Saturday, May 21, 2011

Weekend Comment May 20: Top Great buy propels Mencast into spotlight

SHARES OF CATALIST-traded Mencast Holdings have seen heavy trading volume after it announced on May 18 it had acquired engineering systems installer Top Great Engineering & Marine.

Mencast -- which makes, supplies and repairs propellers and stern gear for seafaring vessels -- is purchasing Top Great for $24 million. Mencast will pay $9.6 million in cash and satisfy the remaining $14.4 million through an allotment of new Mencast shares via three separate tranches -- “a small price to pay for an accretive deal”, according to Gary Ng of CIMB.

That’s because the acquisition comes with a guarantee that Top Great will achieve net profits of not less than $8 million between May 1, 2011 and April 31, 2013. It Top Great fails to meet the target, it'll have to make good the shortfall in cash to Mencast within six months after the agreed period.

For the year ended Dec 31, 2010, income earned by Top Great before deducting taxes was $4.7 million. In comparison, Mencast achieved a net profit of $8.5 million over the same period, a 20.8% y-o-y rise, on the back of $32 million in revenues, up 21.9% y-o-y.

Analysts say the addition of Top Great will give Mencast the opportunity to tap a larger pool of clients in the region and add margin value with a fuller range of maintenance, repair and overhaul (MRO) services to the booming offshore and marine industry.

“This [acquisition] would allow Mencast to create positive synergies, economies of scale and strengthen its value proposition to attract and retain new clientele,” Ng of CIMB points out. “We think that with Top Great being integrated into Mencast, the group would eventually make its foray into overseas markets, which would mean higher margins due to the higher premium the group charges for projects outside Singapore.”

Mencast started out three decades ago as provider of repairs and maintenance services of marine propellers for fishing and bumboats in Singapore. It eventually expanded its client base to include owners and operators of tugboats and ferries in 1993 and extended its capabilities to provide a full range of sterngear equipment and services for local and regional shipyards and ship owners in 2001. In 2008, Mencast, which operates a yard in Tuas, sought a listing on the Catalist.

Last year, in a bid to increase growth, Mencast announced that it would lease 16,200 sq m of land at the waterfront on Penjuru Road to build a manufacturing plant for stern gear equipment and centralise its manufacturing activities for better efficiencies. Mencast expects to complete construction of the plant -- which will be 3.5 times larger than all its existing plants combined -- by year-end. Despite slowing demand for commercial ships given an existing oversupply in the market, Mencast is confident of booking revenues from repeat MRO (Maintenance, repair and operations) contracts from ship owners and expects to see growth coming from the booming offshore sector. The company currently has an order book of about $8 million.

Since the start of the year, shares of Mencast are up by about 10%, closing on May 20 at an all-time high of 45 cents each. But there’s more good news. Ng of CIMB has upgraded his 12-month target price on the stock by 6% to 70 cents apiece despite dilution from the new shares, as the stock is still trading at a 15% discount to its larger peers. At current levels, it has a market capitalisation of just $76.6 million and trades at 8 times earnings.

“This stock is only at the growth stage and has not scaled the high wall of valuation,” Ng writes in a recent report. “[The shares] will climb, and a further re-rating will propel the stock with an upgrade to the Mainboard from its current board.”

Publish date:21/05/11

China may put the damper on yuan: CLSA

Business Times - 21 May 2011

China may put the damper on yuan: CLSA

Exploding offshore yuan market a tension point for Beijing


THE piling bets on yuan appreciation, which have translated to a scorching yuan offshore market, may prompt China to cool it down sooner, a CLSA report this week said.

This comes as some 50-80 billion yuan (up to S$15 billion) worth of speculative money has been estimated to be poured into Hong Kong - the de facto yuan offshore market - in the first quarter, the brokerage noted.

'If the renminbi offshore market continues to explode, in terms of renminbi deposit growth in Hong Kong, (we) guess that Beijing will sooner or later move to dampen it down,' said CLSA. 'The precedent here will be the continuing efforts to constrain QDII (Qualified Domestic Institutional Investors).'

The Chinese central bank's push for financial liberalisation through its yuan offshore market had been derailed earlier by the recent financial crisis - which also brought the free market model under scrutiny - and is a tension point for the Chinese government, which sees it as a threat to political control, CLSA added.

'The political leadership is fundamentally uncomfortable with an open capital account,' the brokerage said.

'It must already be worried that the capital account is dangerously porous, in the sense that it has long been a practical reality that the wealthy and the connected can get their money out of China.'

This concern can only be magnified by market speculation that 32 trillion yuan worth of total household deposits are 'excessively concentrated' among the rich, CLSA said.

Singapore is edging into the offshore yuan market, but in this post-Lehman period, banks such as OCBC and DBS have also warned of the risks and downsides of investing in products such as yuan deposits. These include wide spreads and volatility.

At the same time, with inflation woes abating in the short term, investors may face what CLSA calls a 'manic depressive' mood swing in the Chinese market as focus swings sharply to fears of a slowdown in growth - particularly with the current tightening mode of the government.

'Still, as this is China, with its still command economy-driven banking system, the authorities have complete freedom to turn the liquidity tap back on should they want to,' said CLSA.

'For this reason, (we) would advise investors to view likely growing market chatter about hard landing risks as an opportunity to build positions in domestic stocks,' that include those tied to infrastructure works such as the cement, consumer durables and construction stocks.

Turning to Singapore, CLSA noted that the leadership changes in the wake of this year's elections are a positive signal, and do not harm the long-term bullish view on the growth story, or the Singapore dollar.

'(We) would much rather own the Singapore dollar than the renminbi.'

But CIMB this week downgraded the Singapore market to 'neutral' from 'overweight' amid softening global growth, earnings forecast cuts and potential drags of corporate profits due to policy tweaking after the general election.

'The upcoming hike in the HDB eligibility ceiling will move the sandwich class from over-priced mass-market private properties back to HDB flats,' said CIMB, singling out developers with large mass-market exposure such as Allgreen and City Developments as those which may be hit.

'A marked slowdown in foreign immigration will reduce rental demand, more telling when new completed supply comes onstream in 2013,' CIMB added.

A limit on immigrants would put a dampener on some industries that rely on foreign workers, including construction and shipyards, the brokerage said.

The call to keep public transport fares low also suggests that transport players ComfortDelGro and SMRT may not see fare hikes, which would hit their bottom line.

Publish date:21/05/11

MSC eyes tin mines in M'sia, Indonesia

Business Times - 21 May 2011

MSC eyes tin mines in M'sia, Indonesia

SINGAPORE-LISTED tin producer Malaysia Smelting Corporation (MSC) is currently looking to acquire concessions for three to four tin mines in Malaysia and Indonesia to tap strong demand from China's booming electronics industry.

The company may invest up to RM200 million (S$82 million) to increase its mining assets in the near term, CEO Mohd Ajib Anuar told Reuters.

MSC operates two mines in Perak and Indonesia's Bangka Island. It also processes tin at its two smelting plants in Penang and Bangka, which have total capacity of 60,000 tonnes. 'We raised RM104 million from the Singapore listing, and out of that we've earmarked RM80 million for financing development of new mines,' Mr Mohd Ajib said.

'With that RM80 million plus some borrowing, we would have possibly RM150-200 million to look for expansion of new mines,' he said, adding that potential locations are Bangka in Indonesia, as well as Perak and Pahang.

MSC, a Kuala Lumpur-listed subsidiary of Singapore's property and resources conglomerate Straits Trading, sold 25 million shares at S$1.75 each on Singapore Exchange in January this year.

Last year, MSC and its Indonesian subsidiary PT Koba Tin had total refined tin output of 45,381 tonnes, making it the second-largest producer in the world behind China's Yunnan Tin, according to industry group ITRI.

MSC is adding a mining unit to raise its production by 20 per cent, or around 360 tonnes per year, at its Rahman Hydraulic mine in Perak from the second half of this year, Mr Mohd Ajib said.

For the first quarter ended March, MSC generated pre-tax profit of RM27 million in Malaysia and RM22 million in Indonesia. Rahman Hydraulic, which produced 452 tonnes of tin, contributed RM16 million, he said. He added that the lowest tin price level at which the industry can remain roughly profitable is US$15,000-US$20,000 a tonne.

'China will continue to be the world's largest consumer of tin because of the booming electronics industry. (In) Taiwan and Korea, we have also seen increased consumption level,' he said.

MSC shares closed at S$1.86 yesterday. -- Reuters

Publish date:21/05/11

Tiger Air seeks more tie-ups to expand Asia budget network

Tiger Airways Holdings, the Singapore-based budget carrier, said it may seek more overseas partnerships after agreeing to take stakes in airlines in Indonesia, Thailand and the Philippines.

“We think our franchise is well established” in Singapore, Chief Executive Officer Tony Davis said in a Bloomberg TV interview in the city-state today. “Our objective now is to take that franchise around Asia.”

The carrier, part-owned by Singapore Airlines, yesterday announced plans to buy a 33% stake in Indonesia-based PT Mandala Airlines as it competes with AirAsia Bhd for budget travelers across Southeast Asia. It also reported a 94% drop in fourth-quarter profit after its Australian unit suffered from tax charges and a slowdown in demand.

“Tiger’s expansion into developing economies may further lower its cost base as operating expenses are lower in these countries,” Rigan Wong, an analyst at Citigroup Inc., said in a note today. “Tiger Australia may continue to be impacted by uncertain demand recovery and rising competition.” Wong has a “buy” rating on Tiger.

The airline fell 1.3% to $1.53 at the close of trading in Singapore. Its fallen 18% this year, while the benchmark Straits Times Index is little changed.

Tiger Australia
Tiger will keep its capacity in Australia unchanged this year, while boosting operations in Singapore 40%, it said yesterday. The Australia unit has faced increasing competition from Qantas Airways’ budget unit Jetstar and from Virgin Australia.

Davis also said that Tiger is confident partner South East Asian Airlines Inc. will win approval for plans to operate flights in the Philippines using Tiger aircraft. The Philippines’ Civil Aeronautics Board yesterday issued a provisional order barring SEAir from implementing the accord on concerns it breached cross-border flight rules.

“As we adopt practices that are fairly commonplace in other parts of the world, inevitably it will take some time for people to get comfortable with that and understand how that works and assure themselves it complies with rules,” Davis said. “We’re sure it does, SEAir is sure it does — we need to convince the regulator.”

