letter of demand from Advanced Manufacturing Industry Investment Fund for the early redemption of a Rmb400m loan extended to subsidiary Jilin Midas Aluminium Industries.
- The loan was guaranteed by Midas, its former chairman Chen Wei Ping and third party North East Industries.
- If loan is not repiad within 90 working days, an additional penalty will be imposed. The group claims that it was previously unaware of the loan guarantee.
- Trading in the counter has been suspended since Feb 8.
- Spinning off the property development unit, SLB Development on Catalist board.
- SLB is offering 238m shares at $0.23 apiece, comprising 8m public shares and 230m placement shares.
- Post-IPO, the group will retain 73.9% interest in SLB.
- Net proceeds of $51.4m will go towards replenishing its land bank (32.9%), funding development projects and working capital purposes (33.6%), and the remaining will be used for loan repayment.
- SLB has 9 ongoing residential, mixed-use, industrial projects and 6 pipeline developments (Singapore: 5, China: 1) totalling 4.6m sf with gross development value of $892m and estimated development profit of $136m.
- IPO will close on 18 Apr and trading is slated to begin on 20 Apr.
- Lian Beng trades at 6.6x trailing P/E and 0.52x P/B.
- Daughter of co-founder and former finance director Ng Bie Tjin has proposed a cash distribution of 32¢ per share. This compares to a 1¢ special dividend declared by the company. Ng and her family vehicle Uniseraya Holdings own 16% of the group.
- The group is embroiled in high profile feud over its controversial business diversification and acquisition of Malaysian haircare products maker Wayco Manufacturing.
- An EGM has been requisitioned on Apr 20 to oust four directors appointed following the entry of new 29% shareholder, Ng Siew Hong last year.
- SGX has also questioned the board appointments, its hiring of an independent reviewer and corporate governance related to the Wayco acquisition.
- Raised its effective interest in Tiong Seng (Tianjin) Project Management and Consultancy to 100% (prior: 99%) for Rmb1.4m.
- Additionally, the company formed a 26:30:22:22 JVCo with three other China-based partners to undertake prefabrication business in China.
- Trades at 5.5x trailing P/E.