Friday, September 16, 2011

Are S'pore REITs defensive?

Are S'pore REITs defensive?
by Tan Chin Keong
04:46 AM Sep 16, 2011
Since the listing of the first real estate investment trust (REIT) in Singapore in July 2002, the sector has grown by leaps and bounds. The Singapore Exchange now lists 23 REITs with underlying properties varying from retail, offices and industrial to hospitality and healthcare. This has made Singapore's REIT sector the second-largest in Asia, after Japan's.

REITs are popular because of the many advantages they offer. For one, they allow investors to diversify their property exposure, as REITs generally hold a basket of investment properties.

Another main attraction is their tax-efficient status. As tax pass-through entities, Singapore REITs do not pay income taxes at the corporate level. Individual shareholders are also exempt from paying income tax on the dividends they receive, although corporate shareholders are not.

In addition, REITs pay at least 90 per cent of their income available for distribution as dividends, making them high-dividend-yielding stocks. These, coupled with the fact that most REITs tend to have relatively stable income streams, are also the reasons why they are perceived as a defensive sector in the Singapore stock market.

Not all REITs are created equal

Give the number of REITs available, how does an investor decide which to choose?

In my view, not all REITs are created equal and some are more defensive than others. Based on experience, shopping mall and industrial property rentals tend to be more stable and resilient in downturns than office rentals and hotel-room rates, which means retail and industrial REITs tend to be more defensive than their office and hospitality peers.

This may be because retail properties tend to be more location-specific and thus less commoditised. For example, shopping malls near MRT stations do relatively better in terms of shopper traffic - and thus tenant demand - than those farther away from the stations even if the rentals for the latter are much lower.

Meanwhile, suburban shopping malls tend to cater more to tenants such as supermarkets, which are less economically sensitive because they provide staple goods. For industrial properties, their tenancy contracts are generally longer than the usual three-year period, giving them more rental stability.

In contrast, office rentals tend to be more economically sensitive, as seen from past downturns. One of the major tenants of prime offices, for example, is the financial sector, which is significantly exposed to the broader economic cycle. For hotels, rental incomes are relatively less stable, as they are not locked in and tend to fluctuate with daily occupancy rates.

Defensive as long as there is no credit crunch

Another important consideration is that the REIT business model relies significantly on the availability of credit. REITs do not retain much of their incomes and thus need to periodically tap the banks or the capital markets to refinance their debt.

In times when credit is unavailable, the inability to refinance becomes a real risk for some REITs. This is what happened during the credit crunch of 2008-09, when a number of small, highly-leveraged REITs came close to defaulting on their debts. This also helps explain why Singapore REITs, despite their high dividend yields, did not display their defensive characteristics and generally fell as much as the broad equity market in 2008 and early 2009.

That said, Singapore REITs have learnt their lessons. In general, they have actively diversified their funding sources and now hold lower debts levels than in 2008. Credit conditions are also currently normal and REITs are able to obtain debt refinancing from different sources.

Parentage matters

However, a new credit crunch - if it materialises, perhaps due to a worsening of the euro zone debt crisis - could significantly dent the defensive characteristics of Singapore REITs. In such a scenario, investors are likely to be better off holding the larger REITs with strong corporate parents.

The advantage of having strong parentage is that during a credit crunch, banks may only provide financing to REITs that are deemed safer from a credit perspective, which usually means those with strong corporate parents. Furthermore, strong parents could step in to provide equity financing if credit is unavailable, thus providing some stability to the REIT business model.

Tan Chin Keong is an analyst at UBS Wealth Management Research.

Source/转贴/Extract/Excerpts: TODAYonline
Publish date:16/09/11

Genting M'sia reveals plans for Miami resort

Genting M'sia reveals plans for Miami resort
04:47 AM Sep 16, 2011
KUALA LUMPUR - Casino operator Genting Malaysia yesterday unveiled plans for its proposed US$3 billion (S$3.7 billion) bayfront resort on land currently housing the Miami Herald Media's headquarters.

The project, known as Resorts World Miami, will include four hotels, two residential towers and a 3.6-acre rooftop lagoon, on land it agreed to buy from Miami Herald publisher McClatchy in May, the Kuala Lumpur-based company said.

A casino will be included if Florida's legislature and governor approve, Genting Malaysia said.

The new Miami resort will cover 30 acres of land overlooking Biscayne Bay, comprising both the Miami Herald site and adjacent Omni Center, for which Genting Malaysia said it had acquired all outstanding mortgages. The project will also include a convention centre, nightclubs and the largest ballroom in the United States, it said.

Genting Malaysia, which has operated Malaysia's only gaming resort on a hilltop since 1968, has been seeking opportunities to break into the US market.

Its Resorts World Casino New York City development is nearing completion on the Aqueduct Racetrack. It is already the largest casino operator in the United Kingdom.

Genting Malaysia is 47-per cent owned by Kuala Lumpur-based Genting Bhd, which is also the parent company of Genting Singapore, which runs the Resorts World Singapore gaming resort. BLOOMBERG

Source/转贴/Extract/Excerpts: TODAYonline
Publish date:16/09/11

Soros: EU needs common treasury to beat slump

Soros: EU needs common treasury to beat slump
04:46 AM Sep 16, 2011
LONDON - Billionaire investor George Soros has warned Europe's debt crisis risks triggering another Great Depression unless euro zone leaders adopt a series of radical policy measures, including the creation of a common treasury.

Mr Soros, in an article for the New York Review of Books and Reuters, says policymakers must prepare for the possibility that Greece, Portugal and perhaps Ireland will have to default and leave the euro zone.

"It appears the authorities have reached the end of the road with their policy of 'kicking the can down the road'," he says.

"Even if a catastrophe can be avoided, one thing is certain: The pressure to reduce deficits will push the euro zone into prolonged recession. This will have incalculable political consequences."

A growing number of policymakers, as well as market economists, are convinced it is a matter of time before Greece, which keeps falling behind on its fiscal targets after two EU/IMF bailouts, will have to default.

Italy and Spain are under pressure from bond markets over their large public and bank debts and weak growth, a cause for particular concern - both economies are too large to be saved by the European rescue fund that has been used in bailouts for Greece, Portugal and Ireland.

As well as preparing for a default and euro zone exit by those three "peripheral nations", Mr Soros recommends four bold policy measures:

- Bank deposits have to be protected to prevent bank runs in weaker states;

- Some banks in the defaulting countries have to be kept functioning to keep their economies afloat;

- The European banking system would be recapitalised and put under European, as distinct from national, supervision;

- Government bonds of other deficit countries would have to be protected.

Meanwhile German Chancellor Angela Merkel yesterday bluntly rejected euro zone bonds as a solution to the currency area's sovereign debt crisis, saying that "collectivising debts" would not solve the problem.

Speaking a day after the head of the European Commission raised financial market hopes by pledging to present options soon for issuing such common bonds, Ms Merkel said: "Eurobonds are absolutely wrong.

"In order to bring about common interest rates, you need similar competitiveness levels, similar budget situations. You don't get them by collectivising debts," she said.

The Chancellor, facing rising German public opposition to euro zone bailouts, said there would be no quick and easy way out of the debt crisis, only a step-by-step process of individual countries putting their fiscal house in order.

Underlining the gravity of the crisis, the EU Commission warned yesterday that growth in the euro zone will come to a "near standstill" by the end of the year due to the European debt fiasco and the turmoil in financial markets.

The commission forecast growth in the 17 euro countries would be only 0.1 per cent in the fourth quarter, down from 0.2 per cent in the third. For the wider 27-nation EU, the Commission said it expected fourth quarter growth to be 0.2 per cent for the third quarter running. AGENCIES

Source/转贴/Extract/Excerpts: TODAYonline
Publish date:16/09/11

Shares jump as central banks extend US$ loans to euro zone banks

Shares jump as central banks extend US$ loans to euro zone banks
04:46 AM Sep 16, 2011
FRANKFURT - Shares in Europe and the United States surged yesterday on news that major central banks worldwide will provide additional funding to the banking sector in the euro zone.

The European Central Bank (ECB) said it would co-ordinate with other central banks to lend US dollars to euro zone banks in a series of three-month loans to ensure they have enough of the currency through the end of the year. The hope is that the new programmes will prevent money markets from freezing up because of Europe's sovereign debt crisis.

"The Governing Council of the ECB has decided, in co-ordination with the US Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank, to conduct three US dollar liquidity-providing operations with a maturity of approximately three months covering the end of the year," the ECB said.

The ECB, which will offer the loans on Oct 12, Nov 9 and Dec 7, said the operations will be run as fixed-rate tenders with full allotment.

The euro jumped more than a US cent after the announcement and traded at US$1.3890 late afternoon in Frankfurt. London's FTSE jumped 2.3 per cent, while Germany's DAX and France's CAC both surged 3.6 per cent.

In New York, the Dow Jones Industrial Average rose about 1.1 per cent in early trade.

Some European banks have struggled to obtain US dollar funding in the last several months as lenders have become increasingly nervous about the euro zone debt crisis and the global economic slowdown.

The premium European banks pay to borrow in US dollars through the swaps market is close to the highest level in almost three years.

The ECB already offers seven-day US dollar loans every week and this offer was tapped for the second time in a month on Wednesday.

Previously, banks had not used the ECB's dollar operation since February.

The US Federal Reserve maintains dollar swap lines with the ECB and other central banks in order to ensure that they can obtain additional supplies of dollars when needed. AGENCIES

Source/转贴/Extract/Excerpts: TODAYonline
Publish date:16/09/11


Source/转贴/Extract/Excerpts: youtube
Publish date:09/09/11

2011-0908-57金錢爆(LOST檔案 神秘的台股三角洲 )

Source/转贴/Extract/Excerpts: youtube
Publish date:08/09/11

Goldman Sachs forecasts oil at US$130 in 12 months

Goldman Sachs forecasts oil at US$130 in 12 months


SINGAPORE: Oil prices will likely rise to about US$130 (US$1 = RM3.09) a barrel in the next 12 months as demand in emerging markets such as China and India make up for weak developed world growth, Goldman Sachs said yesterday.

Despite concerns about the US economy and eurozone sovereign debt, which have hit crude prices due to an expected fall in demand, the Wall Street giant forecast commodity prices to remain buoyant.

At the same time it tipped gold - a safe haven in times of economic uncertainty - to cost US$1,860 an ounce in a year, much less than the record high of US$1,921.15 it hit last month.

The large emerging economies of the BRICS - Brazil, Russia, India, China and South Africa - are forecast to grow 7.7 per cent this year and 7.9 per cent in 2012.

By contrast, advanced economies are projected to expand only 1.7 per cent this year and 2.1 per cent next year, Goldman Sachs said.

Brent crude, which is traded in London, is expected to hit US$130 a barrel in the next year, from current levels around US$112, the bank said.

West Texas Intermediate (WTI) light sweet crude oil, traded on the New York Mercantile Exchange, is forecast to reach US$126.50 a barrel over the same period from current US$88.