Philippine Deal
Tiger has agreed to buy a stake in SEAir, which will also fly international services from the Philippines. These overseas flights haven’t been affected by the regulator’s order. Tiger is also forming a low-cost venture in Bangkok with Thai Airways International Pcl.

Tiger’s net income dropped to $1.3 million in the three months ended March 31 from $22.3 million a year earlier. Operating profit dropped to $10.2 million from $11.8 million on higher fuel costs. Sales increased 16 percent to $163.2 million.

Mandala Airlines, which is undergoing a financial restructuring, will be 51% owned by Sandiaga Uno’s Saratoga Group, Tiger said yesterday. Mandala’s previous shareholders and creditors will have a 16%. The deal is pending due diligence, Tiger said.

Publish date:20/05/11




  马熔炼总裁阿努尔(Mohd Ajib Anuar)说,公司近期将投资约2亿令吉扩展锡矿资产。


  马熔炼目前在马国吡叻州和印尼邦加岛(Bangka Island)拥有锡矿;而在槟城和邦加岛的两座熔锡厂,总产能达6万吨。






  马来西亚熔炼公司(Malaysia Smelting Corp)和刚果(Congo)的矿业部签署保密协议,讨论成立合资企业,共同开采和发展刚果锡矿和其他相关矿物资源的可能性。

  刚果总统约瑟夫卡比拉(Joseph Kabila Kabange)和矿业部长马丁(Martin Kabwelulu)也见证了签约仪式。总统希望马熔炼可协助发展可续性的锡矿业,为当地社区带来社会经济利益,并颠覆人们对刚果矿业的负面形象和观念。



Publish date:21/05/11

海指因套利微跌 分析师:未来市场动荡



  悉尼AMP Capital Investors公司投资战略主管奥利维尔(Shane Oliver)表示:“经过三周的抛售后,市场可能已呈现超卖。部分美国经济数据呈现疲软、对中国紧缩政策的担忧、日本经济衰退及欧洲债务危机,将令市场在未来几个月处于动荡情势。”






  活跃股方面,虎航跌2分报1.53元。集团第四季净利下滑130万元报2230万元。同时,集团也宣布将收购印度尼西亚廉价航空业者曼达拉航空公司(Mandala Airlines)33%股权,但未透露交易价。


  波德国际(Portek International)起2.5分报77.5分。集团截至5月1日的订单达4400万元,达健康水平。


Source/转贴/Extract/: 《联合早报》
Publish date:21/05/11

Landmarks Riding on Bintan transformation (Hwang)

BUY RM1.53 (Initiating coverage)
Price Target: 12-Month RM 3.55 (132% upside)

Major Shareholders
Genting Berhad (%) 30.3
North Symphony Sdn Bhd (%) 18.0
Free Float (%) 51.7

Riding on Bintan transformation
• Initiate coverage with BUY rating and RM3.55 TP based on 1x FY11F book value
• Under-researched, under-valued, proxy to transformation in Bintan
• Wildcard is a gaming license for Treasure Bay Bintan

Banking on Bintan success.
Landmarks is a deep value underresearched property cum hospitality stock with exposure to Bintan. Master developer Gallant Ventures is looking to improve infrastructure and amenities there with a shopping mall and with better transportation, possibly including an airport. Tourist arrivals reached a record 430k in 2010 from diversified source destinations: Singapore 28% (vs 55% in 96). In our view, the 338-ha Treasure Bay land bought for SGD$100 per sqm or SGD$9.30 per sq ft (vs recent valuation of SGD$238 per sqm) is more prime than Lagoi Bay because it is closer to the ferry terminal. This will give its SGD$425m Phase One of Treasure Bay Bintan (total value SGD$2.4bn) - recently launched by the Indonesian President - more pricing power. We expect sales to be robust.

Wildcard is gaming license.
Genting as major shareholder (30.3% stake, average cost RM2.05/share in 2007) will open doors for a gaming license. PT Wisata Hiburia had earlier signed a zoning agreement that would allow several licensed activities at Treasure Bay Bintan, including gaming, but has not received approval at federal level. The Indonesian government is also looking at boosting its tourism industry and a gaming outlet in Bintan would help, as demonstrated by Resorts World Sentosa and Marina Bay Sands in Singapore.

Initiate with BUY rating, RM3.55 TP.
We value Landmarks at RM3.55 (132% upside) based on 1x FY11F book value, which is also reflective of our SOP value. In our view, our SOP is conservative as it only values the raw land in Bintan and the Andaman Langkawi based on 2008 prices, and not potential development profits based on DCF. Our SOP value is very sensitive to changes in land prices where an additional SGD50 per sq m increase will raise our SOP to RM4.33/share

Initiate coverage with BUY rating, RM3.55 TP.
We initiate coverage of Landmarks with a BUY rating and RM3.55 target price based on 1x FY11F book, which is also reflective of our SOP value of RM3.50. Landmarks is currently trading at 0.4x 1-year forward P/BV multiple, which is 33.3% lower than its average of 0.6x (Figure 13).

Our investment thesis for the stock is as follows:
(1) Under-researched, cheap valuation First, Landmarks is an under-researched stock with no coverage currently. Hence, the cheap valuation is partly due to the lack of information flow to the investment community, and because there is no concrete guidance on the master plan for Bintan as it is still being finalised. We expect this to change in June where a firm master plan will be provided. The stock is currently trading at a 131% discount to its book value of RM3.54. It also has a strong balance sheet – it has been in net cash position since FY06.

(2) Huge potential in Bintan development.
Second, we see huge potential in Landmarks’ Treasure Bay Bintan. Although Landmarks has sold most of its other assets and currently only owns the Andaman Langkawi, 20% + 1 share in MCL Properties, and its 338-ha land bank in Bintan Island, the Group will reap huge rewards from its bold move to become one of the leading hospitality players on Bintan Island.

The early signs are promising as Gallant Ventures, the master developer for Bintan, has managed to sell c.SGD$85m worth of its Lagoi Bay development land to investors and developers. Gallant Venture has also sold c.85% of available commercial sites in the Lagoi Bay Village project. Besides that, the government of Indonesia is eager to promote Bintan Island as an alternative tourist destination to Bali. Gallant Ventures has started construction on Lagoi Bay and is believed to be looking for potential JV partners to build an airport on Bintan.

The airport will benefit Landmarks, which 338-ha site on Bintan is located next to Bandar Telani Bintan Ferry Terminal, the main gateway to Bintan Island from Singapore. We believe Landmarks deserves a higher valuation after the positive re-rating given to Gallant Ventures.

(3) Treasure Bay in good stead to get gaming license The biggest wildcard for Treasure Bay Bintan is the gaming license. Landmarks will eventually leverage on its major shareholder and gaming operator, Genting, to obtain a gaming license from the government of Riau. We believe it is only a matter of time before the government of Indonesia endorses that granting a license for gaming operations in Indonesia would help to attract more visitors, as demonstrated by Resorts World Sentosa and Marina Bay Sands in nearby Singapore.

The signs are promising as PT Wisata Hiburia, which has been authorised by the Riau government to assign zones for selected licensed activities, has signed a zoning agreement with Bintan Treasure Bay Pte. Ltd. on 28 January 2008. It would allow Treasure Bay Bintan to carry out activities that include medical tourism, multimedia and information technology hosting, and games and entertainment, including gaming.

The Business Model
Company Background. Landmarks was set up in 1973 as Basset Rubber Company, which actively ventured into oil palm and rubber cultivation. It also had joint ventures with Perbadanan Kemajuan Negeri Perak to develop housing projects in Kamanting and Taiping. During its initial years,the Group changed its name several times, from Basset Rubber Company to Ytong Malaysia, followed by Premium Holdings. In 1983, it changed its name to Landmarks Holdings and merged with Landmarks Corporation, and continued to actively engage in rubber and oil palm, housing, property, hotel and shopping complex businesses. In 1989, it was officially incorporated and commenced operations as an investment holding company with the takeover of the entire undertaking, assets and liabilities of Landmarks Holdings. It was listed on the Kuala Lumpur Stock Exchange on 8 January 1990.

Since the appointment of Datuk Zakaria bin Abdul Hamid as Group Chairman on 24 October 2007, Landmarks has realigned its group strategy to focus on the lifestyle sector.

The Group divested all of its non-core and non-strategic assets to focus on moving forward with its new theme - “to be a leading player in the lifestyle sector, focusing on resorts, hospitality and wellness in the South East Asian region”.

After disposing its non-core and non-strategic assets, the Group repaid most of its debt prior to the restructuring. It has kept its balance sheet healthy with net cash position since FY07. The Group also used some of the disposal proceeds to purchase 100% stake in Bintan Treasure Bay Pte Ltd, a special purpose vehicle that owns two parcels of leasehold land on Bintan Island measuring 338 hectares. The land is held under its subsidiary, PT Pelangi Bintan Indah. Bintan Treasure Bay Pte Ltd is also the master developer of Treasure Bay Bintan, a “Water Resort City” that will comprise resorts, wellness, cultural, residential and commercial developments with supporting facilities such as a Customs, Immigration, Quarantine and Port (CIQP) terminal, marina, cruise transit point, education, medical, convention and other integrated entertainment facilities.

Besides its large land bank on Bintan Island, Landmarks’ other major asset is The Andaman Langkawi resort hotel. The management appointed Sheraton Overseas Management Corporation, an affiliate of Starwood Hotels & Resorts Worldwide, as the new operator of The Andaman Langkawi on 10 December 2009. The resort has since been rebranded “The Andaman, a Luxury Collection Resort” and included in Starwood’s portfolio of The Luxury CollectionHotels & Resorts. The rebranding includes upgrading of the property, and refurbishment of rooms and facilities, which is currently on-going.

Gearing up for Bintan launch. With the launch of Phase One of Treasure Bay Bintan, the Group is expected to gear up for more infrastructure works on its land on Bintan Island. We believe Landmarks is likely to need to raise funds either through borrowings and possibly equity to sustain the development of Treasure Bay Bintan, as its current cash reserves will not be sufficient.

Likely less contribution from Andaman Langkawi in the near term because of refurbishment work/costs. The recent appointment of Sheraton Overseas Management Corporation and the upgrading and refurbishment works at Andaman Langkawi means that in the near term, the resort is unlikely to contribute significantly towards Group earnings. Renovation costs and management fees are likely to affect the resort’s bottomline. Moreover, tourist arrivals at the resort is cyclical, with the peak season being the first and last quarters of the year.

