Friday, September 4, 2015
Thursday, September 3, 2015
Perennial Real Estate mulling sale of Triple One Somerset | The Edge Markets
Perennial Real Estate mulling sale of Triple One Somerset | The Edge Markets: "SINGAPORE (Sept 3): Perennial Real Estate Holdings is exploring the sale of Triple One Somerset for around $2,700 to $2,800 psf, or around $1.55 billion for the entire building, The Edge Markets understands.
Perennial, the property group founded by Pua Seck Guan in 2009, owns 50.2% of the Triple One, which it acquired along with OSIM's founder Ron Sim, BreadTalk, SingHaiyi and Boustead for $983 million in Dec 2013. The consortium is spending $150 million on asset enhancement initiatives which will be completed in 2017.
If Triple One is transacted at $1.55 billion, the sale will give its shareholders a $570 million gain.
For Perennial, this translates into a 7.4% gain to its net asset value (NAV) of $1.695 per share.
Perennial currently is trading at a 55% discount to its NAV. Analysts says the unusually large discount comes from its asset base, 38% of which comprises properties under development in China.
Perennial is trading 0.5% higher at 93 cents."
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Perennial, the property group founded by Pua Seck Guan in 2009, owns 50.2% of the Triple One, which it acquired along with OSIM's founder Ron Sim, BreadTalk, SingHaiyi and Boustead for $983 million in Dec 2013. The consortium is spending $150 million on asset enhancement initiatives which will be completed in 2017.
If Triple One is transacted at $1.55 billion, the sale will give its shareholders a $570 million gain.
For Perennial, this translates into a 7.4% gain to its net asset value (NAV) of $1.695 per share.
Perennial currently is trading at a 55% discount to its NAV. Analysts says the unusually large discount comes from its asset base, 38% of which comprises properties under development in China.
Perennial is trading 0.5% higher at 93 cents."
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Market timing model: Go 100% cash - MarketWatch
Market timing model: Go 100% cash - MarketWatch: "When Mebane Faber talks, people listen.
The chief investment officer of Cambria Investments is a highly regarded independent thinker. He’s among the few people in the investment business smart enough and bold enough to call out the baloney that passes for wisdom on Wall Street. His research papers are essential reading for anyone in finance."
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The chief investment officer of Cambria Investments is a highly regarded independent thinker. He’s among the few people in the investment business smart enough and bold enough to call out the baloney that passes for wisdom on Wall Street. His research papers are essential reading for anyone in finance."
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Visa Invests in International Markets, Expands Its Balance Sheet - Market Realist
Visa (V) stock has returned 24% over the past 12 months. It’s backed by strong growth in volumes and the addition of new clients. Its stock price has fallen 10% over the past month due to macro factors. The company rewards its shareholders through dividend and share repurchases. For 3Q15, Visa declared a dividend of $0.12 per share. The dividends paid translate into an annualized dividend yield of 0.72%
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Visa Invests in International Markets, Expands Its Balance Sheet - Market Realist
Visa (V) posted strong June quarter earnings backed by 11% growth in global payment volumes on a constant dollar basis. The growth was in line with the expected numbers. The international payments volume expanded at a faster pace of 14%—compared to the US payment volume growth of 9%. US credit card growth was recorded at 12%—compared to the same quarter last year. It was flat compared to the previous quarter—mainly due to the completion of Chase’s conversion to Visa cards.
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Wednesday, September 2, 2015
This chart shows how the bull run ended with a bang - MarketWatch
This chart shows how the bull run ended with a bang - MarketWatch: "“This is not how investing works; there is no such thing as risk-free reward in stocks. Going forward, the market environment will inevitably be more challenging than the recent past,” he said. “Those still ‘swimming naked’ and ‘dancing until the music stops’ take note: We’re not living in the outlier anymore.”"
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ELLIPSIZ: Strong cash flow generation
• Strong cash flow generation, as Ellipsiz generated S$10.3m (S$0.018/share) of free cash flow (FCF) in FY15. Ellipsiz had generated positive FCF in the last five years with the exception of FY14 when it acquired certain probe card businesses, technologies, and assets of Tokyo Cathode Laboratory Co., Ltd.
• 56% of market cap backed by net cash. With the strong cash flow generation, Ellipsiz’s net cash position has risen to S$32m (S$0.057/share).