Both contracts touched all-time highs of above US$147 a barrel in July 2008 before the onset of a global financial crisis.

"Clearly, there is very little growth anticipated to come from the US, EU and the developed markets," said Allison Nathan, senior commodities economist at Goldman Sachs.

"But we expect quite robust emerging market demand growth with China still anticipated to grow at 9.2 per cent next year and overall the BRICS countries close to 8 per cent," she told reporters here.

Nathan said the spread between West Texas Intermediate (WTI) crude and Brent should narrow in the future but it was still unclear when the gap will close.

The high inventory level at the US oil hub in Cushing, Oklahoma, has led to WTI trading at a significant discount compared with other light sweet crudes such as Brent, Goldman Sachs said.

It added that transportation pipelines must be upgraded to improve delivery.

"While we expect that alternative transportation capacity such as rail, truck and barge shipments will expand rapidly over the coming months, we believe that WTI will remain volatile and prone to dislocations in the future until the pipeline infrastructure is improved," it said.

For gold, the US bank said an environment of low interest rates and central bank buying will support prices for the precious metal.

Low interest rates drive investors to buy gold for higher returns, boosting prices. - AFP

Publish date:16/09/11

Thursday, September 15, 2011


Source/转贴/Extract/Excerpts: youtube
Publish date:07/09/11

Cosco: At the start of a downcycle (BNP)


At the start of a downcycle
Cutting our SoTP-based TP on growing industry uncertainties
We maintain our REDUCE rating on Cosco Corp, but lower our TP to SGD0.80 (from SGD1.30) on supply glut (worsened by weak economy outlook), increasing competition, and potential order cancellation. Cosco’s offshore operation, which used to be a share price driver, may now be a negative trigger on concerns about key customers’ financial viability.

Higher cost provision to be expected
YTD, Cosco has not received any new-build orders for its conventional bulker shipbuilding business. The group is in the process of restructuring its contract labour operations due to low efficiency, and we suspect further cost provision may be necessary. We see downside risk to consensus earnings forecasts.

Lowering our shipbuilding benchmark valuation
Given the worsening micro and macro environment, we lower our P/BV benchmark for the bulker and containership shipbuilding operations from 2.2x to 1.3x and 1.5x respectively. This reduces our TP to SGD0.80. Upside risks: higher-than-expected BDI, rising oil price, and government policy support to the shipbuilding industry.

Key Earnings Drivers & Sensitivity
For every 5% appreciation of the RMB against the USD, Cosco’s revenue would decline 5.0% and PATMI would decline 45.5%

Source/转贴/Extract/Excerpts: BNP Paribas Securities
Publish date:15/09/11

Yangzijiang: Deteriorating fundamentals (BNP)


Deteriorating fundamentals
Directors’ share buyback to provide technical support
Yangzijiang (YZJ) is one of the most active shipyards in terms of releasing clarifications and press coverage. While we believe industry headwinds will severely hurt shipbuilding gross profit growth and the risk profile of the financial lending portfolio has increased, directors’ share buyback should provide technical support to the stock at current levels.

Earnings quality to deteriorate further
A negative industry outlook is a given, but we expect YZJ to face the impact of a steep learning curve for its first 10,000TEU containership order and of the enlarged capex requirement. This may result in more financial lending activity. The risk to ROE and benchmark valuation is skewed to the downside, in our view.

SOTP-based TP cut to SGD0.99 (from SGD1.11), maintain HOLD
We lower our PBR target for non-core financial earnings from 1.3x to 0.9x on increased risk profile. This reduces our TP to SGD0.99. Upside risk: better-than-expected equity market and economy outlook, and stronger new-build order momentum. Downside risk: increased risk aversion to YZJ's enlarged financial lending activity and any capital dilution.

Key Earnings Drivers & Sensitivity
For every 5% appreciation in RMB against USD, Yangzijiang will see a 4.5% decline in revenue and 14.0% decline in PATMI. The sensitivity analysis is based on the assumptions that the company does not engage in other forward or financial derivative contract.

Source/转贴/Extract/Excerpts: BNP Paribas Securities
Publish date:15/09/11

SIA: Mixed outlook, but valuations reasonable (CIMB)

Singapore Airlines Ltd
NEUTRAL Upgraded
S$10.75 @13/09/11
Target: S$11.80

Mixed outlook, but valuations reasonable
• Upgrade to NEUTRAL. We are optimistic on SIA’s foray into the LCC space via Scoot, but are concerned about Qantas’s new premium carrier RedQ. Nevertheless, SIA’s share price has declined 23% since we downgraded the stock on 20 June and is now below our target price of S$11.80, pegged to 1.1x P/BV which is the average of its historical range of 0.7-1.4x. The current share price implies a P/BV multiple of 1x, a level which SIA rarely goes below except during massive systemic shocks. Therefore, we believe that an upgrade from Underperform to Neutral is warranted. Although the SIA group suffered operating losses for its parent airline and cargo operations in its 1Q, we are not expecting it to incur full-year losses.

• Positive on Scoot. Scoot will be the low-cost leader in mass market aviation, operating close to 400 seats in its B777-200s, charging low base fares and earning
the rest from an exciting portfolio of ancillary offerings. We are positive on Scoot, because we think the value proposition will be good and believe the cannibalization impact on mainline SIA will be manageable.

• Not so enthusiastic about RedQ. The impact of RedQ on SIA is clearly negative as it has the potential to take away high-end business customers from SIA’s and
SilkAir’s front cabins. With RedQ’s A320s having so few seats, the aircraft weight will be low and we expect its A320s to have the range to cover all of India, China and Australia. If so, RedQ is expected to compete against not just SilkAir’s regional routes but also potentially against SIA’s medium-haul routes to India and China.

Source/转贴/Extract/Excerpts: CIMB Research
Publish date:14/09/11

MAS: MAS will need support from oneworld (CIMB)

Malaysian Airline System Bhd
RM1.45 @13/09/11
Target: RM1.60
MAS will need support from oneworld

• Maintain UNDERPERFORM. It will not be easy for MAS to make its newly-minted premium carrier strategy work as it will put it in direct competition with SIA/SilkAir and now the upcoming RedQ. However, if MAS succeeds in joining the oneworld alliance, Qantas and British Airways could help MAS/Sapphire succeed. Our target price for MAS continues to be pegged to an unchanged 2.75x P/BV, one standard deviation above the 10-year mean. Our forecasts are untouched. We recommend investors to stay away from MAS until there is greater clarity on the execution of its long-term strategy, commitment from the oneworld alliance members to develop the KL hub, and broad acceptance of the restructuring plan from its employees.

• A Sapphire is born. Sapphire is likely to start operations from November 2011, and may adopt the seat configuration of MAS’s new B737-800s and fly around Asean, south China and the south/east coast of India. A revitalised product would be good for the MAS group but we note that this is coming very late and in an environment of heightened competition in Asean in both the low- and high-end segments.

• oneworld holds the key. MAS’s success depends on the extent to which Qantas and British Airways will commit to the KL hub by re-establishing flights into KLIA. If this happens and is accompanied by Qantas taking a stake in Sapphire, the odds of MAS turning around will improve.

Source/转贴/Extract/Excerpts: CIMB Research
Publish date:14/09/11

AirAsia: Scoot's impact will be manageable (CIMB)

AirAsia Bhd
RM3.43 @13/09/11
Target: RM4.70
Scoot's impact will be manageable

• Maintain OUTPERFORM. AirAsia’s short-haul operations in Asean will not be directly affected by Scoot, which targets more-than-four-hour-range destinations, or by super-premium RedQ or Sapphire. We also think that Thai Smile will be a weak competitor to Thai AirAsia. Our target of RM4.70 is based on an unchanged 10x core P/E with re-rating catalysts coming from the expected yield improvement from Firefly’s exit from the domestic LCC business and our expectations for MAS’s exit from certain Asean routes. AirAsia is also building new ventures in Japan, the Philippines and Vietnam while Thai AirAsia and Indonesia AirAsia are targeted for listing in 4Q11-1Q12. Our EPS estimates remain unchanged.

• Scoot’s impact will be manageable. Scoot could have an impact on AirAsia X’s long-haul LCC business because budget traffic will now have an alternative stopover airport at Changi. Some short-haul AirAsia traffic might be lost to Tiger Airways or Jetstar as a result, although the impact will be very small given Scoot small fleet size. AirAsia X may also have to invest in its product if Scoot succeeds in introducing wireless IFE, power sockets, personal mobile telephony, etc, in its aircraft.

• Domestic goodies. The relatively minor impact, if any, on AirAsia from Scoot will be more than offset by positive developments on the domestic aviation front. Firefly will be ceasing its LCC flights tomorrow, and we expect this to have a positive impact on AirAsia’s yields to East Malaysia from the 4Q onwards. Short-haul aviation demand is also holding up well and AirAsia is the prime beneficiary.

Source/转贴/Extract/Excerpts: CIMB Research
Publish date:14/09/11

称拖延战术来到死角 索罗斯4招再向欧盟献策

称拖延战术来到死角 索罗斯4招再向欧盟献策
Created 09/15/2011 - 17:08
















Source/转贴/Extract/Excerpts: 南洋商报
Publish date: 15/09/11

Golden Agri-Resources Ltd: Potentially more positive surprises

Golden Agri-Resources (GAR), which recently put out another strong set of results in 2Q11, could continue to post positive earnings surprises in 3Q11, buoyed by still-resilient crude palm oil (CPO) prices, the fairly inelastic demand for CPO, and an expected rise in CPO production in 2H11. As we had just adjusted our numbers (including our base CPO assumption) after its robust 2Q11 results in mid-Aug, we do not see the need to do so at this juncture. Applying the same 12.5x peg to our blended FY11/FY12F EPS, our fair value remains at S$0.80. Maintain BUY. Key risks to our estimates include a sharp weakening of the USD, a collapse of crude oil prices, and of course, severe drop in CPO demand from both China and India.

Still positive on GAR. Golden Agri-Resources (GAR), which recently put out another strong set of results in 2Q11, could continue to post positive earnings surprises in 3Q11, buoyed by still resilient crude palm oil (CPO) prices, the fairly inelastic demand for CPO, and an expected rise in CPO production in 2H11.

CPO prices remain resilient. Despite the increased uncertainty over the global economies, CPO prices have remained largely resilient, with prices averaging around US$1012/ton in Aug. While the average CPO price did ease around 2.3% MoM in Aug, it was nowhere near the corresponding 5.6% slide in crude oil prices. We further note that the current futures price of US$995/ton (for delivery in Dec) is still above our base CPO assumption of US$980/ton for the whole of 2011.

Relatively inelastic demand for CPO. We believe that there are several reasons behind the relatively resilience of CPO prices and the key among them is that the demand for CPO is largely inelastic as it is still mainly used as a food source; it is also relatively inexpensive compared to other vegetable oils, thus making it more attractive to consumers and even industries in the current inflationary environment.

