Analysts' Stock Picks for 2017 (Singapore Stocks)

Based on an article from The Edge Singapore, 26 December 2016.

Singapore Stock Picks for 2017

According to a Maybank Kim Eng research report today (13 December 2016), the firm views the current economic outlook as mediocre to poor for all four factors deemed important for market performance:

1.       Economic growth is sluggish,

2.       Index valuations uncompelling,

3.       Earnings recovery expectations weak with downside risk,

4.       On the politics & policy front, rising risks of protectionism in the west, possible cooling-off in China relations plus neighbouring countries’ measures should stem capital outflow.

Against this backdrop,  MKE prefers a strategy of capital preservation over growth. 

The top stock picks for 2017 by MKE are:

1.       CapitaLand Commercial Trust

2.       Keppel REIT

3.       Venture Corporation

4.       Raffles Medical Group

5.       United Overseas Land

6.       Bumitama Agri

7.       Jumbo Group

8.       Ezion

ST Engineering and DBS are also flagged as two stocks best leveraged to USD strength but valuations are not compelling.

Stocks NOT liked by MKE include:

1.       OCBC

2.       Genting Singapore

3.       Keppel Corp

4.       MobileOne

which MKE believes the market is currently underestimating and mispricing business risk.

A Christmas Quiz Question - Is this Singapore or Hong Kong?

Getting into the mood for Christmas, here is a quiz question for you:

The 2 screenshots were taken today, 5 December 2016, using my mobile phone.

These were the top volume counters for the day:

Screenshot 1 - end of day -  Which market was this?   Hong Kong or Singapore?
Screenshot 2 - 14:05 hrs - Which market was this?   Hong Kong or Singapore?

Scroll down for the answer:

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Answer:

Screenshot 1 : Hong Kong Stock Exchange  (HKEX)
Screenshot 2 : Singapore Exchange (SGX)!


Screenshot 2 pretty much sums up the pathetic state of our Singapore stock market right now.   It is not even penny stocks that are in the top volume list.   Rather covered warrants on the Hang Seng Index (HK Exchange)??!!

SGX had better wake up.   Otherwise we'll become Rip Van Winkle in the near future.

Rip_Van_Winkle

10 Singapore Stocks for 2017 (1H)

1.   Sheng Siong Group
2.   Global Logistics Properties (GLP)
3.   Raffles Medical Group
4.   SingTel 
5.   CapitaLand
6.   OUE
7.   Ascendas REIT
8.   Keppel DC REIT
9.   Frasers Centrepoint Trust (FCT)
10.   Frasers Logistics & Industrial Trust (FLT) 

Above recommendations by OCBC Research.


For reasons for recommendations, see attached link below:

10 stock picks to guide you through a lacklustre 1H17 (Singapore Market Report)

ISR Capital - SGX suspends trading to "safeguard market interest"

Citing the need to “safeguard the interest of the market”, the Singapore Exchange has suspended the trading of ISR Capital shares with immediate effect.

In a filing released at 10.04pm on Sunday evening, SGX says there are “circumstances that prevent trading in the shares of this company on an informed basis”.

“We are reviewing the trading activities in the meantime,” says SGX.

“The suspension will be lifted only when SGX is satisfied that the company’s shares can be traded on a fair, orderly and transparent basis,” it adds.


Full Article (Link)

Source: Singapore Market Report

ISR Capital - Stock down 55% in one day, SGX issues 4th query in 6 months, Trading Halted

It was a disaster waiting to happen.... we didn't know when the price would collapse but it was only a matter of time.   I highlighted my concerns in another blog post just 2 months ago.

ISR Capital - Like Moths to an Open Flame, this will likely end up in tears again


ISR Capital has been halted from trading today, 24 November 2016.   The stock is down a massive 55% in one day and SGX has raised a 4th query in 6 months to the company.

ISR Capital will be halted from trading until 28 November 2016 pending a response owing to SGX on a valuation report issued by Al Maynard & Associates Pty Ltd.

Full credit to the SGX for proactively engaging the company with relevant queries to address potential areas of concern.

Also credit to the Edge Singapore for reporting on ISR Capital many months ago when the deal was first structured.

The Edge Singapore and its sister publication, The Edge Malaysia, are excellent publications that any serious investor should be reading regularly.   The articles are reported in a unbiased and informative manner.   Journalism and reporting of the highest quality and standard!

Uncovering Gems In An Undervalued Malaysian Stock Market 2016

A complimentary report brought to everyone by:
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Thank you Bursa Malaysia & Shares Investment!

Links Below:

English Version (8 MB+)

Chinese Version (8 MB+)

Singapore Bonds - More Trouble (KrisEnergy Ltd, Singapore)

We add KrisEnergy to the list of troubled bonds.

Based on latest news reports, the company's efforts to restructure its bonds are facing problems.

Some noteholders are demanding hgher coupon rates and a shorter extension period,
They have also asked KrisEnery to adopt a more restrained and disciplined capital expenditure programme.

A group of noteholders have issued an open letter to the firm's noteholders and stakeholders saying that it intends to vote no to what it deems an "inequitable offer" while acknowledging the efforts of KrisEnergy and its main shareholder Keppel Corporation to help the firm manoeuvre through a difficult market environment, with the help of DBS Bank.

Rickmers Maritime - Trading suspended, flags on-going concern risk

And so it comes to this sad state.

Rickmers played a risky game of poker with its bondholders with one gambit round of SHOWHAND.    It offered its bondholders very onerous terms for a "haircut" otherwise there was a high possibility that they would no longer be able to maintain their coupon payments.  

However the terms were so onerous that bondholders baulked and called their bluff.

