Thursday, October 29, 2009

STI to go down?

In my opinion, the uptrend is still intact, unless STI drops below 2621.

So those are investing for the long term, and have faith that the Singapore economy will recover soon, this might actually be a good pull back for you to nibble into the stock market.

Buy at your own risk!

Tuesday, October 27, 2009

My 2 stock picks based on Fundamental Analysis (FA)

Though I am an advocate of Technical Analysis (TA), I do believe in buying undervalued stocks for the long term. I did some stock picking using POEMs' Dataline and,DBS Vickers' Clarity.

Using their software to sieve out stocks. These are the 2 stocks that I chanced upon.

1. United Engineers :

They are a construction firm that also provides other value added services to the construction job. One of their sample project is the Park Central at Ang Mo Kio. I am looking at this due to its gross undervalued share price. And the potential of more HDB housings popping up at Punggol and Seng Kang!

These are some ratio that I took note of based on their price of $1.74 :
  • Market Capitalization : SGD 400.9 million
  • Gross Profit Margin: 22.6%
  • Price to Book ratio: 0.5
  • Price of 1 stock / Amount of cash company is currently holding per share: 0.5
  • Dividend : 3.46%
2. Rickmers Maritime :

Its a shipping firm in essence. I am looking at this, because the Baltic Dry Index has been on the rise recently, but there has been no movement in shipping stocks. The Baltic Dry Index is actually a leading indicator of economy activity, as it measure international shipping prices of various dry bulk cargo daily!

SOO..if its increasing, it means economic activity should be picking up. With greater demand for ships, and the fact that you cannot build more ships overnight, the shipping industry will make more $$. On the other hand, if the economy does not pick up, it will mean that they will suffer great losses. Moreover, Rickmes Maritime is having a ship's contract due in the next 4 years, though most of its other ships have long term contracts ( A key risk in my opinion)

These are some ratio that I took note of based on their price of $0.385:
  • Market Capitalization : SGD 158 million
  • Price to Book ratio: 0.33
  • Price of 1 stock / Amount of cash company is currently holding per share: 0.1
  • Dividend : 27.88%
Any comments?

Monday, October 19, 2009

Set Stop Loss!

I was extremely bullish in the last post. But I forgot to reiterate, remember to set stop loss!

For me, my stop loss is set at STI 2665 (Around the index prior to the mini rally. i.e on the 13th Oct) So there is some room for the index to bounce around.

This is because I feel that 2700 is a psychological line! Do remember that support and resistance lines are not exact, but it is a region where such support/resistance is felt. So you must always give a little more space.

But do keep to the limit that you set! And no give yourself more 'space' in an event the stock moves against you.

Thursday, October 15, 2009

Analysis of the Break out of STI and HSI !!

As you can see from the charts of 'STI break out' and 'HSI break out' I personally feel that this is the 'big move' that all of us have been waiting for.

STI Break out

HSI Break out

In addition, the duration, where they break out of the Fibonacci ratios has also increased, but this is also partly logical, because the market will tend to slow down after initial bigger movements. But do take note, if its take way too long to have the next break out, something bad might be brewing.

Last, I have also bought into an STI call warrants yesterday, when I saw the HSI the resistance line during the intra day trading. My reason for doing so is as follows:

As seen from the chart below,
  • HSI and STI are closely linked
  • They follow the Fibonacci ratios quite closely
  • Realized that either market will 'lead' the other market in breaking out of the Fibonacci lines, as shown in the red circles that I have drawn (Chart below). And this difference in time is not very long. Its like within the week itself.
  • As of yesterday's intra-day trading, Hang Seng broke the resistance quite easily, while STI struggles to go past 2700. However because of this 'HSI following STI or STI following HSI when breaking out' that I assumed. I bought the STI warrants.

As for now, like I said in one of my recent post a feel weeks back, it is still safer to blindly go long now, then trying to time a short!

*Just an opinion of mine

Monday, October 5, 2009

Suntec REIT a good buy?

I have consolidated some data on REITs in Singapore from 2 sources, Dated 22 and 25 Sep 2009.

Image 1 (For dividend image and gearing)

Image 2 ( For Price to NAV image)

Image 3 (For estimated future Net Asset Value, NAV)

Just to clarify, the first image is take from one report, and the 2nd and 3rd image from another report.