Expect continued improvement in CPO production. On the operations front, 2Q11 CPO production saw a decent 8% QoQ increase to 650k tons; palm product yield also improved further to 1.5 tons/ha from 1.4 tons in 1Q11 and 1.0 ton in 2Q10. For that quarter, GAR achieved ASP of US$1137/ton, though down slightly from US$1150 in 1Q11. Meanwhile, cash cost also crept up to US$291/ton in 2Q11 (versus US$260 in 1Q11) due to the appreciating IDR against the USD; GAR also used 40% more fertilizer in 2Q11 following a wet 1Q11. Barring any adverse weather conditions, GAR believes it should be able to achieve >10% increase in CPO production for 2011.

Maintain BUY with S$0.80 fair value. As we had just adjusted our numbers (including our base CPO assumption) after its robust 2Q11 results in mid-Aug, we do not see the need to do so at this juncture. Applying the same 12.5x peg to our blended FY11/FY12F EPS, our fair value remains at S$0.80. Maintain BUY. Key risks to our estimates include a sharp weakening of the USD, a collapse of crude oil prices, and of course, severe drop in CPO demand from both China and India

Source/转贴/Extract/Excerpts: OCBC Investment Research
Publish date:15/09/11


Created 09/15/2011 - 19:16



《金融時報》引述接近面子書消息人士稱,創辦人朱克伯格(Mark Zuckerberg)期望員工能夠先集中精神於產品研發方面,上市計劃待明年9月或之後才落實。





Source/转贴/Extract/Excerpts: 星洲日報
Publish date:15/09/11


Created 09/15/2011 - 18:30




























Source/转贴/Extract/Excerpts: 星洲日報
Publish date:15/09/11

Global offshore stocks: Higher E&P spending signals buying opportunity, says DnB NOR Markets’ Lim

Kay Lim, head of securities research at DnB NOR Markets Asia, strides across the vestibule of his office in 8 Shenton Way and ushers reporters from The Edge Singapore into a spacious meeting room overlooking the bustling Singapore port. Handing out a copy of DnB NOR’s fifth offshore exploration and production (E&P) spending report dated Aug 12, Lim launches into a quick summary of his research over the past few months, rattling off percentages, oil-consumption figures and stock prices with ease and precision.

At just 29, Lim boasts an impressive list of accolades. After graduating with a double degree in finance and accountancy from Singapore Management University, Lim secured his first job at Credit Suisse as an equity analyst focusing on the energy and material sectors.

Moving on to DnB NOR three to four years later, he then worked with Thor Andre Lunder, who headed the equity research team when the investment bank first opened its Asian headquarters in Singapore in 2009.

DnB NOR Markets is the investment banking division of DnB NOR Bank — Norway’s largest offshore and marine bank — and the only research house specifically nominated by the Singapore Exchange to provide research on the offshore and marine industry.

When Lunder left Singapore to head a more global team in London in February, Lim stepped up to take his place and now leads a small team of analysts who provide regular coverage on at least 15 sector stocks in the region.

Since then, Lim has made contrarian calls on several local stocks such as recommending that investors sell the heavily traded offshore services provider Ezra Holdings against more bullish calls by his peers, and taking a more bearish stance on market darling Sembcorp Marine when others were scrambling to upgrade their target valuations on the stock.

As it turns out, both Ezra and Sembmarine have fallen significantly over the past few weeks, hitting Lim’s lower target prices and earning him the accolade of Top Stock Picker for Singapore industrials by analyst evaluation firm Starmine.

Yet, Lim is modest about his achievements so far. “Head of research is just a title; everyone does the work and we are just a small team,” he says.

For the Aug 12 report, the team spent the past few months slogging over the telephone and email, interviewing and collating information on up to 65 companies. Based on DnB NOR’s findings and estimates, E&P spending — on the discovery, development and production of oilfields — should increase 14% y-o-y, taking total capital expenditure to US$500 billion ($605.5 billion) in 2011.

“E&P spending is growing, as demand for oil and gas has increased, and the oil price has stabilised at a sufficiently high level to undertake new projects,” says Lim. In the next two years, spending is expected to rise 8% y-o-y and 7% y-o-y, respectively.

Higher E&P budgets from oil companies bode well for the offshore oil and gas industry, as it forms the foundation for stronger levels of activity across the entire E&P value chain. That will improve the utilisation levels and charter rates for seismic vessels used to locate potential oil fields; oil rigs; and a whole array of offshore support vessels (OSVs) — ultimately boosting the bottom lines of rig and OSV owners as well as the yards that build them.

Indeed, offshore driller Standard Drilling recently sold a newbuild jack-up rig for US$220 million, representing a premium of 19% from its construction price, while Ocean Rig is looking to charter out one of its semi-submersible rigs for at least US$500,000 a day, which Lim says is “is one of the best rates we have seen”.

What, then, determines E&P spending? “Oil prices at above US$65 a barrel will encourage spending from oil companies and represent a leading indicator for offshore activity for the next one to three years as projects take time to execute,” says Lim.

Currently, oil is trading at US$89 a barrel, but DnB NOR analysts expect prices to hit US$98 within the year. That will encourage further investments in deeper, more expensive oilfields in Brazil and West Africa at a time when demand — mainly from emerging markets — appears to be outweighing supply at a global replacement rate of 87% versus the
100% ideal, says Lim. He expects deep water production activities to increase from 20% of global production currently to 35% over the
next few years.

Based on the positive outlook and weak market, Lim reckons that it is now time to pick up some stocks in the offshore sector.

“Following the recent sell-off, we see several attractive investment opportunities among the oil service companies, as long as the macro environment for the energy sector remains strong,” he writes in the report.

Where should investors place their offshore sector bets?

At the start of the offshore value chain is the seismic market, which could be the hardest hit if there is a fall in oil prices. Seismic activities require lots of time and significant investments to locate potential oilfields, making stocks in the sector more risky. At current levels, however, the industry should see a pick-up in activity to keep up with demand.

“The seismic market remains depressed, but we believe incremental demand in West Africa and the return of vessels to the US Gulf of Mexico, following the Macondo oil spill [in April last year] will be sufficient to tip the balance,” says Lim. “The US is now releasing new leases for seismic shoots [and exploration method], which means big projects for seismic players, so we expect seismic stocks to go up.”

DnB NOR’s top picks in the seismic area are Electromagnetic GeoServices and Petroleum Geo-Services, both listed in Norway.

Players in the subsea arena are also expected to benefit from the rising demand. To be sure, one reason oil companies have hiked their E&P budgets this year is to cover the rising costs of offshore support services such as subsea services, which include installing equipment on the seabed to facilitate oil production using expensive, high-specification vessels.

We like the subsea sector because there are many delayed projects coming onstream this year and the next, and the major players such as Subsea 7 and Technip have their vessels almost fully utilised for this year,” says Lim. “It’s good to know that this could spill over to fringe players like Ezra.”

After acquiring subsea company Aker Marine Contractors (AMC) in 2010, Ezra has built new vessels and marketed itself as a subsea player with AMC’s track record in the subsea space. It has yet to gain traction as a subsea player, though. “Ezra is trying to be a subsea company, but the market has yet to price in their subsea business at these levels,” says Lim, who believes Ezra’s current stock price looks attractive. “Most of the other players, such as DOF, Saipem and Subsea 7, had to suffer low utilisation when they started out five yeas ago. So, it will take time for Ezra to grow the subsea business.”

In the subsea sector, DnB NOR has “buy” calls on DOF and Singapore- listed Kreuz Holdings, which is controlled by Swiber Holdings.

Meanwhile, production from existing deepwater wells off Brazil and West Africa is dropping, which will boost demand for expensive, high-specification oil rigs capable of performing exploration drilling in harsher environments.

Indeed, Brazilian national oil company Petrobras has already released several packages for oil rigs for tender, with local yards Keppel Corp and Sembmarine contending fiercely for the contracts.

Companies such as locally listed Jasper Holdings have also sprung up to take advantage of the demand in West Africa. Indeed, Jasper recently sent its sole operating asset — a drill ship — to Guinea, where it will begin exploratory drilling in October.

With the world’s demand for oil currently at 85 million barrels per day, Lim prefers offshore drillers with high-quality fleets and exposure to the ultra-deepwater and harsh environments.

DnB NOR’s top picks in the drilling sector include Oslo-listed Aker Drilling and US-listed Rowan, as well as Oslo-listed BW Offshore in the floating, production, supply and offloading (FPSO) sector. FPSOs are mega-ships that can sail to oilfields to drill and store oil and transport it to nearby ports.

“Owing to long-term contracts, the FPSO companies have resilient earning capacity and high-dividend capacity,” the report notes. (See charts.)

Finally, Lim expects offshore support service companies that supply the industry with OSVs used for a variety of support services, including towing rigs and transporting workers and supplies, to do well.

“The companies that supply the offshore sector with OSVs are the backbone of the entire industry, so activity momentum looks set to continue in this sector as spending increases,” says Lim, who has “buy” calls on most of the stocks in the offshore support service sector including ASL Marine, CH Offshore, Ezion Holdings, Jaya Holdings, KS Energy and Swiber, all of which are listed in Singapore. DnB NOR is also positive on Deep Sea Supply and Havila Shipping, which are listed in Norway.

Of course, all that activity bodes well for OSV builder STX OSV, which has so far been the bestperforming offshore stock in Asia. STX is also Lim’s top pick in the yard space, trumping Keppel and Sembmarine.

“The two rigbuilders should continue to receive US$4 billion to US$5 billion in orders, based on the current oil and gas cycle,” says Lim, who recently upgraded his “hold” calls on both stocks to “buy”, owing to the recent selldown. “Keppel and Sembmarine should begin to see pockets of opportunities for semi-submersible rigs and maintain Ebitda margins of at least 16%.

“As a whole, the situation is not as bad as the share prices represent at the moment,” says Lim. “Overall, activity is picking up, and investors’ money will find a need somewhere.”

With markets still reeling from economic volatility, the offshore sector may just be the safe shelter investors need right now.

Publish date:12/09/11

Eurozone crisis bolsters greenback

Business Times - 15 Sep 2011

Eurozone crisis bolsters greenback


(SINGAPORE) Next to the eurozone's festering debt crisis, fiscal deficits in the US seem to have become a mere footnote for investors. The US dollar has regained favour, spiking against a broad range of Asian currencies in the last few days as fears of a Greek default heightened.

At 7 pm yesterday, the greenback went for S$1.2432 - its highest level in more than three months, according to Bloomberg data. It has gone up by 3 per cent against the Singapore dollar in one and a half weeks.

The US dollar also rose to trade at 8,798 Indonesian rupiah - it was worth just 8,539 at the start of last week - and it strengthened against the Thai baht and the New Taiwan dollar.

'Europe's dithering and conflicting messages over Greece is adding to the declines in the Asian currencies, and weakness might still continue,' said UOB economists in a note yesterday.