Nov 15, 5.45 pm - The Business Times Singapore reports that the trustee-manager of Rickmers is unable to pay a S$4.26 million interest for its bonds due on 15 Nov 2016.   If it fails to do so within the next five business days from today, an "event of default"would occur, which would trigger cross-defaults and/or cross-acceleration clauses in other loan agreements.

Trading in Rickmers Maritime will be suspended until there is further clarity from bondholders who are scheduled to vote for a restructuring of their bond obligations.   This is expected between 23 November and 21 December 2016.   The earlier meeting of bondholders was unable to take place due to an insufficient quorum.

If  only the Management had treated their bondholders with more respect and accorded them with more acceptable terms for restructuring, we may not have ended up with today's sad state of affairs.

Sleepless in Singapore

A light-hearted look at sleep-deprived Singapore.  

Singaporean's average only 6.24 hours of sleep a day!    

Sleepless in Singapore (Article Link)

Source:  The Star Malaysia, 6 November 2016

What's the difference between Deepavali and Diwali?

We visited our Indian neighbours yesterday to wish them Happy Deepavali and to present them with some food and goodies to celebrate the day.   During the conversation that we had, our neighbours referred to Deepavali as Diwali constantly and when I returned home, I finally decided to google for an answer to find out a nagging question which I've had for the past few years: -

What's the difference between the choice of the two words: "Deepavali" vs "Diwali"?

The following website:

http://www.deepavali.net/

seems to provide a very good answer.

Here are the key points extracted from the website:

Source: www.deepavali.net

Deepavali (also: Depawali, Dipavali, Dewali, Diwali, Divali, Dipotsavi, Dipapratipad ) marks the beginning of the Hindu New Year according to the Lunar Calendar. It literally translated means 'Row of Lights' (from Sanskrit: dipa = lamp / awali = row, line). It celebrates the victory of Goodness over Evil and Light over Darkness - it ushers in the new year. Especially for this event people are cleaning their houses and wear new clothes. Deepavali is a 4 day festival as Deepavali, Lakshmi Puja, Kartika Shuddha Padwa and Yama Dvitiya. There are many different names for the days of Deepavali (or Diwali) in different regions of India (South & North India, East & West India) and in the different languages spoken in that regions (i.e. Hindi, Urdu, Telugu, Tamil, Gujarati, Bengali). During Deepavali people pray to Lakshmi, Goddess of wealth, light, prosperity and wisdom, but also to Ganesha, the 'Remover of Obstacles' and the 'Lord of Beginnings'.

Deepavali celebrations take place in many countries in the world. On the first day of the Deepavali festival people pray and having a special breakfast made of many different foods. The Hindu Goddess Lakshmi's statue and images are carried through the streets in processions. There are various legends and stories associated with the Deepavali festival. The story of Bali, Emergence of Laxmi, Krishna Narakasur Fight, Victory of Rama over Ravana and many more. Dipa Lights (also called Diwali Diyas, Kandils, Ghee Lamps or Parvati Ganesha Lamps) - made of clay, fueled with Oil from Coconuts, Mustard or Ghee (clarified butter), the wick made of cotton wool - are placed outside of houses, on floors and doorways. During Deepavali festival, doorways are hung with torans of mango leaves and marigolds. Deepavali Melas are being enjoyed by Hindus, Sikhs, Jains & Buddhists alike. On the day of Deepavali people exchange gifts, bursting firecrackers, lighting fireworks, colourful sparklers & bonfires and having festive meals. Diwali Melas (fairs) are held throughout India and the celebrations abroad. The Indian Festival of Lights takes place after the monsoon season has finished and the weather is nice and pleasant again.

Wishing Happy Deepavali to everyone! Deepavali Valthukkal!! Shubh Diwali!!