• 5.9% dividend yield. Ellipsiz has declared a year-end dividend of S$0.004/share. Together with its interim dividend of S$0.002/share, the full-year dividend of S$0.006/share (+11% yoy in line with the increase in earnings) translates to an attractive dividend yield of 6%.
• Lower our FY16 and FY17 profit forecast by 13-14% on the bleaker outlook in the semiconductor industry. Ellipsiz remains cautious over the group’s outlook due to: a) the high inventory of semi-conductor devices built up in the industry during 1H15, b) macroeconomic uncertainties, c) slowing demand in emerging markets and China, and d) cautious capex budget by its customers.
• Excluding its hefty net cash position, Ellipsiz is trading at an undemanding ex-cash FY16F PE of 3.5x. We believe current prices will be supported by Ellipsiz’s strong net cash balance and attractive dividend yield of 5.9%. As the semiconductor industry continues to consolidate, Ellipsiz remains as a potential attractive M&A target by larger probe card manufacturers. Its strong net cash position may also provide the necessary resources for the group to grow inorganically through acquisitions.
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• 56% of market cap backed by net cash. With the strong cash flow generation, Ellipsiz’s net cash position has risen to S$32m (S$0.057/share).
• 5.9% dividend yield. Ellipsiz has declared a year-end dividend of S$0.004/share. Together with its interim dividend of S$0.002/share, the full-year dividend of S$0.006/share (+11% yoy in line with the increase in earnings) translates to an attractive dividend yield of 6%.
• Lower our FY16 and FY17 profit forecast by 13-14% on the bleaker outlook in the semiconductor industry. Ellipsiz remains cautious over the group’s outlook due to: a) the high inventory of semi-conductor devices built up in the industry during 1H15, b) macroeconomic uncertainties, c) slowing demand in emerging markets and China, and d) cautious capex budget by its customers.
• Excluding its hefty net cash position, Ellipsiz is trading at an undemanding ex-cash FY16F PE of 3.5x. We believe current prices will be supported by Ellipsiz’s strong net cash balance and attractive dividend yield of 5.9%. As the semiconductor industry continues to consolidate, Ellipsiz remains as a potential attractive M&A target by larger probe card manufacturers. Its strong net cash position may also provide the necessary resources for the group to grow inorganically through acquisitions.
Singapore Shipping Corp Ltd
RHB Research analysts: Edison Chen & Goh Han Peng
We initiate coverage on Singapore Shipping Corp Ltd (SSC), the only
listed “pure play” Pure Car Truck Carrier (PCTC) company in the world,
with a DCF-derived SGD0.59 TP (implying a FY16F P/E of 13.5x),
representing 100% upside and recommend BUY. SSC is a rare gem that
offers both safety and growth in the highly-cyclical shipping sector.
Operating in the highly oligopolistic PCTC sector, SSC carved a
profitable niche by 1) securing a decade-long profit visibility through its
long term charters to blue chip clients and 2) enjoying quality growth
with its fleet expansion plans.
Close relationships secure decade of profit with long term charters.
In the oligopolistic PCTC industry, SSC‟s close relationships with its
customers helped it secure decade-long profitable charters with blue
chip majors like NYK Line and favourable borrowing rates due to its lowrisk
profile. Together with a minimum forex and oil price exposure, SSC
has its profits virtually protected for the next 15-20 years.
Quality growth ahead, supported by robust operating cash flow.
Through its existing charters, we estimate that SSC will generate a
robust operating cash flow of c. USD22.8m in FY16. This means that
SSC will have sufficient resources internally to support its expansion
plans, allowing its profit to grow at a CAGR of c. 21.8% from USD9.3m in
FY15 to USD20.5m in FY19F under our base case scenario.
Excellent track record of capital allocation and treating minority
shareholders well. SSC‟s management disposed of its shipping fleet
before the peak of the cycle in 2008 and has since distributed more than
USD200m in dividends. The company embarked on a fleet expansion
programme last year, doubling its fleet to six vessels. Management plans
to double the fleet again in the next 3-5 years. We believe that once the
fleet expansion completes, the group can raise its dividend payout to
50% in FY19, implying 10.2% yield in a best case scenario.
DCF-derived TP of SGD0.59. With 1) safe earnings for the next decade,
2) quality growth ahead and 3) high FY19 dividends, we initiate coverage
on SSC with a BUY and a DCF-based TP of SGD0.59 (WACC: 10%,
terminal growth: 0%), representing 100% upside and implying a FY16
P/E of 13.5x.
Key risks: decreasing profits from agency business; counterparty risk
from blue chip clients, particularly NYK Line.
Close relationships secure decade-long profitability through long term
charters. In the oligopolistic PCTC industry, SSC‟s close relationships forged with its
clients helped it secure decade-long profitable charters with blue chip majors such as
NYK Line. These charters, along with its close interactions with the banks, has
allowed it to obtain favourable loans on a project basis (with fixed interest rate
swaps); together with terms that exclude oil price fluctuations and minimise forex
exposure, this virtually safeguards SSC‟s profit for the next decade.
Quality growth ahead, supported by robust operating cash flow. Through its
quality charters, we estimate that SSC can generate a robust net cash flow of
USD22.8m in FY16F. Thus SSC could be able to generate sufficient resources
internally to support its expansion plans, allowing its profit to grow at a CAGR of c.
21.8% from USD9.3m in FY15 to USD20.5m in FY19F under our base case scenario.
Most vessels have decade-long profitable charters with blue chip majors. SSC
owns a total of six vessels, with the majority holding decade long charters. Other than
a single vessel whose charter has been continuously extended upon expiry, all other
vessels are chartered out to blue chip clients for contracts with at least 10 years
remaining. SSC management was able to achieve this thanks largely to the close
relationships that they have forged with their clients over many years.
Superior to its peers with a forward P/E of 6.7x. SSC is the only listed “pure play”
PCTC company in the world. If we were to compare it to its SGX-listed shipping
peers, SSC operates in a more favourable niche space with higher barriers of entry
(PCTC vs Containership, Dry Bulk etc.). Currently, it trades at a significantly higher
ROE to its peers. Going forward, gearing should increase but ROE could further
improve.
The right market: stable PCTC supply and demand dynamics. PCTC is a niche
industrial shipping sector requiring a high degree of specialization where oversupply
is a far less serious issue. Going forward, demand and supply is expected to grow at
the same rate. RS Platou Economic Research estimates fleet growth at 2.8% and
automobile export demand around 3%. Clarksons Research forecasts a 4.5% fleet
growth and 5% seaborne car trade growth.
Canny management, who kept minority shareholders in heart, signals return.
SSC‟s Executive Chairman, Mr C K Ow, showed uncanny timing in disposing of its
vessels before the downturn and subsequently distributed capital back to
shareholders as special dividends. Now, Mr C K Ow has led SSC back in the game
with the delivery of three new vessels in 2014 and 2015, marking a return from its
hiatus. Upon the completion of the expansion phase, we expect SSC to start dishing
out generous dividends (50% payout ratio) just like in the past which implies an
attractive FY19F yield of 10.2%. Since the company first listed in 2000, it has dished
out more than SGD200m worth of dividends and has never raised any equity.
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Tuesday, September 1, 2015
Correctly Defining "Bear Market" - Free Weekly Technical Analysis Chart - McClellan Financial
Correctly Defining "Bear Market" - Free Weekly Technical Analysis Chart - McClellan Financial:
"A bull market is when the major averages are in an uptrend, and most stocks are doing well. An uptrend is defined as a period when prices make higher highs and higher lows. A bull market should be thought of as lasting over several months at least. You can see higher highs and higher lows on an intraday chart, but that does not make it a bull market. There needs to be persistence for a long period.
A bear market is nearly the same, except that there are lower highs and lower lows for a protracted period over several months. A bear market is when most stocks do poorly, even the most deserving ones. It hurts everyone. It gets people talking about giving up investing, and going to live in a commune. A bear market does not depend on the ultimate magnitude, but rather upon the attitude it creates.
A single stock or sector cannot be in “official bear market territory” by itself. A bear market is not a place, it is a process. And it hurts broadly, not just affecting a single stock or sector.