News flow from the eurozone continues to be daunting, with Moody's Investors Service cutting its long-term credit ratings for Credit Agricole and Societe Generale yesterday because of the banks' exposures to Greek sovereign debt.

Markets have a 'bifocal view', selling the euro and buying the greenback on negative news from the European Union, while doing the opposite when problems in the US come into focus, said OCBC economist Selena Ling.

Capital Economics Asia economist Vishnu Varathan held similar views. Risk aversion this time round has been triggered by the eurozone and its debt problems now have the market's attention. 'It's almost like a shift of focus in an ugly sister contest,' he said.

The euro has fallen by some 0.9 per cent against the Singapore dollar since the start of the month, and by almost 4 per cent against the US dollar in the same period.

The US dollar may also be seeing more demand because few options are left for investors looking for safe haven assets, Mr Varathan said. The Swiss National Bank's cap on the value of the Swiss franc has worked so far, while Japanese authorities periodically warn about the dangers of a strong yen.

Asian currencies could also have slipped against the greenback on growing speculation that central banks in the region could ease monetary policy or keep it on hold as risks to economic growth increase. The Bank of Korea, for instance, left its benchmark rate unchanged last week after several rounds of rate hikes.

There are hints of 'a change in central banker mindset and a change in risk assessment by the markets', said Bank of America Merrill Lynch on Monday. 'With the exception of China, the market is taking the view that Asian central banks will largely be on hold this year, with a marginal risk of an actual (rate) cut in Malaysia's case.'

Publish date:15/09/11

Aviation: Flight plan (UOBKH)

Aviation – Regional
Flight plan
What’s New
• CLI warns of slowdown; air cargo will be hit first. The OECD Composite Leading Indicator (CLI) has declined for five consecutive months and fell below 100 in June and July, indicating a high likelihood (94% correlation to US industrial production) of a broad-based slowdown within the next 3-6 months. Asia Pacific cargo traffic declined 2.9% in 1H11, even prior to the CLI turning negative. Thus, the odds of a significant seasonal recovery in 2H11 appear low. There are also signs of a modal shift from air freight to sea freight, given that container rates have fallen by a greater quantum. Thus, air cargo growth could be hit by the double whammy of a cyclical slowdown and a modal shift.

• For passenger traffic, we see three factors impacting stock price performance: a) a cyclical slowdown impacting long-haul and premium travel, b) stiffer competition in the low-cost segment as full-service carriers (FSC) enter the segment, and c) volatile yields due to forex movements. We believe the market has mostly priced in the risk of a cyclical slowdown, but the impact of stiffer competition remains a wild card.

• Competitive landscape changing with strategic ventures and alignments. Competition in the region has intensified with AirAsia’s and Malaysia Airlines’ (MAS) shareholder alignment, Singapore Airlines’ (SIA) and Thai Airways’ (THAI) plans to form low-cost carriers (LCC), and Jetstar and AirAsia setting up bases in Japan. More LCCs are also targeting Northeast Asia as the new growth frontier and this will gradually impact FSCs in the region, especially Cathay Pacific Airways (CX).

• SELL Chinese airlines. The market is too optimistic on Chinese airlines and has not priced in the risk of a slowdown in China’s exports or lower forex gains in 2012. China’s trade figures are at record levels, even as the US and Europe grapple with weak consumer confidence, high unemployment and massive federal debt. China’s export growth, which currently stands at 23%, is thus at risk of easing in the coming months. Meanwhile, ytd air cargo traffic growth is flat yoy, far below the official target of 10% for 2011-15. The decline in air cargo traffic suggests there is substitution by sea freight and this explains why all three Chinese carriers reported lower cargo yields in 1H11. We expect this trend to continue in 2H11 and even into 1Q12. Another reason we are cautious on Chinese airlines is that forex gains account for 35-45% of their net profit. As inflationary pressures ease, the rate of further renminbi appreciation will be slower. We have assumed a 2.0% appreciation in 2012 vs 4.6% in 2011.

• Buy/Trade stocks with low P/B and sell those with high P/B. We believe the best way to approach the sector at this stage is to buy stocks with low P/B and sell stocks with high P/B, given the significant risk of a traffic slowdown. As such, our top pick in the sector is SIA (SIA SP/BUY/Target: S$12.70), while all three Chinese airlines are SELLs.

We are neutral on CX (293 HK/HOLD/Target: HK$16.10). The exception is THAI (THAI TB/SELL/Target: Bt25.25), which deserves a low P/B multiple, given that its earnings are highly dependent on forex movements. We would however be buyers at 0.7x P/B or Bt22.00. We have also upgraded AirAsia (AIRA MK/HOLD/Target: RM3.70) to HOLD from SELL, after rolling forward our valuation to 2012. The airline will be less vulnerable to demand destruction and could potentially even benefit from passengers downgrading from FSCs to LCCs.

Sector Catalysts
• Downside catalysts: Steep decline in world trade and contagion from the European debt crisis. If the downturn becomes more severe, stocks could head towards our grey skies-based valuations. (Please refer to our “Grey Skies Scenario” table below.) • Upside catalysts: Jet fuel prices ease.

Assumption Changes
• Lower cargo yields for 2H11 and 2012.

• Global economic slowdown and a slump in world trade.
• Surge in jet fuel prices.

Source/转贴/Extract/Excerpts: UOB Kay Hian Research
Publish date:14/09/11

Revisiting Earnings Revisions – Shapes and Trends from 2008 and 2001

Think Singapore
Revisiting Earnings Revisions – Shapes and Trends from 2008 and 2001
 Halfway through weak exports data? — High semiconductor inventory levels feeding into weak electronic exports for much of this year have us leaning towards a repeat of 2000/2001. Weak electronics exports, with a 17% YoY decline for July, have weighed Singapore’s STI down for most of this year. Judging by declines seen in 2001 and 2008 (up to a 40% YoY decline), Singapore could already be halfway through the contraction cycle in manufacturing / exports. Foundry TSMC’s July and Aug revenue was stronger than earlier thought (making up 71% of expectations for 3Q11) and conclusions from Citi’s recently concluded tech conference in the US offer some support that Singapore’s export malaise could reach its trough later in 4Q. Our economics team reduced Singapore's 2011 GDP forecast twice to 5.3% (prev: 5.7%) with a technical recession likely in Q3.

 Comparing current EPS declines versus trends in previous downturns — In 2001, Singapore’s exports slumped following the dot-com bust led to ~25% in EPS decline for 2000-01. During the global financial crisis (GFC) in 2008/09, EPS declined by almost 35%. Matching 2001’s experience would lead to at least 10-15% more in negative EPS revisions (from -5% currently) and matching the STI’s price to book lows in 2001 would have the STI index falling by about 10% from current levels to 2500 points. A repeat of events similar to those that triggered the GFC unfortunately suggests 40% more downside for the STI index assuming similar p/book lows.

 Near to halfway mark on negative revisions? — Negative revisions exceeded positive revisions counts by 29% in early September – the sixth consecutive month the ERC has been in the negative zone. During the GFC period, the ERC spent 16 months in the negative zone and during the tech bust, 13 months, i.e. the market is about 37- 46% through the current malaise either on the GFC or tech bust as a reference framework.

 EPS revision trends: three sectors to note — Revision data for 2008/2009 stands out for three sectors – commodity traders and industrial firms in that these exhibited recovery trends earlier in 2009. Transport names offer a strong contrast with negative revisions being sustained way into 2009.

 Key stock picks — Preference within this volatile environment are for large cap stocks with low growth expectations into 2012 to minimize the risk of earnings disappointments. These include Singtel & A-Reit (we like both for their dividend yields and defensive qualities), Genting (as a proxy for regional arrivals remaining strong) DBS (Singapore’s banks have a strong equity base) and Wilmar on the continued turnaround of its oilseeds unit.

Halfway through weak exports data? – High semiconductor inventory levels feeding into weak exports for much of this year have us leaning towards a repeat of 2000/2001 for 2011/2012. Weak electronics exports, with 17% YoY decline for July have weighed Singapore’s STI down for most of this year.
Judging by the declines seen in 2001 and 2008 (up to a 40% YoY decline), Singapore could already be halfway through the contraction cycle in manufacturing. August's PMI at 49.4 (while 0.1pts better than the 49.3 recorded for July) exhibited continued weakness in electronics: PMI for the segment was 48.0 for August vs 49.5 in July i.e. electronics continues to be in rather bad shape.

Weak datasets have led Kit Wei Zheng, Citi’s economist in Singapore to reduce 2011’s GDP forecast twice in Q3 to 5.3% (prev: 5.7%) with a technical recession likely in Q3. Based on our current forecast of 3.3% GDP growth for 2012, on a quarterly basis, Singapore’s GDP growth rate will bottom by 1Q12 (See Figure 6). Citi’s 2011’s GDP forecast for 5.3% implies that 1) we expect the non-electronics side of things to see a pickup later in the year in Q4 and 2) Destocking activities for electronics, which had started in early 2011 when the macro environment was still strong could a switch back into mild restocking mode later in the year as the sector typically has a 3 quarter contraction inventory destocking run.

It is important to note here that restocking in technology products/electronics is typically driven by low inventories rather than a brighter outlook for end demand (which of course would be needed to sustain the momentum in exports).

The only positive dataset that helps to support this expectation has come from foundry TSMC’s July and Aug revenue being stronger than earlier thought (making up 71% of expectations for 3Q11), which offers some support that Singapore’s export malaise could reach its trough in 4Q as the destocking cycle peters out. A similar message can also be condensed from Citi’s just concluded tech conference in the US where the vast majority of the chip companies who presented at the event believe that absent any further deterioration of end-demand, their respective inventory correction phase will end by Oct

We have used the growth rate of wafer shipments at key semiconductor foundry such as TSMC as a guide towards growth trends in Singapore’s electronics sector, covering both developed and emerging market demand pools. Within Singapore manufacturing segment, while the dependence on electronics as an NODX driver has steadily reduced from about 50% in the past to about a third now, it is still a critical driver of Singapore’s economy.

Comparing current EPS declines versus trends in previous downturns — In 2001, Singapore’s exports slump following the dot-com bust led to~ 25% in EPS declines between 2000-01. During the global financial crisis (GFC) in 2008/09, EPS declined by almost 35%.

Matching 2001’s experience would lead to at least 10-15% more in negative EPS revisions (from -5% currently).

EPS revision trends - three sectors to note – Revision data for 2008/2009 stands out for three sectors – commodity traders and industrial firm in that these segments exhibited recovery trends earlier than the rest in 2009. Transport names offer a strong contrast with negative revisions being sustained way into 2009. Similarly, industrial firms also stood out in 2001, as it exhibited positive revisions in late 2001.

Not expecting a repeat of 2008
While 2011 bears similar notes to the 2008/09’s GFC, we believe this is not a repeat. GFC was sparked by an acute credit crisis while the ongoing rout is linked to risks of anemic growth amongst developed markets and issues with developed nations’ sovereign debt.