From Image 1, we can see that Suntec has one of highest dividend yield in Singapore. Not considering those REITs that are heavily invested in overseas properties. And at a dividend yield of 8%, its attractive! Considering the low bank interest rates now.

In addition in image 1, we can see Suntec has a gearing of 33.9%. This means that it has a debt to equity ratio of 33.9%. Personally I feel that 33.9% is still a healthy value, meaning Suntec is not taking too much loan/debt. ( A low ratio gearing ratio might mean that the company is not taking enough risks to make $$, but a extremely high ratio could also mean that the company is taking excessive risks! and might not be able to pay back the debt. Therefore how much gearing is good, is subjective.)

From Image 2 and 3, we will be looking at price and net asset value. Suntec has one of lowest Price to NAV according to image 2.

In image 3, this particular brokerage report expects Suntec's NAV to drop heavily because of the investment properties i.e the value of Suntec City,Park Mall. The drop is expected to be around 30%!

As seen from my previous post on brokerage firms, values estimated by brokerage firms should be taken with a pinch of salt. In my personal opinion, I do not feel that the asset value of Suntec's properties will drop by 30% in 3 years! Even if it did drop, I feel that it will not drop by more than 10%. This is because I have faith that the Singapore government will do all in the means to make sure the Singapore economy will do well.

If this is the case, at a present price to book value of around half, we are essentially buying a stock that is suppose to be worth almost twice the amount! ( I.e Suntec is worth $1.98 now, but is sold on the stock market for $1.04)

However the current risks is that property prices might really drop THAT badly and that Suntec might issue rights soon, causing a drop in dividend yield. These are the main risks to consider!

But in my opinion, it would be better to just buy Suntec's REIT stock and hold for the long term. With a dividend yield of the ard 11% ( as of 4th Oct), isn't it a better choice than fixed deposits?

Friday, October 2, 2009

Star Hub report

Just when I did a report on Star hub, Phillip securities churned out a new one.

The below table is extracted from the latest report. As you can see, foretasted values by brokerage companies can change VERY VERY quickly, depending on market sentiments. And in this case, the lost of Star Hub's EPL, ESPN etc. channels has caused a decrease in their Cable TV segment, as compared to my previous post, whose data is from Aug 7th, barely a month!

In addition, I am currently looking for a job. My resume is uploaded on this website. The link is on the right of this page, just below the search box.

Thursday, October 1, 2009

Singtel Won the EPL rights! Star Hub lost!

Yup, Singtel won the EPL rights from star hub. And now they have the rights to broad cast the EPL and champions league star sports, ESPN.

This has caused a devastating blow to Star Hub. A drop of 6.5% in their share price! Compared to a rise of 1% in Singtel's share price. ( This is due to the bad market sentiments today)

I was very tempeted to buy into Star Hub, as the drop is really too big for a single day drop, for such a blue chip. But before doing so, I wanted to look at star hub's financial sheet first.

Below is a segment of a financial report by Philips securities.

As you can see, cable TV takes up around 18.7% of total revenue in 2008. And if you realized, this report foretasted that the revenue from cable is set to increase in the next 3 years. This means that cable TV is seen as the market segment that Star hub is expected to excel in.

However with a lost in the broadcasting rights for the EPL, I would think that Star hub will not be able to achieve such growth in their cable TV business segment. Hence, even though there is a drop of 6% in their share price, the company's stock might still be overvalued!

On the other hand, Star hub is having a current yield of 7.9%. And it seems like their core business is highly defensive in nature, i.e mobile lines, network lines etc. ( I mean will you cancel you hand phone line in a bad economy?). So even if the yield drops to 5%, it is still much higher than any fixed deposits now.

Hence, after looking at all this, I am still a little skeptical. I will need to look at Singtel and M1 again before deciding which Tel Co to buy into. Singtel might not be the obvious choice, even though they won the EPL rights.

This is because, a report that I read states that Singtel is not expected to win the bid, because its uneconomical for them to do so. If this is true, I feel that this bid by Singtel is aimed at winning a bigger market share, which might prove beneficial to them, since now they can bundle their MIO TV with EPL and champions league etc. at a higher price.

From the TA point of view, star hub is a good buy.

Your call!