A “correction” is any movement which is contrary to the current trend direction, but which does not change the dominant trend direction. As such, the classification does not depend on the magnitude of the drop. It depends on what happens to the trend as a result of the movement. A correction can even be upward, if the market is in a downtrend. "
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"A bull market is when the major averages are in an uptrend, and most stocks are doing well. An uptrend is defined as a period when prices make higher highs and higher lows. A bull market should be thought of as lasting over several months at least. You can see higher highs and higher lows on an intraday chart, but that does not make it a bull market. There needs to be persistence for a long period.
A bear market is nearly the same, except that there are lower highs and lower lows for a protracted period over several months. A bear market is when most stocks do poorly, even the most deserving ones. It hurts everyone. It gets people talking about giving up investing, and going to live in a commune. A bear market does not depend on the ultimate magnitude, but rather upon the attitude it creates.
A single stock or sector cannot be in “official bear market territory” by itself. A bear market is not a place, it is a process. And it hurts broadly, not just affecting a single stock or sector.
A “correction” is any movement which is contrary to the current trend direction, but which does not change the dominant trend direction. As such, the classification does not depend on the magnitude of the drop. It depends on what happens to the trend as a result of the movement. A correction can even be upward, if the market is in a downtrend. "
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Sunday, August 30, 2015
EZRA: Deal with Chiyoda unlocks value for shareholders
DBS Vickers analyst: Suvro SARKAR
Shot in the arm for subsea division. Ezra announced a landmark transaction for its subsea unit EMAS AMC, as it proposes to rope in Japanese engineering player Chiyoda Corporation as a partner in the business.
Chiyoda will invest up to US$180m for a 50% stake Ezra’s subsea business to form a JV company – EMAS Chiyoda Subsea. Including third-party debt and shareholder loans, this transaction values the subsea division at around US$1.25bn. Ezra will capitalise part of the existing intercompany debt to EMAS AMC to enhance the capital structure of the proposed JV.
Reputable partner can create synergies.Chiyoda Corp, headquartered and listed in Japan with close to US$1.8bn market cap, has executed numerous EPC projects worldwide, with core competency in design and construction of LNG plants. Chiyoda’s expertise in Front End Engineering Design (FEED) and EPC activities will come in handy for the early phase planning and costing of offshore projects for the subsea division, which is an area that EMAS AMC has lagged so far. The new JV will also benefit from Chiyoda’s strong project management expertise, global network, R&D capabilities and financial muscle in future.
Unlocks value, upgrade to BUY. No significant gains or losses on restructuring and sale are likely. We are not changing our earnings estimates at this point, pending completion of the deal, which will see the subsea division move to the JV line, and reduce net gearing from 1.0x to 0.8x. The implied US$360m equity valuation for 100% of the subsea business is higher than our estimates, leading us to adjust our valuation for Ezra.
Our SOTP valuation is thus revised up to S$0.30 and given the significant upside from current valuations, we upgrade the stock to BUY.
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Shot in the arm for subsea division. Ezra announced a landmark transaction for its subsea unit EMAS AMC, as it proposes to rope in Japanese engineering player Chiyoda Corporation as a partner in the business.
Chiyoda will invest up to US$180m for a 50% stake Ezra’s subsea business to form a JV company – EMAS Chiyoda Subsea. Including third-party debt and shareholder loans, this transaction values the subsea division at around US$1.25bn. Ezra will capitalise part of the existing intercompany debt to EMAS AMC to enhance the capital structure of the proposed JV.
Reputable partner can create synergies.Chiyoda Corp, headquartered and listed in Japan with close to US$1.8bn market cap, has executed numerous EPC projects worldwide, with core competency in design and construction of LNG plants. Chiyoda’s expertise in Front End Engineering Design (FEED) and EPC activities will come in handy for the early phase planning and costing of offshore projects for the subsea division, which is an area that EMAS AMC has lagged so far. The new JV will also benefit from Chiyoda’s strong project management expertise, global network, R&D capabilities and financial muscle in future.
Unlocks value, upgrade to BUY. No significant gains or losses on restructuring and sale are likely. We are not changing our earnings estimates at this point, pending completion of the deal, which will see the subsea division move to the JV line, and reduce net gearing from 1.0x to 0.8x. The implied US$360m equity valuation for 100% of the subsea business is higher than our estimates, leading us to adjust our valuation for Ezra.
Our SOTP valuation is thus revised up to S$0.30 and given the significant upside from current valuations, we upgrade the stock to BUY.
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Saturday, August 29, 2015
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