What’s different this time?
1) There has already been negative momentum in our earnings revisions count (ERC) in the last 9 months, with downgrades exceeding upgrades since April 2011

2) Expectations are lower as STI‘s PER is at 13x (-1 s.d) vs about 17x 2 quarters before the GFC started

3) Declining Govt bond yields, which have now gone to a low of 1.52% (in contrast, yields rose during GFC)

4) S$ has continued to strengthen, though we note it has weakened to 1.23 this week as we pen this piece (the S$ weakened 8-10% during the GFC)

5) Credit remains accessible (eg Noble CDS at ~20% of peak levels in 2008) Before the US credit rating downgrade in August, our outlook for the market had been guided by continuous weakening of our ERC indicator since April. Negative revisions have exceeded positive revisions by 29% in early September – this is now the sixth consecutive month the ERC has been in the negative zone. In comparison, during the GFC period, the ERC spent 16 months in the negative zone, between Jan 2008 to April 2009.

The STI Index bottomed a month earlier in Mar 2009 ~1500 points and about four months after the ERC hit its worst patch with negative revisions exceeding positive revisions by 70% in November 2008.

In the 2000-2001 tech bust period, the ERC was negative for 5 months in 2000 (between July-Nov2000) and a further 13 months between Jan 2001 and Jan 2002.

Near to being halfway through on negative revisions? – Thus far, the message from Singapore’s weak electronics export data and our ERC is similar in that the market is about 37-46% through the current malaise, even if one uses the GFC or the tech bust period of 2000/2001as a reference framework.
That said, one would expect the quantum of negative revisions (only -5% so far, see figure 10) to become larger in the next few months as investors and analysts make reductions to earnings estimates.

Deciding on what constitutes the half-way point will be an important task in the next few months.

Valuations near strong support levels, unless a crisis erupts – Investors have moved more quickly this time, with the STI already trading at a support level of 13x PER, which is seldom breached except during major recessions. A similar outcome can also be concluded looking at the STI using P/B ratios. STI’s earnings yield of c.7.5% is almost 600bps higher than the 10-yr govt bond yields of c.1.5%.

Matching the STI’s price to book lows in 2001 tech bust recession would have the index falling by about 10% from current levels to ~2500 points. Unfortunately, a repeat of events similar to those that triggered the GFC suggests 40% more downside for the index assuming similar p/book lows.

STI among worst hit in recent sell-off — Selloff sparked by the downgrade of U.S. sovereign credit had STI down by c.10% in Aug, ranking among the worst hit in the region together with Korea and Taiwan.

Key stock picks
In this volatile environment, our preference is for large-cap stocks with low growth expectations into 2012 to minimize risk of earnings disappointments
In our May Think Singapore note2, we had added defensive companies such as AREIT (as a proxy of S-REITs) and Singtel for their attractive dividend yields in replacement of higher beta stocks SIA and GLP from our Singapore stock pick list. In our last Think Singapore note in August3, we added Genting (as a proxy for regional arrivals remaining strong) in replacement of Keppel as a pick. While Horng Han continues to like Keppel’s dominance in the rig building segment, he sees rising risks on slower orderbook growth in 2012. Concerns on the impact of European financing onto the rigs value chain also needs to be watched. Meanwhile, our Genting analyst George Choi highlights that Genting’s valuations are attractive at a 20%+ discount to Macau centric names, having lost some shine on Resorts World Sentosa losing some market share to Marina Bay Sands. Gross gaming revenue for Singapore is still likely to grow 10% in 2012 from an estimated US$5.4b in 2011. The possible addition of legalized junkets to the Singapore scene can also be helpful as this may allay concern on credit risk away from Genting's receivables.

We also continue to like Wilmar on the back of a sustained turnaround seen at its oilseeds division. Wilmar could see better volume growth as China’s lifting of price caps in August allows for volume growth for soybeans and edible oils to regain momentum in 2H11.

We also continue to have DBS as a proxy for a well capitalized bank in Singapore. Robert Kong remains constructive on Singapore banks despite negative sentiment of GDP downgrades and concerns of a further quarter of qoq economic contraction in 3Q11, given banks' continued strong loan and currently benign asset quality and strong capital levels.

In the property sector, Wendy Koh and Tan Chun Keong continue to reiterate that the risk reward ratio remains unfavorable for developers4 and continue to prefer REITs as a more defensive play within the property sector. The view remains that developers will remain in a 'no-win' situation. If demand remains strong, developers are likely to be subjected more policy risks. Should the economy go into a full-blown recession, we clearly run into a risk of a price decline and further downgrades in RNAVs. Among the REITs, the preference is for MCT (MACT.SI; S$0.85; 1L), FCT (FCRT.SI; S$1.46; 1L), A-REIT (AEMN.SI; S$2.12; 1L) and MIT (MAPI.SI; S$1.21; 1L).

Ongoing risks – Uncertainty due to volatile markets can be a big dampener to consumer spending and can feed into further GDP weakness in Singapore. TSMC’s data and our conclusion from the tech conference aside, the current soft patch in electronics exports caused by high inventory stockpiles can well be extended into one that also bites into the consumption element as job losses at locally based manufacturers start to become a concern as we have started to detect duress and margin erosion within technology exporters due to the continued strength of the SGD. Headline inflation for July was 5.4% YoY. Our economist expects CPI to average 4-5% YoY for 2011, even as a record strong S$ helps dampen imported inflation.

There is now effectively a conflict of interest between exporters (who may needs a lower S$) and domestic consumers and policy makers (who need to tame inflationary pressures). This mean inflation remains a risk factor for investors - despite a 10-15% fall in headline commodity prices since the recent peak in April, we remain concerned on risks from inflation and will watch inflation data carefully for in the coming months.

Source/转贴/Extract/Excerpts: Citi Investment Research & Analysis
Publish date:14/09/11

东尼:马航若没打造品牌 外资航空日后有机可趁

东尼:马航若没打造品牌 外资航空日后有机可趁
Created 09/15/2011 - 12:44
















Source/转贴/Extract/Excerpts: 南洋商报
Publish date: 15/09/11

Ahmad Jauhari new MAS MD

The Star Online > Business
Thursday September 15, 2011

Ahmad Jauhari new MAS MD

PETALING JAYA: National carrier Malaysia Airlines (MAS) has announced the appointment of its new chief, Ahmad Jauhari Yahya, in hopes that he will be able to turn around the loss-making airline.

The 56-year-old will be the airline's new managing director starting next Monday.

Meanwhile, Mohammed Rashdan Mohd Yusof will remain the airline's executive director and report to Ahmad Jauhari, the company told Bursa Malaysia.

Ahmad Jauhari was appointed to the board of Malaysia Airports Holdings Bhd earlier this year.

He had previously served as the managing director at several companies, including Malakoff Bhd (from 1994-2010), Malaysian Resources Corp Bhd (1993) and Time Engineering Bhd (1992).

He was also The New Straits Times Press (M) Bhd senior group general manager for production and circulation in 1990 and has served several directorships, which included Jordan's Central Electricity Generating Co Ltd and Saudi Arabia's Shuaibah Expansion Project Co Ltd. Aside from this, Ahmad Jauhari was the honorary president of Penjanabebas, the association of independent power producers.

The hunt for a new MAS managing director began after Tengku Datuk Seri Azmil Zahruddin vacated his position as the airline's chief with immediate effect on Aug 9. Tengku Azmil's departure from MAS came with a board re-shuffle at MAS.

In the revamp, six independent non-executive directors resigned and four new individuals Land & General Bhd founder Tan Sri Wan Azmi Wan Hamzah, IJM Corp Bhd executive deputy chairman Tan Sri Krishnan Tan, Astro Malaysia Holdings Sdn Bhd CEO Datuk Rohana Rozhan and Axiata Bhd director David Lau Nai Pek were appointed as independent non-executive directors.

On the same day, MAS' major shareholder Khazanah Nasional Bhd and AirAsia Bhd's largest shareholder Tune Air Sdn Bhd announced a share-swap deal.

Khazanah took up a 10% stake in AirAsia while Tune Air, the investment vehicle of AirAsia founders Tan Sri Tony Fernandes and Datuk Kamarudin Meranun, bought a 20.5% stake in MAS. On top of the share swap, a collaboration agreement was signed simultaneously by MAS, AirAsia and AirAsia X, which would effectively see MAS concentrate on being a full-service premium carrier, AirAsia on being a regional low-cost carrier and AirAsia X, a medium to long haul low-cost carrier.

Meanwhile, it is expected that the five-member executive committee put in place as an interim measure to lead the airline while the search for a new chief was underway, will be disbanded. No announcement was made on this. The exco was chaired by MAS chairman Tan Sri Md Nor Yusof and the members included Datuk Mohamed Azman Yahya, Mohammed Rashdan, Fernandes and Kamarudin.

Source/转贴/Extract/Excerpts: The Star Online
Publish date:15/09/11

MAS-AirAsia tie-up necessary

The Star Online > Business
Thursday September 15, 2011

MAS-AirAsia tie-up necessary


KUALA LUMPUR: Malaysia Airlines’ (MAS) largest shareholder Khazanah Nasional Bhd has defended the collaboration agreement between the national carrier and budget carrier AirAsia Bhd signed a month ago, calling the decision a “necessary” move.

Critics have raised concern over the comprehensive collaboration framework between the airlines and the share-swap deal agreed by major shareholders of MAS and AirAsia, with some parties highlighting that the share-swap deal was not a solution to turn around loss-making MAS.

Khazanah managing director Tan Sri Azman Mokhtar acknowledged that the collaboration was not sufficient on its own to turnaround MAS, but deemed it beneficial for both airlines.

“I would say the indications are quite positive and that there are many synergies to be had from the collaboration, such as procurement, learning from each other’s strengths and co-branding, but the collaboration is a necessary, rather than sufficient, condition for success,” he told the media yesterday on the sidelines of the Forbes Global CEO Conference.

When asked what would be needed for the collaboration to bear fruit, Azman cited “route network, returns and management performance” as areas of focus.

Former MAS managing director Tan Sri Abdul Aziz Abdul Rahman had said the recent share swap deal between MAS and AirAsia was not a guaranteed fix to the ailing national carrier, which continues to suffer losses due to high operating costs.

Bernama quoted him yesterday as saying that MAS stakeholders should get to the root of the problem in terms of the airline’s poor performance instead of hammering out a share swap.

Abdul Aziz attributed MAS’ poor showing to two factors – lack of good management in the last 15 years and the Government’s failure to have an orderly air transport policy.

“As far as I am concerned, AirAsia was initially approved on the ground that it travels to international routes not taken by MAS instead of what happened later, the no-frills airline was also involved in domestic routes. With Malaysia being a “price-sensitive” market, this collaboration would also bring about continuous competition for MAS,” he had said in a Bernama Radio24 interview.