Property Development
Property development earnings insignificant. Landmarks’ property development division is conducted through its 20%+1 stake in MSL Properties Sdn Bhd, a township developer in Wangsa Maju. Earnings from this division is insignificant and we expect it will divest its stake in MSL Properties under its strategy to become the leading player in the lifestyle sector in South East Asia.

Growth Prospects
Treasure Bay Bintan
Set to take off. Landmarks deferred the October 2008 launch of its 338 ha Treasure Bay Bintan development project due to the US subprime mortgage crisis and the resulting global economic downturn. But with increasing optimism towards a sustained global economic recovery, Landmarks decided to launch the massive project which is expected to span over 20 years and has a GDV of approximately SGD2.4b (RM5.8b).

On 26 February 2011, Indonesian President Susilo Bambang Yudhoyono officiated the naming ceremony for Treasure Bay, now known as “Pesona Lagoi Bintan” which means “Wonder of Lagoi Bintan”. This ceremony also kicked off groundwork for Phase One of Treasure Bay which will span 222 acres (out of a total of 847 acres) and includes an iconic luxury resort and serviced villas, a crystal lagoon that will be the largest in the region, a world class marina, a dedicated multi-modal transportation terminal, and amenities for entertainment, night-life, retail and F&B. Construction is scheduled to be completed by 2015 and will have a development value of S$425m (RM1.02b).

According to Bintan Treasure Bay Pte Ltd, Treasure Bay Bintan is an integrated water resort city which will comprise four key areas, namely North Islands, East Bay, South Side and West Key. North Islands will comprise hill side residences and island villas. East Bay will house the Beach Side Residences, Marine Village, Amphitheater, Cultural Village, Town Centre, Main Canal Residences and a Themed Resort. South Side will consist of two more Themed Resorts while the Marina, Water Taxi Pier, Cruise & Ferry Terminal and another Themed Resort will be located at West Key. We understand Landmarks is currently talking to operators of international hotel chains to manage its iconic hotel at Treasure Bay.

Bintan Island to be the next world class tourist attraction?
Bintan Island had been largely ignored in the past, but it has been slowly and surely gaining prominence as a new major tourist destination in recent years. This is reflected by the number of resorts that have opened on the island as developers seek to capitalise on the booming tourism industry there

Previously, tourism on Bintan Island had been restricted due to the lack of transportation between the individual resorts on the island. This, coupled with the lack of alternative transportation other than Ferry to get to the island, had limited its capacity to grow. However, things look set tochange as the master developer of Bintan, Gallant Ventures, a company listed on the Singapore Stock Exchange, plans to integrate the current self-sustaining resorts with a village centre located at the heart of Lagoi Bay. This will allow tourists staying in resorts on the island to interact with each other and eventually increase the vibrancy on Bintan. Visitor arrivals on Bintan expanded at 8.5% CAGR between FY05 and FY10, surging 6% y-o-y to a record 434k visitors in 2010. This was mainly due to increasing efforts by the Indonesian government to market Bintan alongside Bali as tourist destinations. Tourists to the island are also from more diversified nationalities - domestic visitors to Bintan have increased from 3% in 1996 to 21% in 2008. This has diluted the previously high concentration of visitor arrivals from Singapore from 55% in 1996 to 28% in 2008.

With visitor arrivals in Singapore and Indonesia projected to hit 13m and 7.6m in 2011, respectively, we expect Bintan to see about 480k tourists this year. This is 11% higher than 2010 arrivals, and visitor arrivals are expected to increase further once Phase 1 of Gallant Venture’s Lagoi Bay Village iscompleted at end 2011 and the whole island starts to come alive.

Strategic location of Treasure Bay. Landmarks’ Treasure Bay Bintan development is located next to the Bintan Bandar Telani Ferry Terminal, which is the main gateway to Bintan from Singapore. All tourists arriving by ferry from Singapore will have to pass through Treasure Bay.

New port terminal to ease visitor arrival. The Southeast Asia Building article also states that a new port terminal to be built under Phase One will serve as a gateway to sailing in the Riau Archipelago. The one stop multi-modal transportation terminal will be located next to the marina and provide visitors and residents with speedy and hasslefree immigration clearance.

Additional modes of transportation to boost tourist arrivals in Bintan. The completion of the Marina South Ferry Terminal by the end of 2011 will reduce the ferry journey from Singapore to Bintan by 30-45 minutes from 60-75 minutes previously, as its location in downtown Singapore will reduce ground travel time when the current Tanah Merah Ferry Terminal is relocated next to the Changi airport. This will benefit Bintan, as the shorter travel time will entice more Singaporeans who wish to go for quiet and relaxing island trip over a weekend or for short breaks.

Besides that, a new airport is believed to be in the pipeline after President Susilo Bambang Yudhoyono granted permission for a new airport (catering to single-aisled planes like the Boeing 737s and Airbus A320s) to be built at the Lobam industrial area. It is understood that master developer Gallant Ventures will be involved and is currently looking for JV partners for this project.

In addition, according to the Southeast Asia Building article, Bintan Treasure Bay has plans to include daily shuttle services on seaplanes, helicopters, luxury yachts and fast ferries to increase travel options, convenience and accessibility to the island.

Prospect for gaming outlet in Treasure Bay Bintan. The additional growth catalyst for Treasure Bay Bintan is the prospect of obtaining a gaming license to build a gaming outlet within the project. Genting is currently the largest shareholder of Landmarks with 30.3% stake in the Group, which it had bought between 18 August 2006 and 28 December 2007. It average cost is RM2.05 per share, which is 40% higher than its current share price of RM1.53. We believe Landmarks will leverage on Genting’s extensive gaming industry experience to bid for a gaming license.

On 24 January 2008, Bintan Treasure Bay signed an agreement with PT Wisata Hiburia, which has been granted a Surat Izin Tetap Usaha Wisata Internasional Terpadu Eksklusif (Decree for Permanent Licence of International Exclusive Integrated Tourism) by the Kebupaten Bintan. The decree improves the prospect of the government allowing gaming outlets to be opened within Treasure Bay. Under the agreement, PT Wisata Hiburia has assigned Treasure Bay as an Exclusive Integrated Tourism Zone (EITZ), which grants permission for certain licensed activities to be conducted within the development. These licensed activities include medical tourism, multimedia and information technology hosting, and games and entertainment, including gaming. With this zoning agreement in place, coupled by Genting’s successful foray into the gaming industry in Singapore with Resorts World Sentosa, we believe it is only a matter of time before Genting decides to flex its muscles as major shareholder of Landmarks and push for a gaming outlet in Treasure Bay to tap into the thus far untested gaming industry in Indonesia. We think that the target market for Landmarks’ casino operations will be different from the patrons in Singapore whereby the operations in Bintan will be on a smaller scale, hence becoming synergistic to Genting’s casino in Singapore.

Sale of Residential Villas in Treasure Bay
Property sales to unlock value for Landmarks. Management guidance had been sketchy in terms of the luxury serviced villas in Bintan Bay that it plans to launch for sale. However, the article in Southeast Asia Building claimed that there would be 160 serviced villas within the development. The land area for each villa will range from 200 sq m to 1,100 sq m while built-up areas will be between 160 sq m to 440 sq m. These one to three bedroom luxury villas will be located on the fringe of the crystal clear water lagoon.

We understand there will not be any property launches in FY11 as the Group plans to concentrate on ground works at Treasure Bay. We expect Landmarks to launch several of the serviced villas in 2012, and more the following year as it seeks to lock in some sales as it progresses with Phase One of Treasure Bay Bintan. Although it is still early days for residential projects on Bintan Island, the response to Gallant Venture’s launch of its Pantai Indah seafront bungalowswithin its Lagoi Bay enclave has been encouraging. Gallant Ventures has managed to sell 10 out of the 26 villas since its launch in April 2010, with most buyers being Singaporebased expatriates who intend to use these properties as weekend homes.

Assuming Landmark’s serviced villas will be priced similar to Gallant Venture’s Pantai Indah homes (as Treasure Bay is more strategically located, right beside the Ferry Terminal), Landmarks will be able to price its villas at c.S$4,300 per sq m. We are assuming 60 units would be launched in FY12F with 30% take up during initial launch, as developments on Bintan start to take shape. This will contribute c.RM17m revenue to the Group. We also expect Landmarks to launch another 90 units in FY13F and generate approximately RM96m in revenue.

Management & Strategy
Genting is the major shareholder of Landmarks, with 30.3% stake, but does not have Board representation currently. The other major shareholder of Landmarks is North Symphony Sdn Bhd. with 17.99% stake. Datuk Zakaria bin Abdul Hamid, the current Chairman of Landmarks, owns 50% of North Symphony.

Boardroom tussle firmly behind them. Landmarks experienced several major boardroom tussles as (major) share ownership changed frequently in bids to gain control of the company, which was attractive as an undervalued stock with huge earnings potential. This resulted in constant management changes. However, the appointment of Datuk Zakaria bin Abdul Hamid as Group Chairman seems to have brought some stability to the management team, which had been missing all these years. The Group is now only focused on achieving its goal of becoming the leading player in the lifestyle sector in Southeast Asia, led by Datuk Zakaria in the foreseeable future.

Segmental Forecasts
Average occupancy at Andaman Langkawi.
We assume average occupancy at Andaman Langkawi will improve as visitor arrivals in Malaysia are projected to increase to 25.6m in 2011 from 24.6m in 2010. Tourist arrivals in Langkawi had been hovering at 10% of Malaysia’s total visitor arrivals, so if we assume the same percentage, Langkawi should see 110k tourists in 2011. Our expectation of higher occupancy at Andaman Langkawi is also premised on better branding as part of the Luxury Hotel & Resorts Collection under the portfolio of Starwood Hotels & Resorts Worldwide. Room rates will also be adjusted based on inflation rates. We expectthe Andaman Langkawi to return to the black and contribute RM1.3m to Group earnings in FY11F.

Property sales.
We conservatively assume initial property take up will be slow when the residential villas on Treasure Bay Bintan are launched in FY12. This is primarily because the Group does not have a track record on Bintan. However, as the project starts to take shape in FY13F, we expect take up rates to improve as the villas would be an alternative to Gallant Venture’s Pantai Indah bungalows. Hence, we projected c30% take up rate in FY12F and c.50% in FY13F. Average selling prices are projected to be similar to Gallant Venture’s Pantai Indah at S$4,300 per sq m. However, this is conservative as Landmarks’ site is more strategically located. Based on these assumptions, property sales revenue contribution will be about RM17m to the group in FY12F and RM96m in FY13F.

Key Risks
Property take up rates.
The take up rate for FY12F might not meet our expectation because the Group does not have a track record on Bintan and also in developing large scale integrated resorts. Treasure Bay Bintan will be its first foray into resort development. Hence, potential investors might want to wait to see how the development takes shape.

Sales launch units and timeline.
As management is still redesigning the masterplan and altering the specifications of each section of the development, the number of units of villas available for launch may change. Besides, the timeline in which the properties will be launched for sale may also be modified as the masterplan is currently undergoing some changes. We understand there will be no property launches in FY11, as the initial year for Phase One of Treasure Bay will involve only ground works. A detour from our assumptions for launch volumes and timing will be a key risk for property sales earnings and could affect group earnings significantly.

Interest rate risks.
Interest rates will affect the costs of borrowing for the Group as it is likely to raise funds for the project. As Landmarks is expected to borrow a substantial sum to cover development costs, a slight increase in interest rates will have a large impact on interest costs and repayments in the future.

Financials - Quarterly / Interim Performance
• Highlights of YTD performance. Net profit for FY10 fell 145% yoy due to lower contribution from MSL Properties. It contributed only RM0.4m last year against RM9.87m in FY09. Besides, Landmarks also experienced lower earnings from hotels as the contract given by the government to operate Carcosa Seri Negara had expired on 31 December 2009. The current quarter’s performance is also weaker than 3Q10 due to lower contributions from hotels and resorts.

Expectations for next few quarters.
1Q11 result will be similar to 4Q10 with the ongoing refurbishment and upgrading works at Andaman Langkawi. And 2Q11 performance might be weaker than 1Q11 due to seasonal factors as the peak season for its resorts is the first and last quarters of the year. However, we believe its near term performance is irrelevant as the jewel for Landmarks now is Treasure Bay Bintan, which will contribute to earnings in the longer term.

Financials – Income Statement
• Historic Performance – Trends and Key drivers. Landmarks’ revenue has been declining since 2004 as the Group was divesting assets that do not fit into its strategy to become the leading player in the lifestyle sector. As a result, the Group is now left with only three major assets, including one that is not expected to contribute until further down the road. However, group revenue is set to increase in FY11F, FY12F and FY13F as the Group looks to launch its residential villas at Treasure Bay Bintan.

• Exceptional items/events The RM552m gain in FY07 arose from the sale of its interest in Sungai Wang Plaza and Shangri-La Hotels in that year.

• Between FY05 and FY08, Landmarks realised exceptional gains from asset disposal (see Company Background section).

Financials – Balance Sheet
Fixed assets has increased significantly over the years. Landmarks’ fixed asset value has increased by about 10-fold since FY06, as the Group has a valuable piece of land bank on Bintan. It revalues its land bank every year and we expect valuations to increase when it releases its 2010 Annual Report.

Healthy Balance Sheet.
The Group’s balance sheet is in healthy net cash position as the restructuring exercise has reduced its debts while simultaneously filling its coffers to prepare for its big spend on Treasure Bay. We expect long term debt to increase over the years as the Group will look to raise funds for Phase One of this project.

Financials – Cash Flow
CAPEX set to increase. Landmarks is set to increase its CAPEX as it commences construction of Phase One of Treasure Bay Bintan. With Phase One estimated to cost S$425m (RM1.02b) and span over 5 years, group capex would be RM150m- RM200m p.a. over the next three years. Hence, we expect negative FCF over the next three years.

Operating profit. The Group’s operating profit had been declining steadily over the years as it had been selling its assets. Currently, it only has the Andaman Langkawi, the land on Bintan, and its 20%+1 share in MSL Properties. We expect operating profit to pick up gradually after the Andaman Langkawi refurbishment is completed and Phase One of Treasure Bay commences operations in stages.

Financials – ROE Drivers
Property sales to pick up. We expect Landmarks’ property sales to grow in FY12F and FY13F as it launches its residential villas in Treasure Bay Bintan. FY12F property sales is expected to be lower as we expect the villas to be launched at the end of FY12, but sales should pick up in FY13 as the project starts to take shape and developments at Lagoi Bay also start to pick up. This is the key to ensure gradual ROE expansion to 1.6% by FY13F.

Improving margins. Landmarks’ margins are expected to improve as it will be able to lock in high margins for its villa sales due to its low entry cost. Its average land cost is only S$100 per sq m while average selling price (ASP) ois estimated conservatively at S$4,300 per sq m. The current ASP is realistic as Gallant Venture’s Pantai Indah development at Lagoi Bay is fetching similar prices, but Treasure Bay is more strategically located right next to the ferry terminal.

SOP value of RM3.50. We value Landmarks at RM2.0bn based on sum-of-parts (SOP) methodology, or RM3.50 per share. Our target price is based on 1x FY11F book value per share of RM3.54, which is reflective of our SOP value. We believe our valuation is conservative as it only values the raw land in Bintan and the Andaman Langkawi based on 2008 prices and does not factor in potential development profits based on DCF. Landmarks is trading at attractive 0.4x 1-year forward P/BV, which is 33.3% lower than its average historical P/BV multiple of 0.6x (see Figure 13).

Our SOP value is very sensitive to changes in land prices where an additional SGD50 per sq m increase will raise our SOP to RM4.33/share. (see Figure 12)

In terms of contribution to our SOP value, the Bintan land accounts for the lion’s share at 69%; deferred tax liabilities making up 20%; net cash at 5%; Andaman Langkawi 4%; and investment in associate 2% (see Figure 10).

Key Assumptions
Bintan land – We value its entire land bank on Bintan at its 2008 valuation that is shown in its 2009 Annual Report. It is RM1,931.1m or RM571.1 per sq m (SGD238 per sq m) vs its historical purchase price of SGD100 per sq m. This value is likely conservative as the land value might have appreciated since then.

The Andaman Langkawi – We value the resort at RM117m (RM622,075/room) based on its last valuation in 2008 as shown in its 2009 Annual Report. This value might also be conservative as the land value might have appreciated since then.

Source/转贴/Extract/: HWANGDBS Vickers Research
Publish date:20/05/11

Landmarks Ready to make its mark (CIMB)

10 December 2010
RM1.37 @09/12/10
Ready to make its mark

Landmarks is trading at a hefty discount of more than 70% to our estimated RNAV of RM4.81. It also boasts RM130m net cash, which works out to RM0.27/share or 20% of the current share price. There are two potential catalysts for the stock. One is the launch of the group’s core asset, the 835-acre Treasure Bay Bintan (TBB) development, possibly in 1Q11. Two, the announcement of gaming operations at the TBB resort, which would be a huge catalyst for the stock. Assuming a 50% discount to its RNAV, the stock could trade at RM2.41, which implies 81% share price upside. Landmarks could also ride on the 40% share price rally of Gallant (GALV SP, Non Rated) over the past month. Gallant is an integrated master planner for industrial parks and resorts in Batam and Bintan.

Background. Landmarks is a 30.3% associate of Genting. Its core assets are the 835-acre Treasure Bay Bintan development in Bintan, Indonesia and the Andaman resort in Langkawi, Malaysia. Landmarks acquired Bintan Treasure Bay Pte. Ltd (BTB) in stages from 2007 to 2008 for RM764m cash. BTB is the master developer of Treasure Bay Bintan. The 835 acres of land were valued at RM1.93bn in 2008.

About Treasure Bay Bintan. The TBB project is located next to the sole ferry terminal in Lagoi, Bintan, which is the main gateway from Singapore to Bintan. Bintan is just a 45-minute ferry ride from Singapore. The mixed development project which has an estimated GDV of S$1.8bn (RM4.3bn) is expected to comprise of resorts, condominiums and villas. Plans call for its development as the Water Resort City of Bintan with canals, waterways and lakes. It will target the middle- to upper-segment of tourists and investors, particularly Indonesians and Singaporeans. Tourist arrivals in Bintan reached 410,000 in 2009 and are projected to touch 440,000 in 2010. Most of the tourists come from Singapore.

No confirmation of gaming business yet? Landmarks did not confirm whether there are plans to set up a gaming establishment there. In Jan 08, the company announced the signing of a zoning agreement between BTB and PT Wisata Hiburia (PTWH). What is the zoning about? The zoning involved the designation of Treasure Bay Bintan as an exclusive integrated tourism zone (EITZ) for conducting certain licensed activities i) medical tourism, ii) multimedia and information technology hosting, and iii) games and entertainment, including gaming.

PTWH has been granted a surat izin tetap usaha wisata internasional terpadu eksklusif (decree for permanent licence of international exclusive integrated tourism) by the Bupati of Kabupaten Kepulauan Riau which allows PTWH to zone land in Bintan Island where the above-mentioned activities can be conducted. While we do not foresee hurdles for the non-gaming portion of the EITZ, there are undoubtedly risks associated with the licence to operate a gaming establishment on Bintan as gaming is still prohibited in Indonesia.

Project to be revived again next year? Due to the 2008 global financial crisis, the Treasure Bay Bintan project was put on hold. However, the company recently indicated that it is resuming the project and is finalising a master plan for the project. The first launch is likely sometime in 1QCY11.

Financial highlights. Landmarks has been turning in only marginal pretax profits over the past two years as its only revenue-generating asset is the Andaman in Langkawi. Over the past few years, the company sold core assets including Sungei Wang Plaza and its 26.6% stake in Shangri-la Hotels (Malaysia) and used the funds to acquire the Bintan landbank. Landmarks now has RM130m (RM0.27/share) net cash.

Valuing Landmarks
Asset valuation is most appropriate. As Landmarks is turning in marginal losses and has yet to start commercial development of its main asset, we believe asset valuation is the best way to value the stock. In 2008, PT Heburinas in association with CB Richard Ellis valued the 865-acre Treasure Bay Bintan landbank at an average of S$22.50 or RM54 psf (S$1=RM2.40).

Transacted commercial and residential land around S$28-29 psf. Gallant Ventures (GALV Sp, Non-Rated), which is listed in Singapore, is an integrated master planner of industrial parks and resorts in Batam and Bintan. The company is also involved in commercial development in the Riau archipelago and provides support services to Bintan and Batam properties such as ferry terminals and ferries.

Gallant has 14,000ha of residential, commercial and resort development landbank in Bintan, to be developed in phases. 1,300ha has been earmarked for the Lagoi Bay development. Gallant has so far sold some commercial and residential development land at Lagoi Bay, averaging S$28-29 psf. As Landmark’s Treasure Bay Bintan is located just beside the ferry terminal, one could argue that its landbank should be worth much more than the land at the Lagoi Bay development (see Figure 2).

Bintan landbank worth more with the opening of two IRs? Furthermore, one could argue that Landmarks’ Treasure Bay Bintan landbank is worth much more than the valuation done in 2008 given the commencement of two new integrated resorts in Singapore this year. Assuming an average landbank valuation of S$25-30 psf for Treasure Bintan Bay, Landmarks’ RNAV/share would be RM5.26-6.17. A 50% discount to this RNAV estimate would peg the stock’s value at RM2.63-3.09.

Valuation and recommendation
Trading at huge discount to share price. Landmarks is trading at a hefty discount of more than 70% to our estimated RNAV of RM4.81. Investors are currently valuing the Bintan landbank at only slightly more than S$3.00 (RM7.20) psf. At 50% discount to its RNAV, the stock would be worth RM2.41.

Major laggard. Landmarks has been a laggard this year, trading sideways since Sep 09. YTD, the stock has eked out a mere 5% gain compared to 18.8% for the KLCI. We expect the stock to catch up soon. Furthermore, Landmarks’ current share price is way below Genting’s entry cost, which we estimate to be RM1.70-2.00/share.

Potential catalysts for the stock. There are two potential catalysts for the stock. One is the launch of the Treasure Bay Bintan development, possibly in 1Q11. Two, announcement of gaming operations at this resort given that Treasure Bay Bintan is located in an exclusive integrated tourism zone (EITZ) in Bintan, giving it the licence to provide gaming services at the resort.

Ride on Gallant’s upswing. Three weeks ago, Gallant’s share price rallied 40% and finally broke out of the sideways consolidation it has been in since Apr 10. Technically, this is a positive sign for the stock. As both companies are involved in a similar business in Bintan, Landmarks’ share price could ride on the strong share price trend for Gallant.

Appendix - Technical outlook
Landmarks – bullish ascending triangle pattern?

Bullish ascending triangle pattern. Landmarks’ daily chart shows a potential bullish ascending triangle formation that began in Jul this year. Over the past few months, its trading volume has picked up within a tight trading range, which suggests accumulation by “strong hands”. The triangle resistance trend line is at RM1.46. A breakout above this level supported by strong trading volume could indicate the end of the consolidation that began in mid-09. The first target on triangle breakout would be RM1.76, the 38.2% retracement of the 2007-2009 downtrend. The next target is RM2.11, the 50% retracement.

Source/转贴/Extract/: CIMB Research
Publish date:10/10/10

Another throw of the dice for Landmarks? (CIMB)

4 October 2010
Genting Bhd
RM9.96 Target: RM11.00
Another throw of the dice for Landmarks?

Conquering SEA with Bintan?

The Edge Weekly attributed the recent share price rally for Genting Bhd’s 30.3% associate, Landmarks, to news that its flagship Bintan project may be revived soon. We are surprised by this news though a revival is timely in light of the success of Singapore’s two new integrated resorts (IRs). However, we are slightly disappointed that the article failed to provide clues on whether the project has a gaming component. We retain our FY10-12 core earnings and DPS projections for Genting Bhd. We also maintain our SOP-based target price of RM11.00, which does not attribute any value to its stake in Landmarks. The stock remains an OUTPERFORM, with the key rerating catalysts being i) less-than-expected cannibalisation and ii) new M&A ventures. Concrete signs of a gaming component for Bintan could be a source of re-rating for both Landmarks and Genting Bhd. Genting Bhd remains our top pick within the group. The news

The Edge Weekly attributed the recent rally in Landmarks’ (LMK MK, Not Rated) share price to news of a potential revival of its flagship asset on Bintan island in Indonesia, which was put on hold during the 2008 global financial crisis. When contacted, the company’s spokesman, Chew Eng Kiong, confirmed that the company is indeed resuming the project, but added that it was too early to share details. “We are just preparing a master plan for the Bintan project now. The intention is to launch the project next year, but it really depends on the situation. Perhaps by 1Q2011 something interesting will come up,” Chew said. Genting Bhd owns 30.3% of Landmarks.

Bintan project back in the spotlight. For us, the key surprise from the article is that the Bintan project is back in management’s focus after a two-year hiatus and that the long-awaited project could be launched as soon as next year.

A mixed development project ... Most of the information in the article is historical details that were first revealed in 2006. To recap, earlier plans involved a S$1.77bn (RM4.07bn) GDV mixed development project, known as Bintan Treasure Bay, comprising resorts, condominiums and villas on 330ha in Bintan island. Bintan Treasure Bay would be developed as the Water Resort City of Bintan, with canals, waterways and lakes. It would target the middle- to upper-segment of tourists and investors, particularly Indonesians and Singaporeans.

... with possibly a gaming component? The spokesman declined to say whether there are plans to set up a gaming establishment there. However, in Jan 08, Landmarks had announced that Bintan Treasure Bay had signed a zoning agreement with PT Wisata Hiburia (PTWH). The zoning involved the designation of Treasure Bay, Bintan, as an exclusive integrated tourism zone (EITZ) for conducting certain licensed activities, i.e. i) medical tourism, ii) multimedia and information technology hosting, and iii) games and entertainment, including gaming. Back then, it had also disclosed that PTWH had been granted a surat izin tetap usaha wisata internasional terpadu eksklusif (decree for permanent licence of international exclusive integrated tourism) by the Bupati of Kabupaten Kepulauan Riau which allows PTWH to zone land in Bintan Island where the above-mentioned activities can be conducted. While we do not foresee hurdles for the non-gaming portion of the EITZ, there are undoubtedly risks associated with the licence to operate a gaming establishment on Bintan.

Gaming is currently still prohibited in Indonesia.
Is the timing right? The decision to revive the project at this point appears timely in light of the success of Singapore’s two new IRs in boosting tourist arrivals and tourism-related receipts. We believe that Singapore’s successful rollout of two new IRs is putting pressure on governments in the region to relook at their gaming policies. Indonesia is closest to Singapore and Indonesians are a key target market for both the Singapore IRs.

What could it mean for Singapore’s two IRs and RWG? Should the Indonesian government allow gaming in Bintan which is just a 45-minute ferry ride from Singapore, it could spark cannibalisation concerns for Singapore’s two IRs. Having said that, we think this would be more of a worry for Marina Bay Sands than Genting Singapore’s (GENS SP, Outperform) Resorts World Sentosa (RWS) given the affiliation between Genting and Landmarks. In the bigger scheme of things, we are not overly concerned about cannibalisation as we have seen how Singapore helped enlarge the regional gaming pie. Also, we believe that Singapore should be able to defend its turf given i) its superb regional flight connectivity and ii) the other non-IR complementary tourism offerings. Even if the Bintan project were launched next year, Singapore’s two IRs would have at least a 3-4 year head start. For Genting Malaysia’s (GENM MK, Neutral) Resorts World Genting (RWG), we view its strong day-trippers segment, which makes up about 70-75% of its visitor base, as its key strength in protecting its gaming pie.

Impact on Genting Bhd. For Genting Bhd, the possibility of a third foothold in the lucrative Southeast Asia (SEA) gaming space, after its monopoly in Malaysia and duopoly in Singapore, will entrench this gaming giant’s status as a formidable global gaming force. As Landmarks is very much a property developer, it is very likely that the Genting would spearhead any gaming efforts for Bintan Treasure Bay.

Valuation and recommendation
Bintan – a new gaming market? For us, the key surprise from the article is that the Bintan project is back in management’s sights after a two-year hiatus and that the long-awaited project could be launched as soon as next year. The decision to revive the project at this point appears timely in light of the success of Singapore’s two new IRs in boosting tourist arrivals and tourism-related receipts. However, we are slightly disappointed that the article failed to provide clues on whether the project has a gaming component.

Reiterate OUTPERFORM. Genting Bhd accumulated its 30.3% investment in Landmarks at an estimated average price of RM1.70-2.00/share, 31-50% higher than the current price level. We retain our FY10-12 core earnings and DPS projections for Genting Bhd. We also maintain our SOP-based target price of RM11.00, which does not attribute any value to its stake in Landmarks. The stock remains an OUTPERFORM, with the key re-rating catalysts being i) less-than-expected cannibalisation and ii) new M&A ventures. Concrete signs of a gaming component for Bintan could be a source of re-rating for both Landmarks and Genting Bhd. Genting Bhd remains our top pick within the group.

Source/转贴/Extract/: CIMB Research
Publish date:04/10/10

Friday, May 20, 2011

公司業績扶持 僑豐維持綜指年杪1680目標













Source/转贴/Extract/: Oriental Daily
Publish date:21/05/11

Malaysia: Growth, Inflation, and OPR Prospects (DMG)

Malaysia recorded a 4.6% yoy expansion in Q1 11, slightly slower than our forecast of 5.0% (consensus: 4.9%) amidst broad-based slowdown of the supply-side. Manufacturing and services posted moderating growth momentum to 5.4% yoy and 5.9% yoy respectively (6.2% and 6.1% in Q4 10). Other sectors such as construction also slowed to 3.8% yoy last quarter from 5.6% in Q4 10 while mining continued to shrink further to -3.0% yoy from -1.2%. Only agriculture sector managed to lessen its contraction to -0.3% from -3.9%.

From the expenditure side, consumer and government spending continue to remain robust at 6.7% and 6.1% respectively (previously at 6.4% and 0.1% in Q4 10) while investment expenditure still came in respectable at 6.5% albeit slowing down from 10.0% in Q4 10. Such development remains consistent with the strategy of diversifying sources of growth.

Overall, we maintain our view for growth to be stronger in H2 11 (6.3%) on the back of stronger export recovery (higher industrial production (IP)) and sustained domestic demand as global economic recovery becomes more sustainable and domestic policies continue to remain supportive of growth. But, based on the Q1 11 growth, our H1 11 real GDP growth forecast is revised slightly lower to 5.1% from 5.3%. Thus, our 2011 growth forecast is revised slightly lower to 5.7% from 5.8% before (7.3% in 2010).

Malaysia’s Apr inflation rate came in at 3.2% yoy (our forecast: 2.8% and consensus: 3.0%; Mar: 3.0%) on higher transport (5.3% vs. 4.6% in Mar) and food (4.9% vs. 4.7% in Mar) prices while housing remained the same at 1.6%. Food, housing, and transport inflation account for 68% of the overall CPI basket.

Nevertheless, the degree of volatility in terms of market sentiments and the ample liquidity that could again drive the commodity and energy prices back higher. We think that inflation could remain elevated in the near term on increased uncertainty in the direction of the global food and energy prices.

Based on higher than expected Apr’s inflation, we revised our H1 11 inflation forecast slightly higher to 2.9% from 2.8% before but kept our H2 11 at 2.8%. Overall, our 2011 inflation forecast is revised slightly higher to 2.9% from 2.8% before.

Bank Negara Malaysia decided to raise its Overnight Policy Rate (OPR) by 25bps to 3.00% on firmer-looking steady growth path that is expected to be underpinned by sustained domestic demand and exports recovery. The statutory reserve requirement (SRR) was also increased to 3.00% from 2.00% “as a pre-emptive measure to manage the significant build-up of liquidity, which may result in financial imbalances and create risks to financial stability.”

We maintain our call for the OPR to reach 3.50% by end Q3 11 but now seeing more risks in both the timing and extent of rate hikes based on the recent growth and inflation developments.

The subsequent export and IP growth figures as well as inflation rate would be crucial in our assessment of such OPR scenario and we will revise our forecast accordingly, if necessary.

We also maintain our USD-MYR forecast on assumptions that interest rate hike would be done mainly in Q3 11 and likely to result into a strengthening ringgit from our Q2 11 forecast of 3.000 to 2.9800 and remains there throughout the rest of the year.

Source/转贴/Extract/: DMG & Partners Research
Publish date:20/05/11

Strong S$ not major concern for cost competitiveness

Business Times - 20 May 2011

Strong S$ not major concern for cost competitiveness

Monetary policy must be seen in context of managing growth, inflation risks: MAS


(SINGAPORE) The strong Singapore dollar is not a major concern for the economy's cost competitiveness as the latter hinges on a broader set of factors.

A stronger currency may have an impact on industries in general but the impact has not been significant, said Ong Chong Tee, deputy managing director of the Monetary Authority of Singapore (MAS), yesterday.

He noted that the monetary policy has to be viewed in the context of managing growth and inflation risks, when asked to comment on Singapore's slip in the 2011 World Competitiveness Rankings published by Swiss business school IMD.

'We do not use the Sing dollar with an idea of export competitiveness. Indeed, that competitiveness stems from a much broader set of other factors, for example, innovation, creative products, productivity and so on,' he told reporters at the briefing on Singapore first-quarter GDP results.

In the keenly watched global competitiveness ranking, Singapore lost its top spot, dropping to No 3 behind the United States and regional rival Hong Kong, due to concerns over rising cost of living and doing business.

Kwek Mean Luck, deputy secretary (industry) at the Ministry of Trade and Industry (MTI), noted that the strong Sing dollar has a 'balancing effect' as much of Singapore's production depends on supply from other countries.

'On business cost pressures front, we are watchful for continued pressures,' he said. 'As you are aware, with economic activity spiking up, we will face supply-side constraints particularly on the labour side.'

And the labour market remains tight, Mr Kwek added. But he hopes that with Singapore's move to reduce dependence on foreign workers through higher foreign worker levy from next year, companies will seek more productive ways in the face of rising wage costs.

Productivity grew by 4.5 per cent in the first quarter, slower than 7.8 per cent in the previous quarter, data from MTI shows. Overall unit labour cost for the economy grew by 2.3 per cent in the first quarter, slightly higher than the 1.8 per cent rise in the previous quarter.

Still, inflationary pressures are expected to ease towards 3 per cent by the end of this year, after peaking at 5.2 per cent year on year in the first quarter, Mr Ong said. The high base effect from elevated car and accommodation prices in the later part of last year is expected to kick in during the second half of this year.

Giving a breakdown, Mr Ong said about 30 per cent of the rise in headline CPI stems from cost of cars and private road transport, 30 per cent from housing and another 30 per cent from commodity-related items. The remaining 10 per cent of the CPI increase is coming from higher wages.

MTI's new GDP growth forecast of 5-7 per cent for 2011, up from the previous estimate of 4-6 per cent, has factored in an underlying oil price assumption of US$100-US$110 a barrel, 20 per cent higher than the average price for last year.

Given the current inflationary environment, the monetary policy announced by MAS last month 'remains appropriate', Mr Ong said.

MAS had in April signalled further appreciation for the Sing dollar by shifting the exchange rate policy band upwards. It re-centred the policy band below the prevailing level of the Singapore dollar nominal effective exchange rate (S$Neer), while leaving the band's slope and width unchanged.

Publish date:20/05/11

2011-0517-57金錢爆(索鱷黃金大倒貨 信美元得永生!?)

Source/转贴/Extract/: youtube
Publish date:17/05/11


Publish date:16/05/11

Retail REITs Limited near term catalysts(OCBC)

Retail REITs
Limited near term catalysts; Maintain NEUTRAL
Mixed retail sales data. Singapore Retail sales in Mar 2011, excluding motor vehicles, were up 7% YoY but down 1.3% MoM. The yearly sales increase was partly the result of escalating inflation. At constant price, retail sales were, nonetheless, up 4.6% YoY but down 2.4% MoM. Compared to Mar 2010 and adjusted for inflation, only the food & beverages, wearing apparel & footwear and furniture & household equipment segments recorded growth of more than 7%. The largest drop, however, came from supermarkets and optical goods & books which declined approx. 2%.

Rental rates mixed as well. According to CBRE, the retail leasing market also gave mixed signals in 1Q11, with major leasing deals concluded (Abercrombie & Fitch at Knightbridge, Cold Stone Creamery at Orchard Building) as well as the exit of some anchor tenants (such as ALT at Heeren) along OrchardRoad. Monthly rents for prime Orchard Road averaged $30.10 psf/month in 1Q11, dropping 0.5% QoQ. Suburban rents remained at $29.10 psf/month, unchanged from the previousquarter. On average, the gap between prime Orchard and suburban rents continues to narrow, amounting to S$1.00 this quarter compared to S$4.10 a year ago. It is likely that prime retail rents along Orchard Road will continue to slide in the near term as recent completions along Orchard Road have not been digested and rental re-negotiations at some of thesemalls are impending. For example, more than 20 retailers at shopping mall 313@Somerset have banded together recently to petition for lower rents after struggling to attract customers. We also heard on the street that business for tenants in older malls such as Orchard Plaza, Far East Plaza, Heeren and Midpoint Orchard continue to deteriorate, dropping by some 30%-50% ever since the newer malls opened.

Supply Issues. According to our estimates, there is approximately 1.9m sq ft of mall space in the 2011-2012 pipeline. The retail sector continues to grapple with supplyside issues, brought on by the massive injection of new retail space in 2009-10. Some of the tourism expenditure is also diverted to the casinos and more consumers are shopping online, particularly among the younger group. The appreciating SGD will also affect tourist spending and motivate more Singaporeans to shop overseas. In fact, Knight Frank has forecasted that prime Orchards rents are likely to remain flat while suburban rents are likely to see only upside of about 2% - 3% this year. Landlords face an increasingly uphill task ahead to maintain attractive rentals, not only to retain but also to enhance the tenant mix. With limited near term catalysts, we think Singapore-based Retail REITs are likely to trade range bound. Maintain NEUTRAL on the overall sector.

Demand & Supply. According to URA, as at the end of 1Q11, the total available stock of shop space stood at 3,411,000 sq m (36.7m sq ft) There was a total supply of 373,000 sq m (4.0m sq ft) GFA of shop space from projects in the pipeline, from Government and private land sources. Of the total pipeline supply of shop space, about 277,000 sq m (2.4m sq ft) are expected to be completed between 2Q11 and 2013. The island-wide vacancy rate of shop space was 6.1% as at the end of 1Q11, compared to the 5.8% vacancy rate as at the end of 4Q10. The vacancy rates for shop space in Orchard, RCA and OCA as at the end of 1Q11 were 6.0%, 8.2%and 5.3% respectively. In comparison, the vacancy rates for shop space in Orchard, RCA and OCA as at the end of 4Q10 were 5.0%, 8.8% and 4.8% respectively

Tenants consolidation at play. There seems to be a growing tendency amongst retailers to consolidate their retail spaces, a view first expressed by DTZ. Previously, we have seen retailers opening outlets in different malls along Orchard Road to gain prominence. Flights to newer malls from retailers in the older mall are also seen, considering lower footfall experienced in some of these older malls. Though prime ground floor rents in Orchard (Central) area are not likely to feel the brunt as the shuffling of spaces generally affect the upper or basement levels, such trends may impact the prime retail rents in Orchard (Fringe) area.

Source/转贴/Extract/: OCBC Investment Research
Publish date:20/05/11

China Taisan Too good to be true? (CIMB)

China Taisan Technology
Too good to be true?
BUY; TP:S$0.23
Price @19/5/11: S$0.14
52-week range (SGD): 0.135 – 0.24

1Q11: Below

What’s up (doc)?
• 1Q11 below.
• Sales formed 15% of our full year forecast.
• Net profit was 12% of full year forecast.
• 1Q11 performance hurt by revenue decline and gross margin erosion.

Cost structure little changed yoy.

Hmm …..

• In our FY10 results note, we highlighted the possibility of more intense competition depressing ASPs which unfortunately came true in 1Q11 results.

• In addition, 4Q10 performance was boosted by some customers’ bringing forward their requirements, leading to a 33% qoq and 12% yoy decline in volumes.

• We believe 2Q11 and 3Q11 could mirror 1Q11’s performance which means yoy declines in both quarter given the high base in FY10. We expect Taisan to remain profitable in FY11 though not as high a target as we previously anticipated.

..... So, is it heaven or hell?

• With 2 unexciting quarters ahead, we cut our target price to S$0.23 (from S$0.39 based on 5.4x CY12 P/E) pegged at parity to CY11 book value.

• With the TDR proceeds, the Company is sitting on historical net cash per share of S$0.128 or 91% of share price. Debt is just Rmb 40m versus cash of Rmb 779.1m.

• EV/EBITDA dips below 1x given the net cash of Rmb 739m versus market cap of Rmb 799m.

• The share price appears to be discounting 1) potential risks relating to integrity/safety of cash balances and 2) possibility that Taisan could be on the cusp of an earnings decline a la FY09 again. Share price could also face some pressure as we understand that major shareholder Mr Choi still plans to reduce his stake from the current 32.3% (as at 16 March 2011) though we believe he will eventually retain a double digit stake in the Company. The other major shareholder, Mr Lin is likely to maintain his current holding of 9.5% in the Company.

• Planned capacity expansion of 12,000 tonnes (FY12) is likely to go ahead but we believe management may take their time in rolling this out. We do not take this capacity expansion into our revenue forecasts.

Source/转贴/Extract/: CIMB Research
Publish date:20/05/11

S'pore raises 2011 growth forecast

by Rachel Adrienne Kelly
04:47 AM May 20, 2011
Singapore - Less than a month after it warned of dark clouds looming in the external environment, the Government yesterday revised upwards its outlook for the Singapore economy, forecasting growth of 5 to 7 per cent this year, up a full percentage point from its previous forecast of 4 to 6 per cent.

Mr Kwek Mean Luck, Deputy Secretary (Industry) at the Ministry of Trade and Industry (MTI), said that, with the manufacturing sector rebounding by 75 per cent on a sequential quarterly basis and the better-than-expected overall first-quarter numbers, 2011 is enjoying a "firm start" and "the economy is on track to deliver higher growth this year compared to what we earlier anticipated".

Analysts said the upward revision was expected after the MTI released stellar growth rates last month of 23.5 per cent and 8.5 per cent, respectively, on a quarterly and year-on-year basis in its preliminary estimate for the first quarter, beating even the most bullish of private sector forecasts.

The MTI yesterday trimmed the first-quarter growth numbers to 22.5 per cent from the previous quarter and 8.3 per cent from the corresponding period a year earlier.

Analysts called yesterday's full-year growth forecast upgrade conservative, saying that it reflected ongoing risks including the Euro zone debt crisis, tensions in the Middle East leading to high oil prices, and further fallout from the March 11 triple whammy of an earthquake, tsunami and nuclear crisis in Japan.

In the PAP's party political broadcast in the run-up to the May 7 General Election, Prime Minister Lee Hsien Loong had flagged these risks as some of the "dark clouds on the horizon" among others, such as the US budget crisis and security threats in the region.

On the MTI's upgrade, Citigroup economist Kit Wei Zheng said: "There are no surprises as the strong first-quarter number always carries through to the rest of the year."

The robust growth was spurred by the strength of the biomedical manufacturing cluster and a better-than-expected performance of the service industries.

DBS economist Irvin Seah said strong tourist arrivals in recent months have boosted retail, tourism and the other services segments.

He said: "Spearheaded by the gaming industry, the other services industry is set to take pole position as the fastest-growing segment this year."

Integrated resort operator Genting Singapore, for example, turned to a first-quarter profit of S$305 million in the three months ended March 31 as turnover almost tripled to S$923 million, driven in large part by high-rolling gamblers.

And Mr Seah added that fund flows into Singapore have been strong and will continue to power the financial services industry.

But in a stark reminder that the path ahead may not be all smooth, Japan's Cabinet Office yesterday confirmed that Asia's second largest economy was in recession, with gross domestic product shrinking 0.9 per cent in the first quarter compared with the previous three months, and 3.7 per cent in annualised terms.

HSBC economist Leif Eskesen said Singapore's growth is expected to ease in the near term "partly reflecting a base effect after the rapid sequential growth in Q1, but also as the impact of the elevated oil prices and the calamities in Japan are felt more in Q2."

"Still, barring any escalation of the unrest in the Middle East and an associated jump in oil prices, growth is expected to hold up well and come in at or possibly above potential growth," he added.

Publish date:20/05/11

Perennial relaunches IPO, may raise as much as S$843 million

04:46 AM May 20, 2011
SINGAPORE - Perennial China Retail Trust has revived its stalled initial public offering in Singapore and plans to raise up to S$843 million, down from an originally planned S$1.1 billion.

The company, which will launch the IPO through a business trust, resubmitted its prospectus to the Monetary Authority of Singapore yesterday after having withdrawn it in March, when it cited volatile market conditions.

In the revised prospectus, Perennial - managed by Mr Pua Seck Guan, the former chief executive of CapitaMall Trust - said it will offer up to 1.1 billion units and gave a price range of 70 to 76 Singapore cents per unit.

The offer includes up to 577 million units to institutions and the public, and up to 516.7 million units to cornerstone investors.

Before withdrawing its prospectus in March, the company was expected to raise around S$1.1 billion when it set an offer price of S$1 per unit.

The revised prospectus said the listing is planned for June 8.

Perennial's portfolio comprises five properties in the Chinese cities of Shenyang, Foshan and Chengdu.

It plans to use the money from the IPO to develop malls in China.

Henderson Global Investors and CB Richard Ellis Global Real Estate Securities are among the cornerstone investors in the IPO. AGENCIES

Publish date:20/05/11


中國市場淘金 全年獲利拼新高
2011年 05月20日 【黃馨儀╱台北報導】亞太地區第一健康生活品牌OSIM(International Ltd. 910023-TW)將來台發台灣存託憑證(TDR)8.5萬張,並於6月初掛牌。OSIM集團總裁沈財福表示,OSIM上季獲利倍數成長並創新高,受惠OSIM以及中國健康食品自有品牌「RichLife」積極拓點,今年營收成長2成,全年獲利可望刷新去年歷史新高紀錄。





此外,醫療通路服務商盛弘 (8403)在4月間取得國內最大藥用紗布廠商騰旺46%股權後,由於手中現金高達7億元,因此不排除繼續尋找併購標的。盛弘指出,只要有利國內醫院、診所通路拓展,或健康檢查、專科經營的垂直及水平整合者,都不排除任何併購的機會。


◎其他產業領域:今年3月底取得高檔茶葉品牌TWG Tea 35%股權,已在新加坡、日本、英美設點,將在中港台與韓設合資公司,進軍頂級茶葉

Source/转贴/Extract/: 蘋果日報
Publish date:20/05/11

QE2到期 熱錢撤離亞洲 韓股重挫2%

2011年 05月20日
【陳智偉╱綜合外電報導】美國第2輪量化寬鬆政策(Quantitative Easing,QE2)6月底將告終,續推QE3機會渺茫,甚至可能提前升息,全球資金派對接近尾聲,熱錢陸續撤離亞洲股市、回抱美元資產,南韓股市昨在外資連6個交易日賣超下重挫近2%,整體亞洲股市也因缺乏資金行情欲振乏力。





美國Fed昨晨公布上月FOMC(Federal Open Market Committee 聯邦公開市場委員會)會議紀錄顯示,多數理事贊成先升息再出售先前QE政策收購資產,除非經濟展望驟變,才有可能續推QE3,顯示決策輿論逐漸向緊縮傾斜,升息時間點可能較預期提前。


Source/转贴/Extract/: 蘋果日報
Publish date:20/05/11

Thursday, May 19, 2011

美聯儲局推演退出策略 結束再投資 升息 賣資產







FOMC 10位擁有表決權的成員中,部分人士表示,再推出一輪收購資產方案的先決條件是,經濟前景大幅改變,或者這項前景存有風險。


Source/转贴/Extract/: Oriental Daily
Publish date:20/05/11

Genting Singapore Invests in non-core (Phillip)

Genting Singapore PLC –
Buy (Maintained)
Closing Price SGD 2.08
Target Price SGD 2.36 (+13%)
52w k High (11/9/2010) 2.35
52w k Low (5/21/2010) 0.91
1. Rubs CRA the wrong way;
2. Invests in non-core

• Genting was fine a total of S$530,000 by CRA for reimbursing entry levy and breaches in Casino Control (Surveillance) Regulations. Amount has insignificant impact on financials.
• Genting ventures into unrelated field in Natural resources through investments in Gold Nature Invested Limited for US$60 million at 3.75x book value.
• We maintain our Buy recommendation and fair value of S$2.36

The breaches
Casino Regulatory Authority of Singapore (CRA) had previously issued a letter of censure on 31st Dec 2010 to RWS for making changes to its casino surveillance system without prior approval from CRA. On 18th May 2011, CRA took further issues with RWS contraventions of the regulations by fining it a total of S$330,000 for the following:

- S$150,0000 Failure to ensure that casino surveillance footage from 22 cameras during the period 29 March 2010 to 2 April 2010 was retained for the specified period as required.
- S$30,000 Failure to ensure that casino surveillance footage from 18 cameras during the period 29 March 2010 to 30 March 2010 was retained for the specified period as required.
- S$150,000 Did not have a failure notification system to provide an audible as well as visual notification of specific failures in the casino surveillance system.
Source: CRA

CRA further fines RWS another S$200,000 for reimbursing entry levy payable by Singapore citizens and permanent residents. On 15 July 2010, a senior management staff of RWS had provided cash to SCPR media representatives for the purpose of paying for the entry levy payable by them for entry into RWS’ casino premises to cover the launch of the Ladies Club.

Impact on financials
RWS earned NPAT of S$305.4 million in 1Q11 and our projected net profit for FY11 is S$1.27 billion. The S$0.53 million fine is thus small change to the company.

Investments in Gold Nature Investments Limited
Genting Singapore paid US$60 million for Gold Nature Investments Limited. This represents PB of 3.75x base on NAV of US$16 million. The new subsidiary is 51% vested in Montbella Limited which has investments in natural resource ventures. The investment is not expected to have any material impact on consolidated net tangible assets and earnings per share of the Company for the financial year ending 31 December 2011.

In our initiation report dated 14th January 2011 (page 2), we highlighted the roles of each listed entities and under Genting Singapore, its core business is to focus on running RWS and in bidding for projects related to the construction, development and management of similar sized resorts. No where did it say investments in natural resources. In fact, this portfolio appears more suited for Genting Plantations Berhad which has many oil palm plantations in Malaysia. As at Dec 2010, Genting Plantations had cash stash of MYR 755.7 million (S$309 million) which is sufficient to pay for Gold Nature Investments. But of course Genting Singapore has an even larger cash hoard of S$3.46 billion. But when we consider its net debt position, Genting Singapore is in fact in a worse off position with net cash of S$6 million versus Genting Plantations’ S$205 million.

The Genting Group had on a few occasions reshuffled the portfolios amongst the subsidiaries through sales and purchase agreements with one another. Hence, we are not surprise if the newly acquired subsidiary is divested to a sister entity in future. Hopefully at a higher valuation. Meanwhile, Genting Singapore can afford to pay cash for Gold Nature Investments Limited considering its cash hoard and operating cash inflow of S$383.4 million in 1Q11. Though we do not see the rationale in Genting Singapore’ non-core investment as it does not align with the company’s long term strategic growth, we choose to maintain a more neutral stance.

Outlook for 2Q11 results
Cash will be lesser by S$75 million due to investments in Gold Nature as well as the CRA fine. We further expect core net profit to be lower than 1Q11 as second quarter is unlikely to repeat stellar win rate of 3.8% and as gaming activities become slightly more muted without the CNY atmosphere. However, given the weaker performance in USS and Hotel ADRs in 1Q11, these may turn in relatively stronger contributions for 2Q11. Furthermore, the disposal of 43,092,136 Rank shares for 150 pence in May 2011 will contribute an additional S$12.9 million. Hence, we still expect Genting to meet our expectations. We thus maintain our Buy call on Genting Singapore and fair value estimate of S$2.36 base on 15x EV/EBITDA.

Source/转贴/Extract/: Phillip Securities Research
Publish date:19/05/11

CapitaLand to book $100m in China gains

Business Times - 19 May 2011

CapitaLand to book $100m in China gains

It sells residential site in Shanghai and 398-room Hilton hotel in Kunshan


CAPITALAND expects to book a net gain of $100 million after selling two assets in China recently, it said yesterday.

The property group sold off its 100 per cent stake in a residential site in Shanghai for 807.7 million yuan (S$155 million) to an unrelated third party. It expects to recognise a gain of about $82 million from the sale.

And earlier this month, CapitaLand said it sold the 398-room Hilton Double Tree Hotel in Kunshan, also to an unrelated third party. The developer expects to recognise a net gain of $18 million from the deal.

The capital recycled from the two divestments will be deployed for 'growth opportunities', said CapitaLand chief executive Liew Mun Leong.

'In line with our stated growth strategy for the group, we are focused on acquiring and developing choice real estate properties, or realising value from investments which have matured such as the residential site in Shanghai's Qingpu District,' Mr Liew said.

Jason Leow, chief executive of CapitaLand's China unit, said that CapitaLand has so far recycled $1.2 billion of the $3.1 billion it spent to acquire Hong Kong property investment holding company Orient Overseas Developments in January 2010.

'We achieved quick time-to-market in developing residential projects in the portfolio, which have generated approximately $250 million in terms of sales value,' said Mr Leow.

'We are also developing our second Raffles City in Shanghai and Tianjin International Trade Centre. These two developments will be valuable additions to our portfolio of landmark properties,' he added.

CapitaLand shares gained 2 cents to close at $3.17 yesterday

Publish date:19/05/11

World needs another crisis instead of more stimulus, says Saxo Bank’s Jakobsen.

Steen Jakobsen, chief economist at Saxo Bank, believes another crisis is just what the global financial system needs to clean itself up once and for all. Finally unburdened by excessive debt, the world’s major economies could then be able to grow strongly for 20 to 30 years.

Yet, the likelihood of this happening is re-mote, he says. Instead, he sees the US continuing with its ultra-loose monetary policy amid disappointing economic data. According to him, there will be yet another round of so-called quantitative easing, as the current round is due to end in June, likely in the fourth quarter of this year or by early next year. “It’s a scenario where the market is down 10% to 15%, and you have a policy response that reengineers the market going [up] again.”

That’s essentially “more of the same” and will do little to solve the imbalances in major global economies. In fact, loose US monetary policy, with the Federal Reserve increasing the money supply, has only served to debase the value of the US dollar, he says. To get out of the rut, the US ought to be addressing the leverage in the system instead of the cost of the debt. “As soon as you start dealing with solvency instead of liquidity, we are taking one step in the right direction.”

For investors, the continued ultra-loose monetary policy and anaemic economic growth ultimately means having to venture into riskier assets such as commodities and equities at the expense of less risky options like US Treasuries. “The problem is that at zero inter-est rates, every single investment product in the world has an infinite return profile,” Jakobsen points out.

Ultimately, of course, the pursuit of risk against the backdrop of weakening growth is unsustainable, and is likely to end in crisis anyway. The Copenhagen-based economist, who dubs this scenario Crisis 2.0, says it could happen when the rounds of quantitative easing and similar moves by other countries fail. “People realise it’s just more money and we give up on the government,” he says. “My preference for a crisis is not because I want people to feel pain. I want a crisis because that’s the only way I can see the political establishment doing anything to adjust to the structural issues at hand.”

Fundamentally, the global economy has to be rebalanced. And, for that to happen, the US and Europe need to progress politically while capital markets in Asia open up to a free flow of cross-border transactions. Jakobsen also talks about a common Asian currency. “The leverage we have between these economic regions right now is the currency,” he says, explaining that it would remove the kind of competitiveness among the regions that takes place at each other’s expense. “If we fix this, the only thing left is the structural changes.

It becomes investment in education, in microeconomic agents,” he says. “We need to change because we can’t use the currency weapon anymore. That will be a true paradigm shift.” On the whole, Jakobsen is very positive in his outlook on Asia. He points out that China is already allowing select partners such as Russia to trade in each other’s currencies. Last December, China and Russia began to settle their bilateral trade in both the rouble and RMB. “The ability to create growth now is very much based on Asia’s ability to open up its own market for its own citizens and also for foreigners.

The only reason we all buy US dollars and dollar assets is that it’s the only market big enough to take all these excess savings.” Jakobsen says it is now time for central banks to stop trying to save the world with an ultra-loose monetary policy. “We can see a slow erosion of growth and wealth over20 years, or we can have a relatively accelerated crisis which deleverages the system, rebalances the global imbalances and re-starts everybody at a better point with less leverage.”

That might also hasten the end of unproductive investment in tangible assets such as gold and silver. “Everything has been debased, except for tangible assets,” Jakobsen says. “But buying tangible assets like gold and silver is not productive. You take gold out of a mine, bring it up to the ground and put it in a safe underground again. Where is the productivity?” The world would be better off investing in human talent instead, he continues. “We have to be careful that we don’t fall in love with these tangible hard assets relative to belief in people’s ability to renew themselves, to be productive.”

Publish date:15/05/11

Investors shifting to cash from commodities

Global investors have tempered their optimism about the US and world economies and plan to put more of their money in cash and less in commodities over the next six months, a Bloomberg survey found. Almost one in three of those questioned say they will hold more cash, while 30% intend to reduce investments in commodities, according to a quarterly Bloomberg Global Poll of 1,263 investors, analysts and traders who are Bloomberg subscribers. Both results are the highest since the survey began asking the question last June.

A plurality – 40% – expects oil prices to fall in the next six months, the first time respondents felt that way since the inception of this poll in July 2009.The “big-stimulus game is over”, says Bill O’Connor, a poll participant and founder of Sagg Main Capital hedge fund in New York, in explaining why he’s moving money into cash as the US Federal Reserve winds up its bond-buying programme and US lawmakers look to cut the budget.

Fewer than four in 10 of those surveyed describe the US and global economies as improving, down from about 50% who felt that way back in January. US economic growth slowed to 1.8% in 1Q2011,down from 3.1% in 4Q2010. Home prices fell in more than three-quarters of US cities in 1Q2011, according to the National Association of Realtors.

The poll, conducted on May 9 and 10, also found that investors’ ardour for stocks is cooling. Two in five intend to increase their exposure to equity markets over the next six months, down from almost three in five in the last poll in January. US investors, in particular, have become less keen on stocks: Just 37%say they are increasing their exposure, down from57% in the previous poll.

The survey was taken after a turbulent week in the markets that saw commodity prices suffer their biggest decline in more than two years. The Standard& Poor’s GSCI Total Return Index of 24 commodities dropped 11% two weeks ago, led by a 27% collapse in silver prices. The gauge fell 3.9% on May 11 and another 0.9% by 9.29am in London on May 12.Crude oil fell below US$100 a barrel in New York trading on May 11.More than half of those surveyed expect silver prices to fall further in the next six months. Sixteen percent identified commodities as one of the markets that will suffer the worst returns over the next year, more than double the proportion that said that in January. Commodities have “become a bubble, with a lot of non-specialist investors”, says Ken Welby, a salesman at KNG Securities LLP in London and a poll participant. “Demand cannot cope with the price rises that we have seen.”

While the attractiveness of the US is ebbing, it still comes out on top when survey participants are asked to name the best countries to invest in. Thirty-one per cent cite the US as among the markets that will offer the best returns over the next year, down from 37% in January.

US investors are more enthusiastic about their country than those in either Europe or Asia. Almost two in five Americans picked the US as a top market. Only one-third of Asians and less than a quarter of Europeans felt that way. Brazil and China trail the US in the poll, with one in four investors citing those countries as good places to put money. Fifteen per cent single out Japan, almost double the amount that did so in January, before the country suffered a devastating earthquake and tsunami that left 24,837dead or missing as at May 7 and cratered its stock market. “We have confidence that the Japanese are addressing the issues, and that earnings will not disappoint the market,” says Welby. “I see it as a relative-value trade.” More than two in five investors see Japan’s Nikkei225 Stock Average rising over the next six months. That compares with about one in four who said that back in January.

The Nikkei average on May 11 rose 45.50, or0.5%, to 9,864.26. That’s down from 10,254.43on March 11, the day of the earthquake. The gauge dropped 1.5% on May 12.Investors have turned less optimistic about other stock markets. Less than half see the Standard & Poor’s 500 Index rising during the next six months; in January, almost two-thirds forecast an advance.

About one-quarter in the latest poll say they expect the stock gauge to fall. The S&P 500 fell 1.1% to1,342.08 on May 11 in New York. “US stocks will have a 5% to 8% decline in the coming months,” says Joe Larizza, a director at Vining Sparks IBG in Memphis, Tennessee, and a poll participant. “I see energy and food prices causing a drag on the economy.” Global investors still consider equities to be among the most lucrative places for their money, with more than one in three forecasting that stocks will provide superior returns over the next year.–Bloomberg LP

Publish date:15/05/11
Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)

乔治·索罗斯(George Soros)



高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo

There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
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