AIO Finance Analysis

China Oilfield bid to enter Russia fails

Russia has rejected a bid by China Oilfield Services Ltd to buy a unit of TNK-BP, smothering what would have been the Chinese firm's first acquisition abroad at the final hurdle and sending its shares 12 percent lower.

State-owned China Oilfield, the drilling and equipment arm of top Chinese offshore oil producer CNOOC Group, had agreed to buy oil services firm STU from TNK-BP for more than $10 million, making its maiden foray into the world's No. 2 oil exporting country.

China Oilfield had expected the Russian deal to be finalised last April. It had already won Beijing's blessing and obtained approval from both companies.

China Oilfield now views Russia, the Middle East and the Gulf of Mexico as strategic markets it needs to explore. It already maintains a presence in Southeast Asia.

But if it eventually wins entry into Russia, it will still lag Western oilfield services giants such as Schlumberger Ltd and Halliburton Co , which have bought into local independents and now control about a third of the Russian service sector. Russian oil majors and independents each hold a third.

China Oilfield Chief Executive Yuan Guangyu told Reuters last August that the company was in advanced talks to buy another foreign firm, in a deal that would dwarf the STU transaction.

I don't think they have the scale to buy any listed company. If they do look it's probably going to be private smaller companies

The firm has operations in more than 10 countries and derived 18 percent of its revenue from abroad in the first half of 2007. It aims to raise that share to 30 percent by 2008.

Singapore-listed China stocks rally after signing of QDII investment agreement

Chinese stocks that are traded in Singapore rallied Thursday after the Monetary Authority of Singapore and the China Banking Regulatory Commission signed an agreement to allow Chinese banks to offer their clients investment opportunities in Singapore under China's qualified domestic institutional investor (QDII) scheme

"I think they (Chinese investors) should find it quite attractive to invest in Singapore. Chinese companies listed here are the cream of the crop since they adhere to stricter listing rules," said Kim Eng Securities analyst Gregory Yap

While this should be positive, Yap said he is not expecting an immediate dramatic impact since China plans to sign similar accords with securities regulators in US, Germany and Japan. So far, China has signed QDII pacts with Hong Kong and the UK

UBS also doubts that Chinese banks will rush to buy shares in Singapore

"This is hardly an environment for a rush of Chinese banks' funds into the Singapore market. Having said that, this will likely be a short term catalyst for a big bounce in oversold S-chips (Chinese stocks listed in Singapore)," said UBS research head Tan Min Lan in a note to clients Among big cap Chinese stocks, Tan said she believes that Cosco Corp Singapore, Yangzijiang Shipbuilding, sports shoemaker China Hongxing and Synear Food are oversold considering these shares have fallen between 40 and 50 percent in the last three months. At 12.15 pm (0415 GMT), the FTSE ST China index was up 8 percent at 568.67. The index was introduced on January 10 by the Singapore Exchange as part of a revamp of local stock market indices. The index represents 50 out of the more than 100 Chinese stocks listed in Singapore

Shipbuilder and shipping company Cosco was up 12.4 percent at 4.72 Singapore dollars, Yangzijiang was up 10.4 percent at 1.38 dollars, China Hongxing was 12.7 percent higher at 71 cents and Synear Food was up 15.2 percent at 1.21 dollars

Mobile phone maker Longcheer Holdings rose 14 percent to 48.5 cents

Chartered Semiconductor

Valuation

Our target price of S$0.90 continues to be based on a 2008E P/BV of 1.0-1.3x, at a slight premium to our valuation for UMC due to CHRT’s improved technological edge. Benchmarking CHRT to UMC is justified in our view because the gap between the two companies in operating margins, ROE, weighted average tech node, and breakeven utilization is narrowing. We use P/BV as our primary valuation method due to the cyclicality of the industry, and earnings could be absent during downcycles.

Risks

We rate CHRT Medium Risk based on our quantitative risk-rating system, which tracks 260-day historical share-price volatility. Upside risks that could cause the shares to trade above our target price include stronger-thanexpected PC and handset demand, faster-than-expected inventory build by OEM/EMS customers, a better-than-expected wafer pricing environment, and faster-than-expected tech migration to 0.09um at 12" fab.

Mapletree Logistics Trust

4Q07 results above expectations. Revenue was up 49.9% yoy to S$40.3m while distributable profit was up 67.8% yoy to S$19.7m. Full-year revenue was S$141.7m with a distributable profit of S$71.8m and DPU of 6.57cts, which is 2% above our ‘s and consensus’ forecast. The strong performance in the last quarter was attributed to increased revenue from nine acquisitions completed in the quarter. 2007

Operating expenses were significantly below expectations as a result of economies of scale. As at 31 Dec 07, MLT’s portfolio reached S$2.379bn, with revaluation gains of S$125.58m. Target price lowered to S$1.36 from S$1.65.

CapitaCommercial Trust, Singapore's third-biggest property trust by market value, said on Thursday its fourth-quarter distributable income rose 14.5 percent due to higher rentals from its portfolio of office properties.

The trust said it earned net distributable income of S$32.3 million ($22.5 million) for the three months ended December, higher than the S$28.2 million it had earned in the year-ago period. CapitaCommercial Trust, 30-percent owned by Southeast Asia's biggest developer CapitaLand, will pay unit-holders 2.33 Singapore cents per unit for the quarter.

Cosco said it has won $422 million worth of shipbuilding contracts. The firm said in a statement that the contracts are expected to have a postive impact on the company's earnings for the fiscal year ending December 31 2008.

Singapore-listed heart stent maker Biosensors said Thursday that it has appointed Robert Michael Kleine as president and chief executive with immediate effect. He replaces Lu Yoh Chie who will continue as chairman, the company said in a statement.

Wee Hur Holdings Ltd.

Wee Hur Holdings Ltd specialise in construction projects, ranging from new construction, additions and alterations of existing buildings. Bascially we can use one phrase to describe this company - A "Brave" Construction Firm.

2,091,000 Public Offer shares at $0.25
81,558,000 Placement shares at $0.25
Joint Managers: SBI E2-Capital and Phillip Capital

Closing date: 28 Jan 2008 12pm (they should have chosen 8.08 am as the closing time)

Assuming EPS for 2007 is 1H07 x 2 = 3.6 cents, based on the IPO price of 25 cents, it is trading at a historical PE of 6.9x, which in my view, is reasonably priced. Assuming a EPS growth of 20% for FY 2008, the EPS will be 4.32 cents. Assuming a PE value of 8x, the 'fair value' will be around 34 cents.

(Read More...)

Source: Singapore IPOs

CapitaMall Trust – Reported a 19% increase in fourth-quarter distributable income on better returns from its shopping malls. CapitaMall will pay $62.3m distributable income, for the October-to-December period, or 2.34 Singapore cents per unit. This compares with distributable income of $52.3m it paid in the year-ago period. CapitaMall competes with other Singapore-listed real estate investment trusts which own offices and retail malls, including Suntec Reit, Macquarie MEAG Prime, and Frasers Centrepoint.

Bright Orient Holdings – Is to give up its clothing manufacturing operation after buying a bulk carrier and port operation business in a reverse takeover deal worth some $160.5m. Yesterday, Bright Orient said that it entered into a conditional agreement to acquire the entire issued and paid-up capital of Golden Oriental Pte Ltd. It will pay the vendors by issuing some two billion new Bright Orient shares. Bright Orient said that the purchase consideration was determined at arm's length and on a willing-buyer-willing-seller basis. 80% of the escrowed shareholders' stake will be issued to vendors Guo Ze Ming, Chang Poh Nee, Sarah Sim Kim Lian and Wan Teck Guan when the acquisition is completed. The remaining 20% will be released if the enlarged group achieves a net profit of at least $18m for the year ending March 2009. Upon the completion of the deal, Bright Orient will issue 60.7m facilitator shares to Pacific Ten Holdings and 39.7m facilitator shares to Joy Wing Enterprises for helping in the acquisition, it said.

Marco Polo Marine – Signed a binding letter of intent to enter into a strategic partnership with Glencore International's Singapore-incorporated unit ST Shipping and Transport to jointly own and operate a fleet of transshipment tugboats and barges. The soon-to-be-incorporated 50:50 joint venture will provide transshipment services primarily for cargo managed and carried by Glencore International and its related corporations and affiliates. Glencore is one of the world's largest suppliers of a wide range of commodities and raw materials to industrial consumers. Under the terms of the agreement, Marco Polo will procure the building and supply of an initial fleet of 16 vessels - eight tugboats and eight barges - for the joint venture at an intended aggregate contract value of about $34m. Marco Polo's participation in the joint venture is expected to have a positive financial impact on the net tangible assets and EPS of the group for the financial year ending Sept 30, 2008.