On Aug 9, Khazanah announced that it would take up a 10% stake in AirAsia while Tune Air Sdn Bhd, the investment vehicle of AirAsia founders Tan Sri Tony Fernandes and Datuk Kamarudin Meranun, would own a 20.5% stake in MAS under a share-swap deal. Both Khazanah and Tune Air have agreed not to sell their shares for a period of 30 months under the share swap deal.

On top of the share swap, a collaboration agreement was signed simultaneously by MAS, AirAsia and AirAsia X, which would effectively see MAS concentrate on being a full-service premium carrier, AirAsia on being a regional low-cost carrier and AirAsia X, a medium-to-long haul LCC.

Meanwhile, Azman said earlier during a Forbes Global CEO conference session entitled “Backseat drivers: Building and managing your board” that “the fish gets rotten from the head”, underscoring the role of a strong board in providing stewardship and guidance.

He made three key points about Khazanah’s management style for board members. “The first is the ‘no bulldoze’ principle. But we make an exception to this rule on two occasions, when there is ‘bull’ going on, and when there is ‘dozing’.

“The second is the Vidal Sassoon principle, which basically means when you (the company) look good, we (the major shareholders) look good too,” he said.

On the third point, he said the best boards maintained an open culture: “Great boards have a fantastic culture of dissent.”

Source/转贴/Extract/Excerpts: The Star Online
Publish date:15/09/11

黑天鵝折翼 股市才會漲

黑天鵝折翼 股市才會漲
萬寶 / 2011/09/09











Publish date:09/09/11


Source/转贴/Extract/Excerpts: youtube
Publish date:06/09/11

Singapore dollar falls to three-month low against USD

Singapore dollar falls to three-month low against USD
04:46 AM Sep 15, 2011
SINGAPORE - The Singapore dollar sank to a three-month low against the US dollar yesterday, as fears about vulnerability in the European banking system and further signs of global slowing prompted a general pullback from risk.

The US dollar rose as high as S$1.2517, its highest level since May 25, from S$1.2404 late in New York. The rise tracked a stronger dollar against other Asian currencies yesterday.

Moody's Investors Service downgraded French banks Societe Generale and Credit Agricole yesterday, citing funding problems and high exposure to Greek debt. European policy-makers have been unable to make headway on ending Greece's solvency crisis, as investors yesterday pinned their hopes on the cash-rich economies of China and Russia to shore up deeply discounted euro-zone periphery debt.

"Generally, the European situation is keeping the sentiment down. There are several events over the next two weeks that will impact the markets but the key thing is still how Europe will resolve its crisis," said Mr Phillip Wee, a currency analyst with DBS Bank.

Also pushing the dollar higher against the Singapore unit are growing expectations that the Monetary Authority of Singapore (MAS) will step back from its tightening stance when it holds its policy meeting next month.

In light of worsening global economic conditions, some economists now believe the MAS may be forced to slow the pace of the Singapore dollar's rise against a basket of currencies, reversing its earlier call that the MAS would stand firm.

Inflation remains a challenge but more and more banks are now predicting a more gradual slope of appreciation for the Singapore dollar. The city-state uses the strength of its currency as its main tool for addressing price growth, rather than interest rates.

The US dollar fell back to S$1.2466 after breaching the key S$1.25 level earlier in the day. Strong psychological resistance will remain at that level, said Mr Wee.

The Singapore Government bond curved steepened slightly as yields rose slightly at the longer end, following a disappointing 10-year United States Treasury auction on Tuesday. Dow Jones

Source/转贴/Extract/Excerpts: TODAYonline
Publish date:15/09/11

Echoes of 2008 in Europe?

Echoes of 2008 in Europe?
'Financial disaster' looms if continent's leaders can't get their act together: US
09:09 AM Sep 14, 2011BERLIN - International alarm over Europe's debt crisis hit new heights yesterday, with United States President Barack Obama pressing the bloc's big countries to show leadership as talk of a Greek default escalated and markets heaped pressure on Italy.

The Institute of International Finance (IIF), a bank lobbying group, warned that prolonged inability to deal with Europe's debt issues put its banking system at severe risk.

"In a pattern echoing that of the 2007-2009 financial crisis, there is a growing risk of the real economy and financial conditions being locked into a mutually reinforcing downward spiral," the IIF warned.

Perhaps conscious of the parallels, Mr Obama said yesterday: "In the end the big countries in Europe, the leaders in Europe must meet and take a decision on how to coordinate monetary integration with more effective coordinated fiscal policy."

US Treasury Secretary Timothy Geithner plans to urge European Union finance ministers to step up their crisis-fighting strategy when he meets with them this week in Poland, a euro-area official said.

It will be the first time Mr Geithner has attended a session of Europe's Economic and Financial Affairs Council.

The visit "underlines the nervousness of the administration in the US about what's happening in Europe" and the effect the region's debt crisis is having on US financial markets, said Mr Julian Jessop, chief global economist at Capital Economics in London.

Mr Obama's comments suggested that Washington is trying to nudge European governments toward closer fiscal union or a bigger bailout fund to recapitalise teetering banks but European politics, especially in Germany, make that difficult.

German Chancellor Angela Merkel sought to quash talk of an imminent Greek default or exit from the euro zone, but confusion over whether she would issue a joint statement on Greece with French President Nicolas Sarkozy sent markets gyrating up and down.

Confidence in the 17-nation currency area was further dented when Italy was forced to pay the highest interest rates since joining the euro in 1999 to sell 5-year bonds.

Ms Merkel said that Europe was doing everything in its power to avoid a Greek default and urged politicians in her own coalition to weigh their words carefully to avoid creating turmoil on financial markets.

Her Economy Minister Philipp Roesler said earlier this week that there should be no taboos in stabilising the euro, including an orderly bankruptcy of Greece. And lawmakers from her coalition have said in recent days that Greece may have to leave the euro zone - a move Citigroup's chief economist warned would lead to "financial and economic disaster".

"As soon as Greece has exited, we expect the markets will focus on the country or countries most likely to exit next from the euro area," Citibank's Willem Buiter said.

"I think there is a possibility, if the wrong steps are taken, that the system goes off the rails," Mr Sergio Marchionne, CEO of Italian carmaker Fiat, told reporters when asked if the euro's survival was at risk.

"Nothing that we've had, be it at a domestic level in Italy, be it at a pan-euro zone level, or above all from Germany, indicates that anyone really is getting to grips with presenting euro zone policy with one voice," said Mr Marc Ostwald, an analyst at Monument Securities. AGENCIES

Source/转贴/Extract/Excerpts: TODAYonline
Publish date:15/09/11

French Banks Downgrade By Moody’s Throws Overall Markets In Moodswings

14 September 2011
French Banks Downgrade By Moody’s Throws Overall Markets In Moodswings
By Louis Lee

Downgrades. The word that is seemingly overused right now in the fragile economy we are struggling with. Moody’s Investors Service has in its Japan downgrade aftermath unleashed another round of downgrade, this time on the French banks, resulting in heavy blows to the already battered European markets.

The debt and deposit ratings of Societe Generale (SOGN) has been cut by one notch to Aa3 from Aa2. Moody’s has also on the same day downgraded Credit Agricole’s (CAGR) Bank Financial Strength Rating to C from C+ and cutting CAGR’s long-term and deposit ratings by one notch to Aa2 from Aa1.

Upon the downgrade, CAGR saw its shares sliding approximately 4.89%. Bank of France Governor Christian Noyer told CNBC that the downgrades were expected and that he doesn’t believe bank stocks will be further hit.

Contrary to what Noyer believed, Futures market and markets across Europe saw a red start before the opening of the London bell.

This added on to the flurry of negativity already piling up in the Eurozone as investors watch closely on the debate of “whether Greece will default and deepen the global economic slowdown.” A conference call will be held today by Greek Prime Minister George Papandreou, with German Chancellor Angela Merkel and French President Nicolas Sarkozy.

Markets across Asia saw bears and bulls fighting to keep their heads above the choppy trading as investors continued to be concerned about Europe’s Debt Contagion issues. Led by losses from Samsung Electronics and Hyundai Motor Co., South Korea’s KOSPI saw it taking the biggest hit in Asia, as we see it shedding off 3.52% at the time of writing.

At the time of writing, The Straits Times Index saw gains muted, (up 11.46 points) and was seen meandering slightly in the green compared to other Asian counterparts. The top 5 percentage gainers seen were CGI group (+$0.005, or +35.714%), Teledata (+$0.002, or +25%), AV Jennings (+$0.06, or +15%), Top Global (+$0.001, or +14.286%) and Far East Group (+$0.03, or +13.043%).

Publish date:14/09/11

Wednesday, September 14, 2011


2011年09月14日 12:39 来源: 21世纪网




  2008 年金融海啸如没有政府插手,结果应该是把美元利率推高,令道指跌至P/E 7倍(情况如1982年8月美国经济一次大衰退,经过一段辛苦日子后经济才慢慢复苏过来)。在联邦储备局大力干预下,利率由2007年9月6.5厘,减到 2008年底0.25厘,2009年3月更变本加厉地推出QE及2010年11月推出QE2,令道指在今年4月P/E上升到16倍,通胀率爬升,资金皆跑去黄金市场及商品市场囤积居奇而非创造就业。


  2009年哈佛大学的Josh Lerner写了一本书Bonleuard of Broken Dreams,详细解释私人投资是以“逐利” 为主,政府投资目标只是产生职位,很易产生破窗效应(掷烂窗户的玻璃找人去维修,然后又再掷烂)。投资应由市场主导而非政府,1990年后的日本、现在的美国皆令人担心,只有无法产生利润的行业例如教育、医疗、社会服务等才应由政府去做,其余只需政府制定政策及严格执行,让私人企业去做更好。

  《时代》杂志报道,加州政府曾动用1.86亿美元去改善住房能源效益,因此创造538个职位,另以5900万美元成立环保培训中心,创造719个职位。《华盛顿邮报》报道,通用电气旗下Smart Grid推出新产品,令2.8万个上门读表员失业(新产品不用派员工上楼抄电表)。创造就业而无法提升效益只是“破窗效应”。不要为“改变”而改变,过去3年奥巴马上台后只改变了道琼斯工业指数,其它方面似乎未见成效。




  美国从1980年开始的利率回落期,到2008年12月结束,虽然如此,2009年至今美元利率仍在低水平牛皮(今年9月10年期美债利率再见2厘)。参考日本过去情况,相信美国低利率期仍维持好一段长日子,因利率回落而推高价格的资产,例如美国楼价在2006年见顶、股票2007年10月见顶、债市在 2008年底见顶、黄金在寻顶。金价至今未出现泡沫(不似1980年1月),但已变得轻浮。






  还记得1999年12月13日《时代》杂志刊出的一篇文章吗?世界上数一数二的大证券行Salomen Smith Barney接受访问,并在《福伯氏》杂志发表Y2K buy stocks及Stick with Tech文章,当天纳指3753点,两个月后科网股胞沫爆破。1999年8月29日New York Times评论文章认为;任何人都不应大量投资黄金。2007年6月27日,美国杂志Entrepreneur认为:Manhattan remains one of Top Retail Investment Markets;今年美国传媒又在宣扬The end of China。


没有一个人在投资方面是百分之百无知的,通常在投资之前早已有自己“一套”。这“一套”通常是过去的投资经历,有人曾被所谓投资专家欺骗多次形成“相反理论”心态,亦有人受多次投资损失后认为股市只是一个骗局,有些成为价值投资法、走势派或趋势投资法信徒。自己“一套”的形成有必然的历史背景,在思考新问题之时很难避免不受“自己一套”所影响。许多时变成视而不见、听而不闻,忘记要开放自己的思想(open your eyes)。例如“企业”要当仔咁养、当猪咁卖!香港第一代企业家今天已步入退休年龄,第二代是不是适合接班人?有没有一如第一代般了解家族企业?加上环境变迁等因素由第二代接班不一定适合,因此将企业卖掉让自己一手经营的企业由别人进行整合,反而有助企业进一步发展,回笼资金可用作协助第二代发展他们喜欢的产业,甚至享受人生,亦无不妥。







Source/转贴/Extract/Excerpts: 金融界
Publish date:14/09/11

经济风暴若来袭 哪些龙筹领域顶得住?