What's the difference between Deepavali vs. Diwali ?
	DEEPAVALI	DIWALI
Origin	Deepavali is the ORIGINAL NAME from Sanskrit Dīpāvalī (दीपावली) meaning "Row of Lamps" or "Spreading of Light".	Hindi name, a contraction of "Deepavali". Could have emerged to simplify pronunciation under the British rule (1757-1947).
Regional Significance	Celebrated in South-India in the states: Tamil Nadu, Kerala, Karnataka, Goa, Andhra Pradesh Countries and Regions with a significant population of Indians from the southern Indian states (Tamils) such as: Malaysia, Singapore, Sri Lanka/Ceylon, Fiji, South Africa, Mauritius, Réunion, Martinique & Guadeloupe	Celebrated in North-India in the states: Gujarat, Madhya Pradesh, Chhattisgarh, Orissa, Maharashtra, Rajasthan, Uttar Pradesh, Haryana, Punjab, Uttarakhand, Himachal Pradesh, Jammu & Kashmir, Bihar, Jharkhand, West Bengal, Sikkim, Meghalaya, Assam, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura Countries with a significant Indian population mainly from North-India such as: USA, Canada, United Kingdom, Guyana, Trinidad and Tobago and others (see below)
Date Calculation	Falls on Ashvina Krishna Chaturdasi (the lunar day before the new moon). The exact date is calculated based on the last 90 minutes before sunrise (Arunodaya). Deepavali involves bathing before sunrise. Geographic location: Chennai (Tamil Nadu)	Falls on the following lunar day on Ashvina Amavasya (lunar day of new moon). The date is calculated based on extended Pradosha (a few hours after sunset). Observed by displaying diyas, lanterns and firecrackers. Geographic location: Allahabad (Uttar Pradesh)
	The 2 holidays are defined to occur on 2 separate lunar days. In the Gregorian (Western) Calendar, Deepavali & Diwali can fall on the same calendar day when both periods (see above) of about 16 hours in total happen to be within the 24 hours of a single civil/Gregorian day. This means that the date will fall in about 2/3 of cases (years) on the same Gregorian day. (Many thanks to Olivier Beltrami for his expert advice on this !)
Festival Days & Spiritual Differences	Deepavali is a 4 day festival Day 1: Deepavali (Naraka Chaturdasi) Commemorates the victory of Lord Krishna over the demon Naraka. People taking a bath in the early morning before sunrise while the stars are still shining in the sky. Day 2: Lakshmi Puja Goddess Lakshmi emerged from Kshira Sagara (Ocean of Milk). Lakshmi Pooja is performed on this day. Day 3: Bali Padyami/Vikram Samvat/Kartika Shuddha Padwa Celebrates the victory of god Vishnu in his dwarf incarnation Vamana over the daemon king Bali. Honours Bali's return to earth for his devotion to the Lord and for his noble deeds to his people. First day of the Hindu month Kartika. Day 4: Yama Dvitiya Yama (God of Death) had a feast with his sister Yami. She put an auspicious tilak mark on his forehead for his well-being. On this day sisters pray for well-being of their brothers. In return brothers giving gifts to their sisters.	Diwali is a 5 day festival Day 1: Dhanteras Commemorates the birth of Dhanvantari (the physician of the Gods). Dhan translates to wealth. Goddess Lakshmi is being worshiped for prosperity and well-being. Many Indian businesses start their accounting year on this day. Day 2: Choti Diwali (Kali Chaudas) Also known as Small Diwali. Daemon Narakasura was killed by Krishna. Poojas for Lakshmi and Rama. Day 3: Diwali & Lakshmi Puja Commemorates the return of Lord Rama (King of Ayodhya) to his hometown from 14 years of exile in the forest, after defeating the evil daemon king Ravana of Lanka. Goddess Lakshmi emerged from Kshira Sagara (Ocean of Milk). Lakshmi Pooja is performed on this day. Day 4: Govardhan Puja (Annakoot) Celebrates the victory of Krishna over Indra, the deity of thunder and rain, by lifting Govardhana Hill with his little finger to save people from the floods. This day is also known as Annakoot (mountain of food). Day 5: Bhai Dhooj Sisters pray for well-being of their brothers and put a mark on their foreheads. Brothers give gifts to their sisters in return.

             Corrections? Additions? Please let us know. Thank you!

Deepavali 2016 Calendar

When is Deepavali 2016 ?

Saturday, 29 October, 2016 - Deepavali (Naraka Chaturdasi)
Sunday, 30 October, 2016 - Diwali (Lakshmi Puja)
Monday, 31 October, 2016 - Bali Padyami / Vikram Samvat (Kartika Shuddha Padwa)
Tuesday, 01 November, 2016 - Yama Dvitiya / Bhai Duj


Note: Deepavali is celebrated 1 day before Diwali in 2016

Singapore Bonds - More trouble (ASL Marine, Ezra Holdings)

More Bond trouble ahead:

1. ASL Marine is proposing to raise $25 million via a rights issue to repay S$100 million worth of  notes due in March 2017.

2. Ezra Holdings will seek bondholders’ approval in a meeting planned for 9 November 2016 to loosen covenants on US$150 million bonds maturing in 2018.


Based on a report by the Straits Times yesterday, 26 October 2016, an informal meeting held by Ezra highlighted that Ezra’s bond holders were “calm and positive” at the meeting.

Extracted from the SGX website is the presentation slides made at the briefing (see link):

Ezra - Informal meeting with Bond Holders


Personally, I am surprised at the cavalier attitude adopted by the bond holders if what the Straits Times’ sensing of the mood of the meeting is correct.      It is a lot of money at stake that bond holders are making a decision on and do they really understand what rights and obligations they are waiving off?    It cites that bond holders were happy that Ezra had delivered on a $3.66 million coupon on Monday and they could “feel Management’s sincerity”.   For Christ’s sake, the coupon payment is due to you! so this is nothing to be thankful to them about.   It is why you bought the bond in the first place anyway, isn’t it?   Otherwise, you would be buying the company's shares and be shareholders instead.  Not bond holders.

Think carefully before you waive away any rights and obligations that you have.   To cite an analogy, this is like cases that we read about in the newspapers whereby heartless children encourage their parents to sell off their existing premises and stay with them so that they can part-finance their purchase of a new apartment.    Sometime later, they kick their parents out of their homes when they cannot get along with them.
 
Business Times’ reporting of the event was far more balanced and I commend them for a more objective view of the meeting.   Of course, I was not privy to the details as I am not a bondholder, so only those present would be able to tell what the mood of the meeting was.

Do read through your documents carefully.   Even with a post-graduate degree in Finance, I had to read them three times before I had a better understanding of what you are giving up your rights on.

All the best to you (Ezra bond holders) for the Nov 9 meeting.

Sincere thoughts and wishes,
Green Ninja.

Swissco's trading status is now reflected as "Suspended"

As of this morning 12 Oct 2016, Swissco's trading status has been updated and reflected as "Suspended" from the earlier "Halted".

Under the circumstances, this can only mean bad news for bondholders and now also shareholders.

The reasons for the trading suspension are two-fold:

1.   In view of the debt structuring plan and,
2.   On-going lawsuits - see attached link below:

On-going Lawsuits (link)


Will bondholders and shareholders be able to get any money back?

The last traded price was 5.2 cents.   I'm afraid it will no longer even be 5.2 cents after it resumes trading again.

Singapore Bonds - Like Dominoes, they are starting to fall

In late 2015, Trikomsel and Pacific Andes Resources Development failed to make payments on three notes. 

Like dominoes, other companies in the Oil and Gas sector are starting to fall:

1.  Swiber
 Defaulted on outstanding bonds for semi-annual payment in the $150 million series 001 Trust Certificates, which carry a coupon rate of 6.5 per cent and are due for maturity in August 2018. Legal claims against Swiber have been piling up, rising to US$231.4 million as of 15 Sep 2016. Swiber's application for judicial management was approved by the High Court on 6 October 2016.

2,  Rickmers Maritime

Asking creditors for leniency on about US$253 million (S$344.8 million) of debt.   It won’t be able to repay US$179.7 million of bonds due in March 2017 and the interest and principal on S$100 million of notes due in May 2017.    An extraordinary general meeting (EGM) on 31 Oct 2016 will be held to seek approval for a debt-to-equity proposal, which is highly unpopular among bondholders.

3.  Perisai Petroleum Teknologi

 Perisai Petroleum Teknologi - Ezra Holdings’ associate company Perisai Petroleum Teknologi was unable to win the 75 per cent note-holder approval needed to restructure its S$125mil (RM377mil) medium-term notes (MTN).  An indicative offer of financing from a financial institution has been received, following the rejection of Perisai’s initial restructuring plan by bondholders for its MTN.

4.   Swissco Holdings 
Swissco – Provided the market with a nasty surprise by proposing to restructure its bonds worth US$100 million including a S$2.85 million coupon payment due on 6 Oct 2016.   Firm’s cash flow situation could be worse than expected.

For Swissco, it was not so long ago (less than 3 months in fact!), when they came out to imply that there were different from Swiber, when the latter announced that they planned to go into voluntary liquidation.   In fact, they even issued a press release to say that they were in a different sub-sector.     See attached. 

Swissco Announcement 28 July 2016

 One really wonders how much we can trust our companies….   : (

Perisai Bonds on shaky ground - Ezra may be in possible jeopardy if firm fails to redeem its bonds

Source: Straits Times 30 Sep 2016


A second Singapore-dollar bond default from the hard-hit oil and gas industry could be on the cards.

Perisai Petroleum Technologi, a company listed on KLSE, and its bond holders are struggling to agree on $125 million worth of notes due to mature on next Monday.

Ezra Holdings, with a 22.5 per cent stake in Perisai via two units, could find itself in jeopardy too should the firm fail to redeem its bonds.   The two firms are linked through a US$43 million (S$59 million) put option.

Perisai is seeking note holders' agreement to waive the payment of note principal and interest due on 3 Oct 2016 and also wants to postpone the maturity date by four months to 3 Feb 2017.   Perisai is operating "under extremely tight financial conditions" as business has been hurt by weak crude prices and slow economic growth.

(For full article and details - see Page C1 of Straits Times).

http://www.straitstimes.com/business/companies-markets/perisai-bonds-on-shaky-ground

Article Link

You're Not as Rich as You Think (by Satyajit Das)

Source: (Bloomberg)

Article Link


You're Not as Rich as You Think
By Satyajit Das


The idea that the world is awash in savings -- one factor driving the theory of secular stagnation -- is, on the surface, a persuasive one. Too bad it may not be true.

Yes, the postwar generation is wealthier than any before it. But the ultimate value of any investment depends upon being able to convert it into cash and thus generate purchasing power. In fact, the world's accumulated wealth -- around $250 trillion, according to Credit Suisse’s Global Wealth Report -- is almost certainly incapable of realization at its paper value. The headline number thus vastly overstates the supposed savings glut.

Most of these savings are held in two forms: real estate, primarily principal residences, and retirement portfolios that are invested in stocks and bonds.

Both are rising in value. A combination of population growth, higher incomes, increased access to credit, lower rates and, in some cases, limited housing stock have driven up home prices; those who got in early have done especially well. Meanwhile, increased earnings and dividends, driven by economic growth and inflation, have boosted equity values. So have loose monetary policies designed to counteract the Great Recession since 2009.

Yet the appreciating value of one’s own home doesn't automatically translate into purchasing power. A primary residence produces no income. Indeed, maintenance costs, utility bills and property taxes -- which often rise along with home prices -- mean that houses are cash-flow negative.


Secular Stagnation

To monetize one's gains would require borrowing against the value of the property. Those loans cost money to service and expose owners to fluctuations in property values. The property can always be sold, of course. But much of the profit is likely to be eaten up by transaction and relocation costs -- not to mention the cost of a new home, which will also have risen in value.
High property prices depend on there being enough potential buyers who can afford the increasingly large mortgages that have helped boost real estate values over the last half a century. Their number may be shrinking: Stagnant incomes, the decline in secure, long-term employment and rise in contracting jobs all undermine the appetite and ability to borrow. Demographic changes and new barriers to immigration will shrink the size of populations as a whole. Similar considerations apply to real estate investment.

Share prices, on the other hand, represent future rather than current earnings streams. Low interest rates, which have to rise eventually, have artificially increased the discounted value of these cash flows. Much of the gains merely reflect higher PE multiples, not higher revenues and earnings. Slower growth and lower inflation mean future income streams may be weaker.
In recent years, equity valuations have also benefited from the rising share of national income captured by corporate profits, which may be unsustainable. Debt-funded share buybacks and corporate activity that boosts valuations -- including mergers -- may slow. Companies can't repurchase more than a certain level of outstanding shares if they want to maintain their stock-exchange listing and trading liquidity. Mergers eventually may run up against competition concerns.