Chip Eng Seng Corporation – Has been awarded a contract worth $188m by the Housing & Development Board for the construction of 1,394 dwelling units in Queenstown. The contract, won through wholly-owned subsidiary Chip Eng Seng Contractors (1988) Pte Ltd, also includes the construction of a multi-storey carpark, link bridges, a roof garden, an education centre and other facilities. Building works are expected to begin next month and to be completed by 2011. This is Chip Eng Seng's first construction contract won this year. As at June 2007, Chip Eng Seng had a construction order book of about $590m that will take the group through to 2011. The company is undertaking two other HDB housing projects. One is in Sembawang and the other is the Pinnacle @ Duxton, which features seven 50-storey residential blocks with skybridges, and communal and commercial facilities.

Raffles Education Corporation – Intends to seek a Hong Kong mainboard listing for part of the group's China operations. It did not indicate the amount it plans to raise but Reuters, quoting sources, said it could be up to US$700m, and that the listing may take place in the middle of the year. The company said that a listing would allow its China operations to focus on growth there. It also believes that such a move would unlock the value of its investments in the China operations. Raffles Education, which has engaged UBS AG for the planned flotation, said the proposed listing is still at a preliminary stage and is subject to approval by shareholders and regulators. Raffles Education, which runs 29 colleges in the Asia-Pacific region with total enrolment of some 44,000 students, is one of the largest publicly listed education companies in Asia. Earlier this month, it proposed a one-to-two stock split.

Wee Hur Holdings – The building contractor launched its IPO of about 83.65m shares at 25 cents each. The shares comprise about 78.91m new shares and 4.74 vendor shares. The company, which is seeking a mainboard listing, plans to use the estimated $17.8m net proceeds of the IPO to fund projects. For the last three financial years, Wee Hur's revenue grew from $48.1m in FY2004 to $80.6m in FY2006, with net profit rising from $1.7m to $2.8m. Wee Hur's executive chairman and managing director Goh Yeow Lian said he believes the IPO subscription “will be good” given the current construction boom and the company’s proven track record. He added that even during the slump in the construction industry, Wee Hur was always in the list of preferred contractors and remained profitable. Mr Goh sees construction as the main growth area for the company, and has no immediate plans for expansion. The IPO, which is jointly lead-managed by SBI E2-Capital Asia Securities and Philip Securities, closes on Jan 28. The shares are expected to begin trading on Jan 30.

Man Wah Holdings – Managing director Wong Man Li has bought 921,000 shares in the company, raising his direct and deemed stake in Man Wah from 62.07% to 62.34%.

Sky China Petroleum Services – Said that it is considering a proposal to take up exclusive development and operating rights to an oilfield located in the petroleum-rich Songliao Basin, China. The oilfield is expected to be developed in three phases, and Sky China estimates that the initial investment in Phase 1 will cost about US$30m.

Sinobest Technology Holdings – Has warned of an unaudited consolidated loss for the year ended Dec 31, 2007, due mainly to a fall in sales and gross profit amid continuing fierce competition.

Mapletree Logistics Trust – Has signed a put and call option agreement to acquire a warehouse in Singapore for $40m. The firm also terminated the purchase of a property at 21 Tai Seng Drive.

Value Buys

Lately, I've been asked by many people whether it is a good time to buy stocks now, and if so, which stocks would be worth buying.

But before I go into that, I feel that I should state this disclaimer:

The sub-prime crisis currently faced by the American economy is very, very real, and so is the threat that it could potentially send the U.S. into a recession, and the rest of the global economy along with it.

If that were to happen, then we would experience a situation whereby stock prices would be falling lower over the next few years.

If you believe that the above scenario is more likely than not, then obviously it would be better to completely stay away from stocks for the next few years until the recession has done its damage.

In which case, you should probably stop reading from here and ignore the rest of this post. (Read More...)

Source: Extraordinary Profits

Unit Trust Recommendation

Above is a chart by Fundsupermart (click to enlarge)

For those who are still interested to buy Unit Trust at the moment, you can refer to the chart for Unit Trust by Fundsupermart. From the table, we can see that Lion Capital Malaysia and Legg Mason SEA Special Sits are doing pretty well at 36% and 40%.

In addition those who wants to save on the manage fees; you can buy Unit Trust at Fundsupermart or POEMs. They are charging only 2%-3% at Fundsupermart and 1.5% at POEMs when banks are charging around 5%. In all you stand to save at least 2% of your investment.

You can refer to here for 2007 best performing funds
http://aiofinance.blogspot.com/2008/01/top-performing-unit-trust.html