  受访的分析师指出,全球若陷入衰退,以出口为主的制造业、可选消费行业(Consumer Discretionary)、银行业和船运业的龙筹股,将受到最大冲击。




  德意志摩根建富证券(DMG & Partners)分析师陈汉明则指出,以出口为主的制造业以及周期性强的一些领域如纺织业,都是经济衰退期间最为脆弱的行业,而问题在金融海啸三年前爆发时就已浮现。已经除牌的中国印染就是一例。

  反而是上游食品生产业者,如中国动物保健品(China Animal Healthcare)、山田绿色资源(Yamada Green Resources)和中国闽中食品,就相对比较抗跌。

  本地的绿色环保股包括在中国从事太阳能薄膜生产的宏威科技(Anwell Technologies)、发展绿色环保技术的本地Transcu集团,以及专门从事节能环保产品生产研发的中圣(Sunpower)集团等。中国安利兴(China Enersave)也涉足再生能源业务,开发清洁和低碳能源。






Source/转贴/Extract/Excerpts: 联合早报
Publish date:12/09/11




Source/转贴/Extract/Excerpts: youtube / 维基百科
Publish date:13/09/11 1Q net profit triples 1Q net profit triples

KUALA LUMPUR: Bhd’s net profit for 1QFY12 ended Aug 31 more than tripled to RM6.71 million from RM2.03 million a year earlier, on the back of higher revenue of RM9.21 million from RM4.04 million.

As the company is a closed-end fund, a better indication of its performance would be the movement of its net asset value (NAV) per share. As at Aug 31, its NAV was RM2.63, a decline of some 5% from RM2.77 as at May 31.

Nonetheless, earnings per share rose to 4.79 sen during 1Q from 1.45 sen a year earlier.

Given the current economic uncertainties, said its fund manger, Capital Dynamics Asset Management Sdn Bhd, would continue to navigate carefully with its “intelligently eclectic” value investing philosophy. During 1Q, the “safety net” of increased to above RM124 million.

According to the latest annual report, stocks held under’s portfolio as at June 22 included Padini Holdings Bhd, Suria Capital Holdings Bhd, Parkson Holdings Bhd, Boustead Holdings Bhd, Integrax Bhd, Tong Herr Resources Bhd, P.I.E Industrial Bhd, Malaysia Smelting Corp Bhd, Petronas Dagangan Bhd and Fraser & Neave Holdings Bhd.

Tan Teng Boo, founder and managing director of Capital Dynamics, has turned bearish on equities. In an interview with The Edge Singapore last month, he warned of a bear market.

“I can’t be 100% correct in my timing all the time,” Tan was quoted as saying. “My [bearish] views were ridiculed by some at the beginning of the year. But I am glad we still have so much buying power left.”

It is worth noting that’s short-term deposits and cash, or its “safety net”, increased to RM124.58 million as at Aug 31 from RM115.91 million as at May 31. Tan also said that there will be more severe downside for global stocks in the coming few quarters due to Europe’s debt crisis, a faltering recovery in the US and inflationary pressure in emerging markets.

“Political paralysis in the Western world is causing massive obstacles for governments in their task to resolve financial and economic problems,” Tan said.

Commenting on the US economy, he said: “You may not get a negative type of contraction in the US, but you may get growth like that in 1QFY11, when the US economy grew only 0.3% ... we will see a very severe slowdown in the US that will feel like a recession.”

The fund closed two sen or 0.98% lower at RM2.02 yesterday with a total of 87,600 shares changing hands. This is 23.2% lower than its NAV of RM2.63 as at Aug 31.

This article appeared in The Edge Financial Daily, September 14, 2011.

Publish date:14/09/11


2011年09月14日 03:35 習廣思
《信報》信筆攻略:......歐洲央行宣布,上周已經動用139.6億歐羅入市買債,較市場估計的100億歐羅還要高,也解釋了上周為何央行委員Jurgen Stark會在上周突然辭職。至於中國會否擔當救世主角色,消息甚囂塵上,但仍要看購債規模有多大。更重要的是,特里謝是否願意冒住道德風險繼續買債,歐洲央行不可能無休止地購買國債,可以嗎?




避險資產不斷創新高,但市場其實並未瘋狂,樂觀分析員才剛剛轉淡。大摩報告把歐美經濟和股市看得極淡,大摩認為,2012年歐美企業盈利下跌6%,市場已反映這看法,但6%跌幅遠遠小於過去任何一個衰退期近40%的盈利跌幅。大摩並認為,美國QE3政策將變本加厲,而且歐洲央行會步美國後塵,以盡量減低歐洲地區一些長尾事件風險(tail-risk event)的機會。目前這個局勢下,未來要見到經濟及金融環境好轉,大摩認為需要有三種政策,包括:一、歐洲央行進行大規模QE措施;二、重新整合財政政策以製造更持久的經濟方向;三、高槓桿的國家、銀行及家庭都需要重組債務。這些建議其實毫無新意,去槓桿化說了三年,但這個過程將徹底改變西方社會幾十年來的生活,過程必定是痛苦無比,而且漫長得很。

Source/转贴/Extract/Excerpts: 信報網站
Publish date:14/09/11

Baltic index rises to its highest since December

Business Times - 14 Sep 2011

Baltic index rises to its highest since December

(LONDON) The Baltic Exchange's main sea-freight index, which tracks rates to ship dry commodities, rose to its highest in nearly nine months on Monday helped by expectation of further iron ore and coal exports to Asia.

The overall index rose 2.07 per cent or 38 points to 1,876 points in a third day of gains and was at its highest since Dec 21.

'The capesize market had another strong week as sentiment continued to remain positive and prompt vessels were able to secure high rates,' Cantor Fitzgerald said. 'The market seems to be slowly anticipating that this turnaround could be around for the near future.'

The rally has been driven by firmer coal and iron exports from Australia to China, which had boosted the larger capesize market. Coal imports into Japan have also picked up, while there had been active freight derivatives trading in recent days, which had bolstered sentiment.

'We suggest it has been a combination of a number of factors, including thermal coal demand from Japan as nuclear reactors go offline for maintenance, stockpiling of iron ore in China, due partially to the currency strength, reduced iron ore exports from India to China, and fleet supply growth that has come down in recent months from the 20 per cent annual growth rate for the past two years to a more moderate 10-12 per cent annual growth rate,' Cantor Fitzgerald said.

Last month, the index, which gauges the cost of shipping commodities including iron ore, coal and grain, dropped to its lowest in more than three months after falling for 18 consecutive sessions. It has remained erratic and is still over 30 per cent down from the same period last year.

The Baltic's capesize index rose 2.67 per cent on Monday, with average daily earnings to US$27,602 a day and their highest since Dec 8. Capesizes typically haul 150,000-tonne cargoes such as iron ore and coal.

The Baltic's panamax index rose 0.59 per cent. Average daily earnings for panamaxes, which usually transport 60,000-70,000-tonne cargoes of coal or grains, reached US$13,614\. \-- Reuters

Publish date:14/09/11

YTL Land: Joining the big league (Hwang)

YTL Land
BUY RM0.95
Price Target : 12-month RM1.80 (prev. RM2.40)

Joining the big league
• Transforming into a regional developer post-asset injection; shares more attractive now - subscribe for ICULS only for long-term
• Sentul looking increasingly appealing as future Northern KL transport hub, with new land price benchmark of RM600psf
• Maintain BUY, cut TP to RM1.80 (from RM2.40) based on 30% discount to RNAV of RM2.57, factoring in higher market risk premium

Joining the big league. YTL Corp.’s RM474m asset injection exercise to streamline property development within the Group should finish by November. It will be funded by ICULS (53%) and cash (47%; via 3-for-5 rights issue of ICULS at 50sen). This is positive given: (i) it would transform YTLL into a regional developer with prime landbank in Singapore & KL; (ii) fair valuation for the assets ; (iii) earnings accretive as proforma EPS will rise by 4% with upside from Sentosa Cove progress billings; and (iv) potential dividend payout as share premium will be used to reduce accumulated losses. But at the current depressed share price, investors may be better off buying YTLL shares instead of subscribing for the ICULS rights, given the high conversion price in Year 0-4 of RM1.32 (Year 5-7: RM0.99; Year 8-10: RM0.66). For longer-term investors, the ICULS could be worth RM0.67-RM2.04 (depending on valuation method) implying >34% upside with 3-6% step-up coupon.

Rise of Sentul. Sentul could be the next KL Sentral with ongoing urban renewal and 3 proposed MRT stops (2 on Circle Line, 1 on MRT3 line), in addition to existing LRT and KTM stations there. Mah Sing’s recent acquisition of 4 acres of land in adjacent Pekeliling has set a new land price benchmark of RM600psf (YTLL’s share price implies only RM70psf for Sentul!). Pekeliling urban rejuvenation (RM9b mixed development on 58 acres) should boost vibrancy of Sentul-Titiwangsa (<10km from KLCC). Proven track record. Despite global uncertainties and risk of policy tightening, demand remained strong for projects in prime locations by reputable developers, such as YTLL. Earnings momentum will pick up with ~RM400m of unbilled sales and RM1.4b launch pipeline in Sentul alone. Wildcard includes participation in government land redevelopment projects e.g. RRIM (YTL has successful JVs with EPF in Lake Fields, Midfields & Lake Edge). The 63% discount to RNAV (vs sector’s 47%) is close to levels seen for small-mid cap developers during 2008/09 financial crisis, but sector fundamentals are much stronger now with record unbilled sales, higher margins, stronger balance sheets, and government’s Economic Transformation Program. Transforming into a regional property developer To recap, parent YTL Corp. is streamlining property development operations within the Group by injecting 1,337 acres of land into 59%-owned YTLL, including prime land in Malaysia (2 acres in KLCC-Bukit Bintang, 5 acres in KL Sentral) and Singapore (Kasara & Sandy Island in Sentosa Cove, Westwood Apartments en-bloc in Orchard Boulevard). The RM474m exercise will be satisfied by RM221m cash (53%) and issuance of new ICULS to YTL Corp. worth RM253m (47%). To raise cash, YTLL will undertake a 3-for-5 rights issue of ICULS at 50sen each. The ICULS are exercisable anytime within 10 years at tiered conversion prices of RM0.66-RM1.32 (set at between 40% discount and 20% premium to 5-day volume weighted average price of RM1.10). The ICULS offer step-up coupon rates of 3-6% (depending on holding period). Upon full conversion, the ICULS would increase YTLL’s share base by 63% to 1.4b shares from 0.8m currently. The asset injection is expected to be completed by early Nov 2011. The ICULS rights are renounceable and will be traded on 6-12 Oct 2011, with 20 Oct 2011 being the closing date for final acceptance of rights and excess application. The ICULS will be listed on 4 Nov 2011.