Fixed-income instruments don't necessarily offer a safe haven. The credit quality of government and corporate bonds has declined. Regulatory changes mean that bank-issued bonds may be written down in cases of financial distress. With investors having assumed more risk to compensate for falling returns, they face increasingly uncertain returns on capital.

An important factor is changing funds flows. Rising wealth, in part supported by forced or tax-incentivized pension savings, created strong markets for financial assets in the postwar era. Now, many aging investors are set to draw down on those savings at the same time to fund their retirement. Given fraying safety nets across the developed world, those withdrawals could well be large -- indeed, greater than new inflows. That will reduce the funds available for investment, as well as demand for property, equities, bonds and other assets.

All this could set off a vicious cycle. Lower asset prices will shrink tax revenues. At the same time, demand for essential services will increase as many find themselves unable to finance their own needs. Fiscal positions will take a hit, resulting in lower government spending and higher taxes. That will only accelerate disinvestment.

The inability to convert investment into cash at current valuations means that individuals may be a lot less wealthy than they assume. They may have to consume less now in order to ensure sufficient cash for future needs, reducing economic activity. Lower levels of wealth also limit policy options for governments and central banks, which rely on mobilizing savings to boost growth and manage high debt levels.

That's perhaps the final irony. Whether real savings are higher or lower than currently believed, the result may be the same: a global economy mired in a prolonged period of stagnation.

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Satyajit Das is a former banker, whom Bloomberg named one of the world's 50 most influential financial figures in 2014. His latest book is "A Banquet of Consequences" (published in North America and India as "The Age of Stagnation"). He is also the author of "Extreme Money" and "Traders, Guns & Money."

ISR Capital - Like Moths to an Open Flame, this will likely end up in tears again

Moths are attracted to light at night, even if that light is from an
open flame.  If one flies too close by mistake, the moth gets burnt!

     ISR Capital's price surge today brings its PE to more than 500 times!   Astronomical by any standards of measurement.   Like moths to an open flame, this is likely to end up in tears again.   Is this going to be another Blumont even before the investigations are over?

Trading on momentum is extremely risky, so beware.   Has SGX raised any query yet?    One was done on 14 September and they'd better raise another one soon.

Holders of the death spiral convertible bonds will have having a field day in this rally and making a killing.   Buyers may likely be taking over their holdings and stock.

Should one "short" this stock?   Probably no.  It is far too risky likewise, not knowing how tightly the stock is held, or if interested parties will push the share price even higher.

Buyers beware!

V Holdings Limited (Part 2) - The Berlin Wall Crumbles (A Fictional Story)

The Berlin Wall (German: Berliner Mauer) was a barrier that divided Berlin (West and East Germany) from 1961 to 1989. Constructed by the German Democratic Republic (GDR, East Germany), starting on 13 August 1961, the Wall completely cut off (by land) West Berlin from surrounding East Germany and from East Berlin until government officials opened it in November 1989.   The barrier included guard towers placed along large concrete walls, which circumscribed a wide area (later known as the "death strip") that contained anti-vehicle trenches, "fakir beds" and other defenses. The Wall served to prevent the massive emigration and defection that had marked East Germany and the communist Eastern Bloc during the post-World War II period.   (Source: Wikipedia)

In the game of chess, a defence set-up known as the Berlin Defence became known as the Berlin Wall after it was used to devastating effect by challenger, Vladimir Kramnik in his World Chess Championship match against Garry Kasparov, in which the former won.    The Berlin Defence was so solid that the world champion, Kasparov could find no way through to break-up Kramnik's defences in his games as Black.


Now back to V Holdings Limited.   To support our proposed rights issue, we erected a Berlin Wall at the rights issue price.    Millions of shares on the "buy side" at the rights issue price to support the share price but the selling wave that came was swift and fierce.   Damn... Who are the sellers?!  Our Berlin Wall has crumbled.    What do we do now?  

Time to reload and gather more fire-power.    Need to nudge the share price back up above the rights issue price again.   : (

-----------------------------
Author's Note: This is a fictitious story which was inspired by a dream that the author had in which he was the Financial Controller of a company.

Retail Pump Prices in Selected Countries (Singapore and Malaysia included)

Source:  The Star, 12 September 2016

   Weblink for more details:

V Holdings Limited - The Emperor has No Clothes (A Fictional Story)

In Han Christian Andersen's tale of "The Emperor's New Clothes", the short tale by Andersen tells of two weavers who promise an emperor a new suit of clothes that is invisible to those who are unfit for their positions, stupid, or incompetent. When the Emperor parades before his subjects in his new clothes, no one dares to say that they don't see any suit of clothes until a child cries out, "But he isn't wearing anything at all!".   (Source: Wikipedia)


Your company's stock price is under tremendous pressure due to adverse events happening from outside and within the company.     You need to "ask for more money from your shareholders"  bolster the financial foundation of the company.    So, how to you best convince your minority shareholders to part with their money,  further be involved in the equity of the Company, and allow ...(the Company) to be less dependent on external sources of funding?

Call for a deeply discounted rights issue and your share price will be bashed down further beyond recognition.    No, No, this will not work.

So, why not think out of the box?   Come up with a proposal so unthinkable that shareholders start to doubt themselves instead of the company?    Let them think that it is them who do not understand the merits of a rights issue that is offered to them at a PREMIUM rather than a discount!    Ok... to sweeten the deal, we'll offer them some free warrants which will given to them if they subscribe to the rights issue.

Meanwhile we'd better start pushing up the share price together with our buddies and interested parties so that it rises above the rights issue price.  And make sure as hell that the share price stays that way until the rights issue is over so that minority shareholders will think that this is a good deal that they are getting themselves into.

Will this plan work?   Maybe, maybe not.   But we've got no choice, so we'll have to give it a try.   Even if the rights issue is undersubscribed, we'll get some much-needed funds into our coffers.

Nothing ventured, nothing gained.    "Forture favours the bold" - don't they say?    Unless someone is smart, brave, stupid enough to say:  "Look Ma... the Emperor has No Clothes!"

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Author's remarks:  This is a fictitious story which was inspired by a dream that the author had in which he was the Financial Controller of a company.

10 O&M (Offshore and Marine) stocks that could be in financial hot water

1.    Swiber Holdings
2.    Ezra Holdings
3.    Swissco
4.    Ausgroup
5.    KS Energy
6.    RH Petrogas
7.    EMAS Offshore
8.    Nam Cheong
9.    Mencast
10.  Loyz Energy

Not in any order of hierarchy, the above 10 stocks were highlighted by UOB Kay Hian in a research report as “facing significant financial concerns”.

The Singapore market report featuring this news is attached in the link below:

Singapore Market report on 10 O&M stocks

UOB Kay Hian is turning negative on the offshore and marine (O&M) sector, downgrading its rating to “underweight” on mounting liquidity pressure on the sector amid a prolonged downturn.

Look at who has been supporting Procurri's share price! (ALERT!)

Look at who has been supporting Procurri's share price since its disastrous IPO debut!

It's none other than Mummy (Declout) herself!

Based on SGX's company announcements and disclosures by companies, Declout increased its holdings in Procurri to 47.3% from 46.5% through an open market purchase of 2 million shares for $1.1million, or an average of $0.525 per share.

See link below:
Declout increases stake in Procurri


We now have a possible explanation on why the (Procurri's) share price collapsed in the final hour of trading.   "Mummy" probably gave up on the defence of the "daughter's"  share price in the late afternoon of Day 1.

Declout's purchase is clearly illogical and borders on madness!   Listing the daughter company (Procurri) and then buying back the shares on the very first day??!!     Does Declout owe her shareholders an explanation on this?

Doesn't it have new businesses to fund?

Is there a better way for Declout to use its available funds?

So, be careful of yesterday's rebound on Day 2.  It could be none other than a major shareholder supporting her own daugher's share price.   In the short term, trade carefully!

Procurri’s Disastrous IPO Market Debut will dampen retail IPO sentiment for a while

Procurri’s IPO debut ended in a disaster yesterday, Wednesday 20 July 2016.   It never traded above its IPO price.    After holding steady for the whole of yesterday at between 53 to 55 cents, it collapsed in the last hour of trading to close at 45 cents.      That is a 20% loss for anyone who subscribed for the IPO and did not cut loss yesterday after its opening price was below water.    That’s a hefty loss for one day for IPO investors and staggers.    Ouch!

I did not subscribe for the IPO and neither did my family.   We were put off by the high absolute pricing as well as the high PE Ratio.   We can only breathe a sigh of relief and nothing more.   My thoughts go out there for those who decided to take the plunge and are still holding on the shares.   Analysts and experts have been giving very positive reviews about the stock and IPO, painting its future prospects rosily. So, it pays to trust your own analysis and instincts rather than to trust what the “experts” tell you.

Procurri’s IPO pricing was priced to perfection and full ripeness, at about close to 15 times price-earnings.    This meant that there was very little meat left for IPO staggers to feast on.       For staggers (now turned long-term investors?), the chance of making money was much lower than the risk of losing money.

It now seems like the mother company, Declout, is also being “punished” for its pricing strategy for Procurri.   Following her “daughter’s” debut,  Declout’s share price has also dropped to as low as 19 cents today (currently at 20 cents), which translates to a 15 – 20% loss from its earlier share price of 23.5 cents which news of Procurri’s IPO was announced.    It looks like investors are upset with Declout too for being so aggressive and not leaving anything on the table for them.

Yet again, the market seems to be irrational.   Procurri’s IPO debut would mean that Declout has monetized one of its key investments and freed up a lot of cash for the mother company.  So, Declout’s shares should be trading up rather than down.  Is this a case of sentiments ruling over logic?

Procurri’s retail IPO interest was partly sparked by the remarkable debut of an earlier IPO – Advancer Global Limited, which doubled in price on its opening debut.    Spurred by this positive development, it would not be surprising that investors and staggers would have wanted to try their luck with Procurri, which with hindsight, has been disastrous.

Following the bad outcome from Procurri’s IPO debut, sentiment in the IPO market, especially for retail investors, is likely to be dampened for now until they see one or two more IPOs trading above water at least.

Anyway, the two forthcoming IPOs, Katrina Group and Wong Fong Industries have both “CHICKENED OUT” by listing through placement shares only.   No retail/public tranche -  folks!    They probably see us retail investors as “kacang putih” and not worth their efforts.  : (

And following that, it will be EC World REIT to list with the offering of 188.13 million units comprises an international placement of 180.63 million units and 7.5 million units to the Singapore general public. Each unit is priced at 81 cents. Annualised distribution yield for FY16 and FY17 is expected to be 7.1% and 7.3%.

Offhand, I am again not keen on this one, it being entirely China-focused.

So, looking forward to more IPOs to come.    Good ones please……. !
Don't treat us as carrot-heads (菜头).

SMRT - Temasek Considers Taking Subway Operator SMRT Private

Updated on Wednesday, 20 July 2016, 7.00 pm

Temasek Holdings' unit Belford Investments has proposed a buyout of transport operator SMRT Corp at S$1.68 a share, in a deal that values the firm at S$2.57 billion.

The exit offer at S$1.68 per share is a 8.7 per cent premium over SMRT's last traded price of S$1.545.

(Source:  Business Times)

-------------------------------------------------------------------------------

From Dow Jones Singapore -


DJ Singapore - ''Temasek Considers Taking Subway Operator SMRT Private"
(2016/07/18 12:58PM)

--------------------------------------------------------------------------------

By P.R. Venkat

SINGAPORE--State investment firm Temasek Holdings Pte. Ltd. is considering an offer to buy the remaining shares that it doesn't already own in Singapore-listed transport firm SMRT Corp., people familiar with the situation said Monday.

Temasek, which has a 54% stake in SMRT, plans to delist the company, which currently has a market capitalization of 2.4 billion Singapore dollars (US$1.78 billion), these people said.

Temasek's buyout plan comes days after the government announced a deal to take ownership of SMRT's train assets, leaving SMRT to focus on the operations and maintenance of the network. That deal is valued at S$1.1 billion, most of which would be used to repay SMRT's debt. SMRT said it doesn't intend to pay any dividends to its shareholders after the sale of the train assets.

SMRT's reputation took a major hit in December 2011 when its subway lines suffered two major breakdowns that left more than 210,000 commuters stranded.

The disruptions were the worst in the network's history, prompting public outrage, criticism of the company's wide-ranging interests, as well as a rare government inquiry--a reflection of how seriously Singapore takes its record of orderliness and efficiency.

Write to P.R. Venkat at venkat.pr@wsj.com



(END) Dow Jones Newswires

July 18, 2016 00:58 ET (04:58 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.

Life is more than just a spreadsheet

"Too often, we transform our lives to point us in the direction of where the money is. We sometimes compromise our quality of life so we can make a bit more. But shouldn’t it be the other way around? Shouldn’t we transform our relationship with money so that it points us in the direction of life that we have always wanted?"

A nice article by Ong Shi Jie which makes a good read and some reflection on a Sunday.

It delves into the eternal conflict between work-life balance.   Do we seek more money or more time for the family?


Article (in PDF format)

Life is more than just a spreadsheet (Weblink)

Source: Personal Wealth, The Edge Malaysia Weekly, on July 4 - 10, 2016.

SMRT - to transfer ownership of train assets to LTA

SMRT Corp will transfer the ownership of its rail assets, including trains and signalling systems, to the Land Transport Authority (LTA) for S$991 million.

New Rail Financing Framework (NRFF) link


This news is expected to be good for SMRT as its burden on heavy capital expenditure will be taken away.

Update (Monday 18 July 2016, 11.00 am)

SMRT is still halted from trading this morning.   It goes ex-dividend today for 2.5 cents.

At the previous closing price of $1.545, the ex-dividend price should be $1.53.

Current queue price is $1.50 (ie. minus 3 cents)

At this price, the news appears to be taken mildly negatively by shareholders and investors.   This could be due to 2 reasons:

     i.  Disappointed that there is no special dividend despite the huge cash bonanza.
     ii. The lower profitability as margins will be capped under new framework.


Update (Monday 18 July 2016, 3.00 pm) - SMRT Still Halted

DJ Singapore

Temasek Considers Taking Subway Operator SMRT Private

--------------------------------------------------------------------------------

By P.R. Venkat

SINGAPORE--State investment firm Temasek Holdings Pte. Ltd. is considering an offer to buy the remaining shares that it doesn't already own in Singapore-listed transport firm SMRT Corp., people familiar with the situation said Monday.

Temasek, which has a 54% stake in SMRT, plans to delist the company, which currently has a market capitalization of 2.4 billion Singapore dollars (US$1.78 billion), these people said.

Temasek's buyout plan comes days after the government announced a deal to take ownership of SMRT's train assets, leaving SMRT to focus on the operations and maintenance of the network. That deal is valued at S$1.1 billion, most of which would be used to repay SMRT's debt. SMRT said it doesn't intend to pay any dividends to its shareholders after the sale of the train assets.

SMRT's reputation took a major hit in December 2011 when its subway lines suffered two major breakdowns that left more than 210,000 commuters stranded.

The disruptions were the worst in the network's history, prompting public outrage, criticism of the company's wide-ranging interests, as well as a rare government inquiry--a reflection of how seriously Singapore takes its record of orderliness and efficiency.

Write to P.R. Venkat at venkat.pr@wsj.com

(END) Dow Jones Newswires

July 18, 2016 00:58 ET (04:58 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.

SGX temporaily ceases trading (14 July 2016) at 1138 hrs - How will this hit Noble Group traders? Are speculators caught?

SGX temporarily ceased trading today 14 July 2016 at 11:38 hrs.
First Announcement (11.50 am)

1st Update at 12:39 hrs - says that trading expected to resume at 1400 hrs.
1st Update at 12:39 hrs


2nd Update at 13:53hrs - that trading not ready to resume due to
ongoing reconciliation.
2nd update at 13:53 hrs






How is this going to affect Noble Group rights traders today?

Oh dear...  how is this going to affect traders and speculators of Noble rights shares?   The rights cease trading today 14 July 2016 at 5.00 pm!

For those traders and speculators who are still caught with the rights shares without the intention of holding on to them or subscribing to them, they must be sweating it out right now.

If the trading halt is not lifted, they will have no option but to subscribe to the rights or forfeit them.

Noble Group is certainly not having much luck these days.  What a day for something like this to happen....




3rd Update at 15:22 hrs - 

SGX confirms that order and trade executions are accurate.   The market will resume trading at 1600 hours and open per  normal on 15 July 2016. 3rd Update at 15:22 hrs A lifeline opens for those who are still exposed, 1 hour to clear all oustanding trades!  GOOD LUCK to all.

Time is 16:03 hrs

The 4.00 pm scheduled resumption of trade has passed.  Market still halted.   
What's happening....

Update 4 - 16:03 hrs

SGX informs that the market will not resume trading at 1600 hours  and will not re-open today.

4th Update





Oh dear.   The worst scenario has happened.   Market is not going to reopen today!   My goodness.. what's going to happen to those with outstanding positions in Noble's Rights shares??

Dreadful!   Will a lot of speculators and traders be caught? ...........


Final Update (15 July 2016)

Good News!   SGX has given Noble a reprieve.  Noble rights trading has been extended for a further day on 15 July 2016.     Good luck to all investors, speculators and traders.    

[ Richard Elman's outstanding position is as follows:   Rights entitlement (as of 30 June): 1.46 bn; Rights holdings (as of 13 July):  889.5m,   Outstanding excess rights: 263.6m)

"Death Spiral" Convertibles - ISR Capital --> Trade Carefully

Source: The Edge Markets (29 June 2016)
Weblink


MAS aware of ISR stake sale to Rigoll, says Value Capital Asset Management

By:
Leu Siew Ying

SINGAPORE (June 28): Value Capital Asset Management, the fund manager that placed a commanding stake in ISR Capital in the hands of David Rigoll, says that the Monetary Authority of Singapore (MAS) was aware of its transactions and the source of its funds.

“To reiterate, VCAM is a privately held fund management company registered with MAS and they are obligated to report to MAS on their investors and source of investment funds,” says spokeswoman Rosalina Soh, of Equitique Communications, in an email exchange with The Edge Singapore.

VCAM specialises in subscribing to redeemable convertible bonds issued by small cap companies. These instruments, sometimes known as “death spiral” convertibles, have the potential to cause massive dilution, and even place control of a company in new hands.

In November 2014, Cayman Islands-based Premier Equity Fund and VCAM entered into an agreement with ISR Capital to subscribe for $35 million worth of 2% redeemable convertible bonds. The bonds are being issued in seven tranches, each composed of five sub-tranches of $1 million.

ISR Capital is charged a 5% arranger’s fee by VCAM at the close of each sub-tranche. The conversion price of the first four tranches of bonds is set at 85% of the average of the volume weighted average price at which ISR Capital shares traded on any three consecutive trading days determined by the subscriber during the 30 trading days that immediately precede the closing date of the first sub-tranche of each tranche of the bonds.

So far, the fund managed by VCAM has subscribed to all five sub-tranches of the first tranche of bonds. The conversion price was just 0.4 cent per share. As at May 13, an aggregate amount of $950,000 of the fifth sub-tranche had been converted into shares, according to ISR Capital.

VCAM sold most of the shares it converted almost immediately, with much of it going to Rigoll. On May 9, Rigoll bought 265.4 million shares in ISR Capital at 0.5 cent apiece from VCAM’s Premier Equity Fund Sub Fund G. That gave Rigoll a 28.5% stake in ISR Capital based on the 931 million shares in issue at the time. By June 13, Rigoll held 426.7 million shares of ISR Capital, or 28.56% of the 1.49 billion shares in issue.

The 0.5 cent at which VCAM’s Premier Equity Fund Sub Fund G sold its ISR Capital shares is 25% more than the 0.4 cent at which the shares were issued. However, shares in ISR Capital have rocketed since Rigoll emerged as a major shareholder of the company. The stock is now trading at 9.5 cents, or 1,800% more than the 0.5 cent at which the VCAM fund had sold its shares.

How were VCAM and Rigoll introduced? Who are the investors behind Premier Equity Fund? Did VCAM have to consult these investors about the sale of ISR Capital shares to Rigoll? “Your questions are again suggestive and seeing this straightforward fund-raising exercise in a rather complex manner,” says Soh, in an email.

In fact, the background to ISR Capital’s recent announcements isn’t straightforward, according to The Edge Singapore’s cover story this week. The company appointed Rigoll a non-executive director on May 16, and an executive director on June 16. On May 20, it said it had signed a memorandum of understanding to look into the possibility of investing in a rare earths mining concession indirectly owned by Singapore-based REO Magnetic. On June 9, ISR Capital signed an agreement with REO Magnetic to buy a 19.9% stake in Tantalum Holding (Mauritius), which owns a company in Madagascar that holds a permit to explore and develop a rare earth concession.

However, according to The Edge Singapore, Tantalum Holding (Mauritius) was once 100% owned by a listed company in Germany called Tantalus Rare Earths. Rigoll is a substantial shareholder of Tantalus Rare Earths, and was a director until Dec 8. As it happened, Dec 8 was also the day that Tantalus Rare Earths signed a deal to sell Tantalum Holding (Mauritius) to a Singapore-based company called Apphia Minerals SOF. This company changed its name to REO Magnetic on May 20, the same day it signed the MOU with ISR Capital.

The largest shareholder of REO Magnetic is an individual named Jonathan Lim Keng Hock. The sole shareholder of VCAM is John Poon Seng Fatt.

In response to questions from The Edge Singapore about whether Singapore Exchange had given its approval for ISR Capital’s deals with Rigoll, the local bourse operator said that Singapore operates a disclosure-based regime, and that the market is best-placed to evaluate the commercial merits of companies and their business ventures.

“SGX’s oversight as front-line regulator is on companies’ continuous obligations including whether their disclosure of material information is timely and done in a manner which meets the standards required of listed companies. As such, SGX does not approve, nor pass judgement on the commercial merits of, the business transactions of companies.”