SG Investor Hub Blog

5 reasons why Moody’s has downgraded China for the first time in nearly 30 years

For the first time since 1989, Moody’s Investors Service has downgraded China’s long-term local currency and foreign currency issuer ratings to “A1” from “Aa3”, on expectations that the republic’s financial strength will erode somewhat over the coming years due to rising economy-wide debt as potential slows. China’s local currency bond and deposit ceilings, as well […]

Bit-Bloody-Coin

Bitcoin (BTC) is trading at freaking $2500 USD now.That’s just mind blowingly insane! (especially when previously I was considering buying in at $500, ehehe #notsalty)I’d say that I understand cryptocurrencies quite well (better than your average Ah Hu…

Stocks to watch

Stocks to watch:
*Economy: Singapore final 1Q17 GDP growth was revised to 2.7% from earlier flash estimate of 2.5%. While MTI kept its 2017 growth forecast at 1-3%, it foresees the economy will expand more than 2% this year as exports continue to strengthen. 1Q17 NODX surged 15.2%, on the back of a recovery in electronic shipments. On that front, IE Singapore raised its growth estimate for exports from 4% to 6%.

*Keppel Corp: Won $103m contract to build two LNG carrier vessels for Stolt-Nielsen Gas, with completion in 2Q/3Q19. The deal comes with options for three additional vessels, with 6/12/18 months expiry from the contract date. Latest order brings the total contracts secured this year to just $279m, well off peak of $10b in 2011 and $0.5b in 2016.

*SIA Engineering: Setting up wholly-owned subsidiary in Japan to provide line maintenance services at airports in Japan. It will commence operations at Kansai Int’l Airport and subsequently expand to other Japanese airports. This will brings SIE’s maintenance network to 37 airports across eight markets.

*SATS: Launched a technology innovation centre, TechnIC@SATS, which will roll out technological solutions to boost productivity. The centre will be supported and co-funded by the CIAS and the EDB to the tune of $110m.

*Valuetronics: FY17 net profit jumped 27.9% to HK$154.1m, beating estimates, as it was partially helped by a positive HK$5.1m FX swing. Revenue climbed 16.5% to HK$2.27b, with improvement in industrial & commercial electronics (+14.1%), as well as consumer electronics (+19.7%) segments. Gross margin was relatively stable at 15% (FY16: 15.2%). Cash pile ballooned to HK$752.9m (FY16: HK$689.3m), accounting for 40% of market cap. Maintained final and special DPS of HK$0.20. Trading at 12x FY17 trailing P/E, and 7.1x ex-cash P/E.

*Cityneon: Officially opened its maiden Avengers S.T.A.T.I.O.N travelling exhibition in Beijing, China. After Beijing, the set will move on to other cities within China over the next two years. *Secura: Entered two-year strategic alliance with ComfortDelGro to offer cyber security related consultancy, products and services to the latter’s customers.

*Vallianz: Converting net payables to Swiber of US$36.6m, as well as Rawabi’s shareholder advances of US$102.1m into equity in its own capital, via the 1-for-1 proposed rights cum warrants issue first announced in Sep ’16.

*Sinwa: Won supply agreements of A$8m for the Prelude FLNG Project in Western Australia. Scope of services include the supply of provisions, stores and logistics to vessels involved in the project.

Singapore Stocks to Watch

* Keppel (KEP SP): Secures contract to build LNG carriers worth more than $100m
*
Noble Group (NOBL SP): Co-CEOs see “incredibly difficult environment;” hires Morgan Stanley, Moelis in battle for survival

Malaysia Stocks to Watch

* XL Axiata (AXIATA MK): Raised to buy from neutral at Nomura

Keppel Corporation (KEP SP)        HOLD
Price/Tgt: S$6.59 / S$6.55        Mkt Cap: US$8,623.9m         52-wk avg daily value: US$20.2m         1-Yr Hi/Lo: S$7.23/S$5.13

Order Momentum continues with another S$103m in LNG Carriers
Analyst(s): Foo Zhiwei / Andrew Chow, CFA        Tel: (65) 6590 6626 / 6633

What’s New?
Keppel secures S$100m in new orders for two LNG carrier vessels. Contract value is S$103m for two LNG carriers (S$51.5m each) for Stolt-Nielsen Gas BV, a subsidiary of Stolt-Nielsen Ltd. Delivery is expected to be in 2Q19 and 3Q19 respectively.
Option for three more similar units. As part of the order, Keppel Singmarine has also secured options to build another three similar units for Stolt-Nielsen Gas. Timeframes for exercise of the options are 6, 12, and 18 months form the effective date of the contract.

Our Take
– Contract wins still within expectations. Year to data contract wins now stand at S$279m and make up 19% of our full-year assumption of S$1.5b.
Positive order momentum, but small contract win sizes insufficient to replenish declining orderbook. While the string of continued order wins is encouraging, it is insufficient to arrest the decline of Keppel’s net orderbook (S$3.5b as of 1Q17). We look forward to 2H17 where we believe more sizeable contracts are likely to be awarded, and are also more meaningful to Keppel’s orderbook (and bottom line). Should 2017, however, prove a repeat of 2016’s low contract win of S$0.5b, current estimates for Keppel’s O&M business will likely have to be revised down. Hopefully, given the continued stability in oil prices from OPEC’s affirmation to extend their supply cut by another 9 months, more large-scale projects will be sanctioned, leading to greater tendering opportunities.

Valuation/ Recommendation
Maintain HOLD, target price of S$6.55. Our target price still remains unchanged on this development. It is based on SOTP which prices the O&M unit at 1.0x P/B, and Property at 0.8x historical P/B. Despite the improving environment, the contracting environment remains challenging and has not seen a flurry of large sized production order awards that Keppel O&M needs to replace its diminishing orderbook. Even if Keppel meets out S$1.5b contract win assumption, profitability will be lower and unlike levels seen in the previous boom cycle. Property remains the core earnings driver, with O&M likely to fluctuate between marginal profitability or breakeven. Continue maintaining HOLD.

Buying a freehold property in Singapore is still worthwhile.

Reader:
Hi AK,

        Hello! I only found out about your blog in Jan this year and have benefitted a lot from your analysis and sharing. 

        I have been reading your recent posts about upgrading to private housing. I happen to work in…

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3 Ways to get the most out of your Financial Planner [Kiasuism Rocks]

Singaporeans are a weird bunch indeed. We strive to get ahead by any means possible, categorically (though unflatteringly) known as being kaisu. We cram the Expo when there are SITEX Roadshows, because queuing up for hours for that free printer a fair trade. We use packets of tissue paper to chope our seats, since nothing marks out personal space better […]

The post 3 Ways to get the most out of your Financial Planner [Kiasuism Rocks] appeared first on Singapore’s Life Insurance Blog: Expert and Unbiased Views.