Wednesday, March 31, 2010

Keppel Corp and Sembcorp Marine

Did you know that Keppel Corp and Semcorp Marine are the world's larges and second largest rig builders respectively?

Also, they have announced new orders this month (March)


SGD $550 million contract from ConocoPhillips to construct the Ekofish accomodation topside, situtaed in the North Sea
  • Project to start in 3Q2010 and ready for delivery in 2013
  • Will cause year to date orders to SGD $810 million, and lift order books to SGD 6.3 Billion
  • Apparently this project will help to contribute to profits of around SGD $27 million for FY 2011 and FY 2012
Keppel Corp

  • Its subsidiary Keppel Verolme and Areva Energietechnik GmbH have secured a 62 62 million euros (SGD $117.6 million) contract from Wetfeet Offshore Windenergy GmbH to build a mobile offshore application barge
  • It will also be situated in the North Sea
  • Scheduled to be completed in 4Q11

Some interesting facts (from Citigroup)

  • Operating expenditure in deep water floaters in 2Q02 is USD $60,000 per day
  • Operating expenditure in deep water floaters in 2Q09 is USD $115,000 per day
  • It is expected that between 2010 and 2013, median day rates are to be more than USD
  • $100,000 for jack-up units and USD $400,000 for deep water units
  • Demand for jack-up rigs should continue to fall as the new oil finds are in deeper waters

Saturday, March 27, 2010

China's Yuan valuation : Undervalued?

Firstly, let us start off by looking at the big mac index. It is based on the theory of purchasing-power parity, which is basically showing how hard you need to work in order to make enough money to buy a Big Mac from MacDonald.

Below is a picture of the index, benched marked to the USD. An example, based on the picture, is that a person in Norway needs to work about 90% lesser than a person in the USA in order to buy a Big Mac.

According to the picture above, China's yuan is about 49% below that of the USD, based on this index.

However, will the USA actually benefit if China strengthen the Yuan? On first thought, it might. Because people will say that with a stronger Yuan, China's goods will be more expensive, hence they will export less to the USA.

But if you look closely, and for those of you who have been to the USA, most of the goods in the USA are actually 'Made in China'. With a stronger Yuan, companies in the USA will have to pay more to purchase their supplies from China, adding to their cost and thus lowering their profits.

An actual example that most of us can relate to is the Iphone. The actual cost of an Iphone is around USD300. The amount that goes to the workers in China who only assemble the parts is only USD 4. The rest of the money actually goes to the other countries that the parts are manufactured in.

So the conclusion is: Yes it is true, with a stronger Yuan, China's goods will be more expensive. However there will be negative repercussion on the USA's economy, whose supplies inevitability comes from China. With more expensive China goods, the USA will have to incur higher cost in their supplies. Thus either the USA companies will have to work with lower profit margins, or pass on the extra cost to their customers. Either way, I personally feel it is quite a lose-lose situation for the USA.

Sunday, March 21, 2010

Fish and Co promotion : $1 Fish and Chips promotion for Earth Day

Not exactly a financial post, but just to let you all know.. Fish and Co is having an Earth Day promotion.

Fish and Chips for $1!

For more information, visit :


Sunday, March 14, 2010

Singapore ranked 4th as a global financial centre

This study, in which 1700 financial services executives took part in, is based on 64 factors some of them which are:
  • Business environment
  • Infrastructure
  • Market access
  • General competitiveness
Apparently, it is stated that in general, a good financial hub must also have a fair, consistent and predictable tax policy and supervisory environment.

My thoughts:

This rankings further reiterate our government's emphasis on making Singapore one of the major hubs for financial services. Just look at the new launch of Bank of Singapore, it is a means to grow Singapore's private wealth management.

Also, Singapore is also the 3rd largest oil trading country in the world (once again, behind New York and London), but it is really quite an achievement, considering the fact that we are a small country.

As you can see, Singapore is heading towards these kind of 'high returns' kind of industry. Basically industries they can bring in LOTS of money.

Just a few days back, I was thinking..why are bankers one of the highest paid people in the industry? And why do banks earn sooo much money?

If you actually think about it, ALL industry eventually will need to rely on banks for financial assistance in some way or another. So a bank has a role to play in ALL aspects in the economy. Hence by earning a little bit from EVERYONE in the economy, they actually make tons of money.

Sunday, March 7, 2010

Luxury Goods, Asia Remains Attractive, My Thoughts

Luxury Goods: China is now the number 2 luxury consumer, after beating USA. Japan currently remains as the world's number 1 luxury goods consumer.

Asia Remains Attractive: According to a report by Credit Suisse, the correction in Jan/Feb this year is more of a healthy correction than a trend reversal and advises investors to buy on dips.

In addition, they expect two positive drivers in the economy,

1. Policy risks have been largely priced in. So further downward risks from any more tightening of monetary policies are not expected.

2. They are expecting a positive earning cycle. Companies are currently reporting better than expected earnings, and such reports are expected to continue in the upcoming financial reportings. This improvement in fundamentals is expected to drive up the markets in the near future.

My thoughts : I do agree with Credit Suisse on the positive outlook on the economy.

The Feds has already tried to raise some of their interest rates, signaling improving sentiments. Greece's problems has more or less been factored in the market, and yet it has not been dropping seriously. Dubai's problem is long forgotten. China's hike in interest rates has also not created much of a dent in the stock market.

Basically, with the positive earnings reported by many companies, the stock market should continue to run in the near future.

So personally, I have actually enter the stock market already. And will be looking for addition counters with potential growth, especially in China.

Also, I was reading reports on property investments. It is advised to buy into REITs, rather than companies that deal with the actually property itself. This is because countires, like say Singapore have been starting to implement laws to prevent a property bubble from building. However these laws will not affect REITs as much, as REITs are essentially just looking at the rental revenues.

In my opinion, whether it is REITs or land stocks, it is still important to do your homework on the actual stock that you are interested in. I have actually a land stock in mind at the moment, which is UOL. It is currently trading below its net asset value (NAV). And I feel that even with the additional laws by the Singapore government, land prices will eventually have to go up to, due to our limited supply. So this can be one stock that you can consider.