We view the deal positively given:
a) Tranformation of YTLL into a niche regional developer with diversified earnings base in KL and Singapore;

b) Injection of prime land at reasonable valuations, comparable to current market values and independent valuers’ estimates (Figure 3);

c) Earnings accretive as YTLL’s fully-diluted pro-forma EPS will increase by 4% (per circular to shareholders). The following (not yet factored into our estimates) could push YTLL’s FY12 earnings beyond RM100m:
(i) Sentosa Cove’s progress billings: While construction progress has reached 37% for Kesara and 51% for Sandy Island, with targeted completion by Dec11, earnings recognition tend to be back-loaded; and
(ii) sale of remaining units at Sandy Island (3 units worth >S$50m).

d) Stronger balance sheet to take on bigger projects. YTLL will leapfrog into Malaysia’s list of Top 10 biggest developers by asset size at RM2.5b (Figure 4);

e) Potential dividend payout soon as share premium will be used to clear accumulated losses;

f) YTL Corp.’s stake in YTLL could increase up to 68% (upon full conversion of ICULS) from 58% currently. YTL Corp. plan to raise its stake in YTLL is testament of the latter’s growth potential. YTL Corp. has undertaken to take up its share of ICULS rights, while Maybank Investment Bank will underwrite the rest.

However, at the current depressed share price, investors with shorter-term investment horizons may be better off buying YTLL shares rather than subscribing to the ICULS rights, because of the high conversion price of RM1.32 in Year 0-4 (Year 5-7: RM0.99; Year 8-10: RM0.66). For longer-term investors, the ICULS may be attractive given its intrinsic value of RM0.67-RM2.04 (depending on valuation method), and 3-6% coupon.

In YTLL’s circular to shareholders, the independent advisors valued the ICULS at 67-72sen (assuming conversion in Year 8-10). Using Bloomberg’s convertible bond valuation function (adjusted for ICULS irredeemability, step-up coupons and conversion rate), YTLL’s ICULS intrinsic value is estimated at 93 sen. And based on YTLL’s RM2.57 RNAV, the ICULS could be worth RM0.86-RM2.04.

Post-completion of asset injection, YTLL’s gross gearing could rise to 1.77x (from 0.32x) if we include the future refinancing of S$448m advances by YTL Corp. for the en bloc purchase of Westwood Apartments. However, we expect borrowings to be pared down quickly with:
a) Sentosa Cove progress billings (total S$467m GDV with Kesara sold out and Sandy Island at 83% take-up);

b) ~RM400m unbilled sales (mainly from recent successful launch of Capers@Sentul East); and

c) RM1.4b launch pipeline over next 12 months in Sentul alone.

The development plan for Westwood Apartments land has been changed to 100% residential (2.8x plot ratio), from mixed development previously (3.5x plot ratio). Given the current sluggish demand for luxury condos (ASP >S$3000psf) in Singapore, Westwood redevelopment will be launched later rather than sooner. But we are not too concerned about this given its prime location along Orchard Boulevard and low holding cost (currently being financed by advances from parent YTL Corp., which has secured term loans at 3.2-3.55% interest rates). For our YTLL RNAV estimate, we have conservatively assumed S$591m GDV for Westwood, based on S$3,500psf ASP (potential upside as YTLL is targeting >S$4,000psf).

DBSV Singapore property analyst prefers developers with exposure to the luxury segment because it has been a laggard in the strong run-up in property prices, there is minimal incoming supply (given dearth of launches postfinancial crisis), and lower policy risk (largely aimed at curbing speculation in mass residential segment).

The Rise of Sentul
We have become increasingly positive on YTLL’s 294-acre development in Sentul given the following:
a) Earmarked as Northern KL transportation hub. In the draft Urban Rail Network Plan unveiled at the MRT ground-breaking ceremony in July, Sentul will house two stops on the proposed Circle Line/MRT2 i.e. Sentul East and Sentul West. Circle Line is the most important line as it will integrate the existing railway infrastructure in KL to create a network. The newly proposed MRT3 line (Selayang-Seri Kembangan) will also have a stop in Sentul. Along with existing LRT and KTM stations, Sentul is set to be THE transportation hub for Northern KL to help disperse traffic from the congested KL Sentral. The MRT2 and MRT3 lines are scheduled to be built concurrently in two phases i.e. Phase 1 (2014-2020) and Phase 2 (2020-2030). Although still a while away, we expect land prices to start appreciating (especially near key interchanges) as developers rush for MRT landbank exposure given the long conversion cycle (5-6 years from land acquisition to construction completion) and scarcity of choice land. Developers will also not wait to price in the potential of MRT, as seen from SP Setia’s 30-40% premium pricing for KL Eco-City, which received overwhelming interest.

We believe YTLL has yet to tap into Sentul’s potential as a key transportation hub in KL. Capers@Sentul East condos was launched in Mar 2011 at only RM600psf vs KL Eco- City’s RM1,200psf (KL Sentral Lot D is also targeting ~RM1200psf). Even developments further out in matured suburbs are fetching RM600-700psf (e.g. Desapark City, Mutiara Damansara, Bandar Sunway, Subang).

b) New land price benchmark. Mah Sing recently acquired 4 acres of land in Pekeliling (adjacent to Sentul) for RM107m or RM600psf. This forms part of the 58-acre urban rejuvenation of the former Pekeliling flats site, which will be redeveloped into a mixed development worth RM9b.

We see this positively as it sets a new land price benchmark and should further boost the vibrancy of the Sentul-Titiwangsa development corridor. While Pekeliling’s plot ratio is higher at 7x, Sentul’s plot ratio of 4x is ‘suppressed’ by Sentul West’s 35-acre private park (commercial parcel may be as high as 9x, subject to approval). At RM600psf, YTLL’s RNAV is estimated at RM2.80 (every RM100psf appreciation of Sentul landbank from this level would raise YTLL’s RNAV by 8.9%).

c) Strong take-up at record prices. After the successful launch of Capers at a new price benchmark of RM600psf (sold out in just one weekend), YTLL plans to launch another three projects in Sentul East, i.e. D2 & D5 commercial and Fannel condos within the next 12 months (cumulative GDV of RM1.4b). ASP will be gradually raised to RM1,000psf – achievable in our view as property prices should continue to appreciate due to cost-push effect, limited new supply of masterplanned developments in prime locations, and new demand (rising affluence, demographic changes). Sentul is ripe for re-rating because it is one of the last available large contiguous parcels of freehold land within a 10km radius of KLCC. YTLL also has a strong following given its good execution track record/brandname.

d) Winning accolades. D7@Sentul East recently won Singapore Institute of Architects (SIA) Architectural Design Award with honourable mention for the commercial office building category. YTLL also bagged three awards at 2011 PAM (Malaysian Institute of Architects) Awards i.e. Gold Award
(Multiple Residential – High-rise) for Centrio in Pantai Hillpark, Gold Award (Adaptive Re-use) for YTL Communications Centre in Sentul Park, and Silver Award (Commercial Building) for D7 in Sentul East. The recognition of YTLL’s innovative designs and concepts should improve its pricing power and branding.

Attractive valuation
Deep value after being oversold. YTLL is trading at huge 63% discount to RNAV of RM2.57, against 58% average discount for small-mid size developers and 47% average for the Malaysian property sector. The discount is similar to those for small-mid cap developers during the 2008/09 financial crisis. YTLL’s share price has fallen by 51% from its recent peak, the steepest decline among companies in our radar (vs KL Property Index’s –24%). But the current share price is ignoring all development profits, YTL Corp’s asset injection exercise, and valuing YTLL’s prized 120-acre Sentul landbank at only RM70psf (vs adjacent Pekeliling’s RM600psf).

There could be upside to our RNAV from the following wildcards:
a) Prime privatization candidate, given its attractive valuation and prime landbank. In an interview with business radio station BFM 89.9 in Mar 2011,
Chairman Tan Sri Dato’ Dr Francis Yeoh said YTL Corp. might eventually privatise its subsidiaries (has been gradually raising its stakes via ICULS - its stake in YTLL could rise to 68% from 58% post-conversion of ICULS following asset injection exercise). YTL Corp is currently sitting on RM12b cash pile (including RM7b from YTL Power).

b) Participation in government land redevelopment projects, given YTL’s strong execution track record and blue-chip parentage. In the past, YTL Group had won lucrative government deals such as YTL Power’s first generation power purchase agreement, Express Rail Link from KL Sentral to KL International Airport, and various construction contracts (hospitals, schools, affordable housing). We understand YTLL has submitted a bid for part of RRIM land redevelopment (owned by EPF) near the approved MRT Blue Line terminal station. YTLL has history of successful JVs with EPF such as Lake Fields, Midfields and Lake Edge in Klang Valley.

c) Developments along KL-Singapore bullet train route. The bullet train was first mooted by YTL Corp. in late 1990s (again in 2006, but that was put on hold due to the 2008 global financial crisis), and was recently revived under the Greater KL Plan (part of government’s Economic Transformation Program). A fresh feasibility study is currently underway (expected completion by end-11). Warming Malaysia-Singapore bilateral ties could see this materialise, with YTL Corp, likely to be given first right of refusal. Funding by the government may include development land along the bullet train corridor, which could benefit YTLL as YTL Group’s flagship property developer. Compared to during the 2008/09 financial crisis, Malaysia’s property sector is on a stronger footing now supported by record unbilled sales, higher margins, stronger balance sheets, and the ETP.

Nevertheless, rising market uncertainties could see investors shunning small-mid cap property counters, leading to continued wide discounts to RNAV in the near term. We cut our TP to RM1.80 (from RM2.40), based on 30% discount to RNAV of RM2.57 – to factor in higher market risk premium.

Source/转贴/Extract/Excerpts: HwangDBS Research
Publish date:13/09/11
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,
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock