Saturday, October 15, 2011

5 Reasons to Buy Citigroup Now

5 Reasons to Buy Citigroup Now
For long-term investors, Citigroup remains a beautiful play.

Of course, a lot depends on how you define "long-term." With the media space dominated by screaming daily headlines and a focus on quarterly results, a securities industry focused on profitable day trading and analysts setting 12-month price targets, it's easy to forget that you might need to hold a long-term position for several years to make a solid gain.

Investors are bound to be frustrated by the 35 percent drop in Citigroup's [C 28.40 0.76 (+2.75%) ] share price since the shares underwent a 1-for-10 reverse split on May 6. The KBW Bank Index declined 23 percent over the same period.

Analysts have been cutting their earnings and revenue estimates for the largest U.S. banks, projecting sharp declines in third-quarter trading and capital markets revenue, along with lower fee income as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

But Citigroup is a much less risky play than the similarly valued Bank of America [BAC 6.19 -0.03 (-0.48%) ], which is facing an uncertain ride through the remaining mortgage mess.

Right now, you're looking at a golden opportunity to start a position in Citigroup's shares on the cheap, or add to a long-term position. The shares have been thrown out with the bathwater, as you'll see below.
Here are 5 reasons to buy Citi now:

5. The Shares Have Been Thrown Out with the Bathwater.
The shares trade for six times the consensus 2012 EPS estimate of $4.63, and for just over half the company's June 30 tangible book value of $49.64, according to SNL Financial.

This is a similar valuation to Bank of America, which faces mortgage put-back risks that several analysts have said are impossible to quantify at this point, mainly resulting from its disastrous acquisition of Countrywide in 2008.

Citigroup faces much lower mortgage repurchase demands from investors in mortgage-backed securities than the remaining "big four" U.S. banks, as highlighted by June 30 data from Federal Reserve filings, supplied by SNL Financial.

Bank of America was servicing $148.8 billion in one-to-four family mortgages loans (excluding home equity lines) for others that were past due over 90 or more days, plus another $22.6 billion in "early-stage delinquency" of 30 to 80 days.

JPMorgan Chase [JPM 31.89 0.29 (+0.92%) ] serviced $52.4 billion in one-to-four family mortgage loans for others that were past due 90+ days, plus another $9.0 billion past due 30 to 90 days.

For Wells Fargo [WFC 26.67 0.55 (+2.11%) ], one-to-fours serviced for others that were past due 90+ days totaled $5.9 billion, while those past due 30 to 89 days totaled $14.8 billion.

For Citigroup, one-to-four family mortgages serviced for others that were past due 90 or more days totaled $1.7 billion as of June 30, while earlier-stage delinquencies within the portfolio serviced for others totaled $5.0 billion.

JPMorgan and Wells Fargo trade at much higher multiples to book value than Citigroup and Bank of America, but on the mortgage front, it's obvious that Citigroup has the lowest put-back risk among the big four.

UBS analyst Brennan Hawken on Monday reiterated his "Buy" rating for Citi, with a $43 price target, saying that the company's fundamentals "support Citi shares trading at a premium multiple to BofA", and that the company is not "facing questions about its capital position."

4. Capital Is Building, Pointing to Buybacks and Dividends.
Richard Staite of Atlantic Equities said in an August report that among the largest U.S. bank holding companies, Citigroup saw the "biggest improvement" in capital levels, with its Basel I Tier 1 common equity ratio more than doubling from 2009 to 11.7 percent in June.

After the Basel Committee announced the enhanced capital requirements for the largest banks in June, Staite said that Citigroup could "pay a $2bn dividend and up to a $4bn buyback in 2012 and still meet the 2.5% buffer by end of 2013, well ahead of the 2019 deadline."

Staite estimated that if Citigroup were to wait on returning additional capital to investors beyond its current quarterly dividend of a penny a share, its "Basel III Tier 1 common ratio [would] be 8% at end 2011 and would increase to 9.5% at end 2012." With a "modest" $2 billion in dividends and $4 billion in common share buybacks in 2012, the analyst estimated the "Basel III ratio would be 9% at end 2012 and would still increase to reach 9.5% in 2013."

3. The International Story Is a Long-Term Winner for Citi.
During the second quarter, Citigroup's consumer banking revenue for its markets outside North America totaled $4.8 billion, or 59 percent of total revenue in the Regional Consumer Banking unit, and increased 12 percent from a year earlier.

While the market continues to oscillate, as Europe tries to solve its financial crisis and the U.S. continues trying to spur economic growth, there's no question that Asia and Latin America represent amazing long-term growth opportunities, and Citigroup has an expanding consumer presence in both regions.

2. Analysts Will Pump the Stock.
The consensus among analysts polled by FactSet is for Citigroup to report third-quarter earnings of 83 cents a share, following EPS of $1.09 in the second quarter and 72 cents in the third quarter of 2010.

Out of 22 analysts covering Citigroup, 16 rate the shares a buy, while four analysts have neutral ratings and two analysts recommend selling the shares.

The consensus price target among analysts polled by FactSet is $60.33, implying 51 percent upside for the shares.

1. Pandit's Strategy Is Working.
Despite the pounding he has taken over the past several years, CEO Vikram Pandit's "good bank/bad bank" strategy has been a winner for Citigroup.
Total assets in the "bad bank" Citi Holdings unit were $308 billion as of June 30, which was a 34 percent decline from a year earlier, and "over half a trillion dollars lower" than in the first quarter of 2008, according to Citigroup.

Oppenheimer analyst Chris Kotowski on Sunday that "Citi remains our favorite stock with a valuation that looks more like BAC (55 percent of tangible book vs. BAC at 50 percent) but with a capital position, diversity of business and earnings stability that look more and more like JPMorgan every quarter."


Source/转贴/Extract/Excerpts: CNBC
Publish date: 14/10/11

经济师: 通胀压力若进一步舒缓 金管局可能更大胆放松新元

正如市场所料,新加坡金融管理局昨天稍微放宽了货币政策立场。经济师表示,金管局在货币政策声明中的语调对经济前景不太乐观,他们认为,若接下来的通货膨胀压力如该局所料般进一步舒缓,金管局在下一轮政策会议可能会更大胆的放松新元。

  金管局昨天在半年一度的政策声明中说,日本大地震造成的供应中断,以及最近的全球需求疲软,新加坡经济在过去六个月的表现减弱。由于主要贸易伙伴的经济展望大不如前,金管局预料,随着需求下跌,我国的经济增长速度可能跌到3%至5%的潜在增长水平之下。

  金管局说:“金融市场的不确定性增加,造成全球经济前景急剧恶化。”

  在欧洲,欧元区持续面对主权债务危机,经济增长将受到财政紧缩和信贷收紧的限制。在美国,劳工市场疲软以及房屋市场毫无生气,造成私人消费持续疲软,企业投资开支也保持谨慎。

  金管局表示,先进经济体的需求趋软,即使得到国内需求的支持,亚洲增长也将放缓。与此同时,全球资讯科技领域继续面临供应过剩的问题,因此接下来的产出预料进一步调整。

  不过,随着国内经济活动持续放缓,金管局表示,这将舒缓紧张的劳工市场,并缓解价格压力。此外,源自海外的通胀压力也预料将消退。

  金管局衡量的核心通胀率,在第二季和第三季的首两个月份维持在2.2%。整体通胀率则在7月至8月,从第二季的4.7%升至5.6%,这主要反映了较高的拥车证价格和自住房屋的估算租金增加。

  苏格兰皇家银行的分析师在研究报告中说:“政策声明对全球和国内的增长前景明显悲观。该局的悲观看法,以及当前所面对的全球风险,意味着我们不能排除在2012年4月的下一个政策会议上,金管局会完全让新元汇率的可波动政策区间完全平坦。”

  高盛投资银行也认为,金管局在下一个政策会议进一步放宽政策的可能性极大,尤其是如果全球宏观经济局势如意料般继续疲软。

金管局自去年4月以来,连续在三个政策会议收紧货币政策。

  在今年4月至9月初,新元名义有效汇率普遍走高,并处在政策区间的上半段。这主要反映美元普遍疲软,以及投资者偏好高增长经济体。之后,新元汇率便跌至政策区间的下半段,因为投资者对欧元区债务问题的担忧加剧而选择规避风险。

  花旗集团的经济师吉伟正估计,新元可波动区间的斜度在调整后,只是降低了1%或1.5%。


Source/转贴/Extract/Excerpts: 联合早报
Publish date: 15/10/11

本地数上市公司 泰国业务受水灾影响

受泰国水灾影响,数家在泰国设有工厂的本地上市公司无法正常运作,这是因为水势攻破了阿瑜陀耶工业区的堤防,工业区已被封锁,无法进入。
  超煜科技(Beyonics Technology)旗下的全资子公司超煜科技(泰国)的工厂目前暂时停止运作。

  超煜科技昨天表示,公司暂时把订单转至马来西亚淡杯或中国常熟市的工厂进行生产,以减少对供应链的干扰。

  此外,超成控股(Chosen)旗下的全资子公司超成(泰国)有限公司在阿瑜陀耶工业区的工厂也暂时停止运作。

  超成采用了沙袋来阻挡水势进一步溢入工厂。为了减低对客户的影响,公司已经把生产工具与材料运到新加坡进行生产。

  超成的泰国工厂大约占据公司营业额的15%,由于无法预知水灾何时结束,因此水灾所带来的具体损失与影响目前尚无法估计。

  泰国酿酒(Thai Beverage)则有两间酿酒厂受影响,其中一间暂停运作,另一间则只用来生产饮用水,以帮忙解决水源短缺问题。

  公司也把这两间酿酒厂之前所生产的货物转移到其他不受影响地区的仓库。位于泰国其他地点的酿酒厂或工厂则不受影响,继续正常生产。


Source/转贴/Extract/Excerpts: 联合早报
Publish date: 15/10/11

大馬轉型高收入國 高盛:需推行消費稅減津貼

大馬轉型高收入國 高盛:需推行消費稅減津貼

(吉隆坡15日訊)全球銀行業巨頭--高盛(Goldman Sachs)指出,若要轉型成為高收入國家,大馬需要大刀闊斧的改革,包括推行消費稅(GST),以及削減燃料津貼。


高盛是在大馬公佈2012年的預算案之後,發表有關的言論。

高盛指出,1997年的金融風暴之後,大馬在私人投資成長速度緩慢,主要是因為投資者對於政府過去幾年在改革方面的決心仍存疑。

高盛認為,採取更嚴謹的改革,將是推動轉型的關鍵動力。而推行消費稅以及津貼合理化行動,是讓投資者感受到政府決心改變的最明確訊息。

首相納吉希望通過經濟轉型計劃(ETP)計劃,可在2020年將人均收入翻倍,達每年4萬8000令吉。政府預計,在這項為期10年的計劃下,將取得1.4兆的投資,其中92%必須是來自私人領域。

然而,由於大選在即,在2012年的預算案中,卻沒有宣佈實施消費稅的日期,同時,政府也將津貼比款提高至332億令吉。

能否持續看大選表現

高盛表示:「政府是否能夠持續這項改革,部分取決於大選的表現。」而該銀行認為,大選可能落在明年初。

然而,高盛預計2012年的經濟成長為4.2%,低於政府所設下,介於5至6%的目標。「基本全球需求放緩的因素,我們早前已經下調大馬的經濟成長預期。」

高盛認為一些大馬主要貿易夥伴,如美國,中國與歐洲的經濟成長料放緩。這將導致大馬的收入減少,而政府計劃將財政赤字從5.4%,削減至4.7%的目標或許也將難以達成。「隨著外圍經濟放緩,及即將進行大選,政府將面對支出方面的壓力,因此,財政赤字有可能超越預期。」

Source/转贴/Extract/Excerpts: Oriental Daily
Publish date: 16/10/11

2011 胡立陽老師 在播放 李南 新浪播客




Source/转贴/Extract/Excerpts: youtube
Publish date: 10/10/11

2011-1010-57金錢爆(十月圍城)



Source/转贴/Extract/Excerpts: youtube
Publish date: 10/10/11

傳委投行進行企業活動‧楊忠禮或私有化

傳委投行進行企業活動‧楊忠禮或私有化
Created 10/15/2011 - 19:17

(吉隆坡15日訊)楊忠禮集團據傳委任本地投資銀行進行潛在企業活動,不排除涉及私有化或換股活動,以重新調整集團的業務營運。

目前無法掌握企業活動的詳情,不過市場人士相信可能包括私有化或換股計劃;一旦涉及私有化活動,楊忠禮置地(YTLLAND,2577,主板產業組)及楊忠禮電力(YTLPOWR,6742,主板基建計劃組)將是潛在目標。

分析員表示,以當前的估值計,楊忠禮置地及楊忠禮電力都已遭低估,而董事經理丹斯里楊肅斌也曾透露會將遭低估的公司私有化。

“根據估算,楊忠禮集團須以6倍債務營運盈利比來私有化楊忠禮電力,低過基準的7倍,後者每年帶來12億至13億令吉現金。”

馬銀行研究對楊忠禮電力潛在被私有化並不感到驚訝,因其估值已寫下2003年5月以來的新低,至於楊忠禮置地的誘人之處則在於其地庫位於策略性地點。

楊忠禮機構(YTL,4677,主板貿服組)持有楊忠禮置地及楊忠禮電力各57.9%及51.72%股權。

楊肅斌早前表示,楊忠禮機構擁有120億令吉現金,可放眼大型的併購計劃。



Source/转贴/Extract/Excerpts: 星洲日報
Publish date: 15/10/11

CapitaRChina Q3 distribution income rises

Business Times - 15 Oct 2011


CapitaRChina Q3 distribution income rises

Quarter's DPU climbs to 2.12 cents as new mall helps lift revenue

By CONRAD TAN

CAPITARETAIL China Trust's third-quarter income available for distribution rose 12.3 per cent to $14.6 million, buoyed by contributions from a recently acquired mall and higher revenue from its other malls.

Distribution per unit for the quarter rose to 2.12 cents, from 2.08 cents a year ago. Its revenue rose 13.7 per cent year-on-year to $33.8 million for the July-September period, while net property income increased by 13.8 per cent to $21.7 million. In yuan terms, gross revenue rose by 21.6 per cent, or 31.7 million yuan, to 179.0 million yuan.

Its revenue was lower than forecast when measured in Singapore dollars, due mainly to a stronger Singapore dollar against the yuan when compared with the rate used in the forecast. The Q3 revenue jump was due mainly to a 13.6 million yuan contribution from CapitaMall Minzhongleyuan in Wuhan, the property trust's newest mall, which was acquired on June 30.

Still, on a comparable portfolio basis, the trust's net property income grew by 13.4 per cent in yuan terms, demonstrating its ability to generate organic growth from its malls, said Tony Tan, chief executive of the trust's manager.

The trust's portfolio now comprises nine shopping malls in China - four in Beijing and one each in Shanghai, Zhengzhou, Huhhot, Wuhu and Wuhan. Its total asset size at end-September was some $1.4 billion.

Tenant sales at the trust's five multi-tenanted malls rose by 21.1 per cent year-on-year in Q3, Mr Tan said. 'We continue to register strong rental reversion of 11.9 per cent across the portfolio this quarter.'

For the nine months to end-September, distribution per unit was 6.42 cents, compared to 6.29 cents last year.

Gross revenue for the January-September period rose 7.4 per cent to $95.4 million, compared to last year, while net property income increased 8.3 per cent to $63.0 million.

'China's economic fundamentals remain strong and we continue to be positive on our prospects in China,' Victor Liew, chairman of the trust's manager, said. 'China continues to be a key market for international and domestic retailers.'

The trust's units last traded at $1.17 yesterday before the results were announced, unchanged from Thursday's closing price.



Source/转贴/Extract/Excerpts: www.businesstimes.com.sg
Publish date: 15/10/11

Sing dollar hits a high against greenback

Business Times - 15 Oct 2011


Sing dollar hits a high against greenback

MAS reduces slope of S$NEER policy band with no change to band's width and centering

By EMILYN YAP

THE Singapore dollar rose to its strongest level in three weeks against the US dollar after the Monetary Authority of Singapore (MAS) released its half-yearly monetary policy statement yesterday.

It reached 1.2702 per dollar at 7pm to post a 0.6 per cent gain from the previous day, according to Bloomberg data. It had risen by as much as 0.8 per cent during the day's trading.

Although MAS signalled a slower pace of increase for the Sing dollar by reducing the slope of the Sing dollar nominal effective exchange rate (S$NEER) policy band, its continued pursuit of 'modest and gradual appreciation' encouraged some to take long positions in the currency.

Most economists had seen the move by MAS coming. But some were counting on much looser conditions ahead, either in the form of a zero per cent appreciation path for the policy band or a downward shift of the entire band.

'With the monetary policy of a gradual appreciation and current improvement in risk appetite, buying back of SGD is taking place and we expect SGD to firm against the USD in the near term,' said UOB economist Chow Penn Nee.

'However, the outlook still remains very much unclear, with the SGD direction depending very much on external developments in the eurozone and US. Given that the policy decision was in line with our expectations, we are maintaining our USD/SGD forecast at 1.29 for end-2011, with very slight strengthening to 1.28 at end-Q1 2012.'

The easing in monetary policy came after three consecutive tightening moves since April 2010 and demonstrated concerns over weak growth prospects.

The global economic outlook has 'deteriorated sharply' with increased uncertainty in financial markets, MAS said. As final demand from advanced economies softens, growth in Asia will slow and Singapore's economy will expand more slowly next year, it added.

The potential moderation will lead to lower inflation, but not yet. Headline inflation was 5.6 per cent in July-August, up from 4.7 per cent in the second quarter on the back of higher COE premiums and imputed rental costs of owner-occupied housing.

Strong rents and firm private road transport costs mean that headline inflation 'will be elevated for the rest of this year before easing, especially in the second half of 2012', MAS said. It expects headline inflation to come in at around 5 per cent this year and 2.5-3.5 per cent next year.

MAS highlighted yesterday that core inflation 'better reflects underlying price pressures' and is the 'most relevant' among the range of indicators it monitors in setting monetary policy.

Core inflation, which excludes private road transport and accommodation costs, was 2.2 per cent in Q2 and the first two months of Q3, higher than Q1's 1.9 per cent. It should gradually drop from an estimated 2.3 per cent in Q4 this year to 1.5 per cent at end-2012, MAS said.

'The ongoing slowdown in domestic economic activity will reduce tightness in the labour market and alleviate price pressures. Inflationary pressures emanating from abroad should also subside,' it said.

Considering the various factors, MAS reduced the slope of the S$NEER policy band with no change to the width of the band and the level at which it is centred. Economists estimate that the pace of appreciation could have dropped by 1-2 per cent per annum.

Central banks in Asia are walking a tightrope between slowing economic growth and persistent inflation. On Tuesday, Bank Indonesia surprised market watchers with a 25 basis point cut to its benchmark policy rate to a record low of 6.5 per cent, in order to mitigate the impact of declining global economic and financial performance on Indonesia's economy.

Bank of Korea kept its benchmark base rate unchanged at 3.25 per cent on Thursday, but noted that downside risks to growth have heightened.



Source/转贴/Extract/Excerpts: www.businesstimes.com.sg
Publish date: 15/10/11

Q3 growth blip comes with sobering message

Business Times - 15 Oct 2011


Q3 growth blip comes with sobering message

MTI and MAS signal growing economic headwinds; 2011 growth forecast downgraded to 5%

By CONRAD TAN

THE government yesterday lowered its growth forecast for this year to 5 per cent and warned of difficult times ahead, even as the economy expanded more than expected in the third quarter. In a widely anticipated move, the Monetary Authority of Singapore (MAS) said that it would slow the pace of appreciation of the Singapore dollar against other currencies to support growth amid the worsening economic outlook.

Statements from both MAS and the Ministry of Trade and Industry were decidedly downbeat. 'With the weak external environment likely to persist, the Singapore economy will expand more slowly in 2012 and growth could be below its potential rate of 3-5 per cent,' MAS said.

The economy is expected to grow by just 5 per cent this year, down from the 5-6 per cent growth forecast in August, the Ministry of Trade and Industry (MTI) said.

Singapore is likely to face weaker economic growth in the next few years as the world economy slows, Finance Minister and MAS chairman Tharman Shanmugaratnam said on Tuesday.

Advance estimates yesterday show that the economy grew by 5.9 per cent year-on-year in the third quarter, higher than the one per cent growth in Q2. Compared to the previous quarter, economic output in Q3 grew at an annualised pace of 1.3 per cent, adjusted for seasonal variation, after shrinking at an annualised pace of 6.3 per cent in Q2.

That was better than many economists had hoped for. Some had expected gross domestic product (GDP) to contract for a second straight quarter in Q3. But the GDP growth in July-September was mainly due to a surge in biomedical manufacturing output, which is notoriously volatile. That boost to growth is unlikely to be repeated in the next few quarters, analysts said.

'We expect a rough patch ahead for the economy,' DBS economist Irvin Seah said. 'The fact that the biomedical segment is the only factor keeping overall industrial production afloat is not particularly comforting. This industry is highly cyclical.'

The overall manufacturing sector, which contributes about a quarter of Singapore's GDP, expanded by 13.2 per cent year-on-year in Q3, after shrinking by 5.8 per cent in the preceding quarter.

Compared to the previous quarter, manufacturing output grew at an annualised 8.9 per cent, against a 23.7 per cent decline in Q2.

Electronics output shrank, but the decline was more than offset by the boost from biomedical manufacturing, MTI said.

The construction sector, the next-biggest goods-producing industry, grew by just 0.4 per cent from a year ago, and shrank by an annualised 11.5 per cent compared to the previous quarter, largely due to a decline in private-sector building activities, MTI added.

The services-producing industries, which contribute about three-fifths of Singapore's GDP, grew 3.6 per cent year on year, compared to 4 per cent growth in Q2.

But services activity shrank by an annualised 0.7 per cent compared to Q2, due to lower levels of activity in transport & storage and financial services.

Growth for the rest of the year could be weighed down by softening global economic conditions, MTI said. It expects electronics output to remain weak as demand worldwide eases, while financial services activity may be hurt by the uncertainty in financial markets and the poor global economic outlook, it added.

'Most of the growth drivers are weak,' OCBC economist Selena Ling said. 'While biomedical manufacturing could provide some near-term support to growth, it is akin to flying an aeroplane with only one engine.'



Source/转贴/Extract/Excerpts: www.businesstimes.com.sg
Publish date: 15/10/11

Yangzijiang, open up on micro-lending

Business Times - 14 Oct 2011


Yangzijiang, open up on micro-lending

By LYNETTE KHOO

THE slew of corporate failures in Wenzhou, China's entrepreneurial hub in Zhejiang province, has sparked fears that the informal lending bubble has burst. One S-chip that has docked itself into this shadow banking sector and could potentially be pulled down by the ebbing tide is Yangzijiang Shipbuilding.

For now, the actual impact on the group remains unclear because the company has not given clear signals publicly.

Once a company engaged purely in shipbuilding and ship repairing, Yangzijiang ventured into micro-financing last year through a 51 per cent stake acquisition in Jiangsu Runyuan Rural Microfinance Co.

It has also invested 10 billion yuan (S$2 billion) into held-to-maturity products issued by Chinese banks and trust companies, which are used in the financing of Chinese corporates and entities.

Greater clarity

All of the group's non-core operating income, including cash deposits and forex forward contracts, now account for close to half of its pre-tax profits, based on its latest quarterly results.

Given the string of corporate bankruptcies in Wenzhou and worsening business conditions, there is now a need for greater clarity on these micro-lending and investment activities.

Of particular concern is whether there are risks of default on loans issued by the micro-lending unit and any potential rise in bad debts.

Also, is there any risk of writedowns on the held-to-maturity assets arising from borrowers defaulting? Has the recent dip in the Chinese stock market affected the value of share collateral for these financial assets?

For now, little is known about the risk profile of the micro-lender, with no information on its borrowers' sectors or geographies. It is also unclear if Yangzijiang will make further investments after its existing held-to-maturity products expire.

BT queries to Yangzijiang drew a blank. But clearly, the business environment for lending and investing has taken a turn for the worse since Yangzijiang's foray into non-core activities such as micro-financing.

Its management has described the group's venture into micro-lending as 'purely opportunistic' while its investment into held-to-maturity products was driven by the need to better manage its cash.

Since China started tightening bank credit to cool growth, many cash-rich corporates and individuals have seized the chance to lend at steep rates to small and medium-size enterprises (SMEs) in China, resulting in a grey lending market.

Lending at higher-than-official rates has proven to be very profitable. According to Societe Generale, non-core lending operations accounted for one-third of the profits of several non-banking Chinese companies in the recent half-year results.

But the latest slew of corporate failures in Wenzhou shows that the informal lending market was a ticking time bomb. Analysts had flagged that it was impossible for corporate margins to keep up with the hefty interest rates of non-banking loans, which could be as high as 70 per cent.

And such risks in China's shadow banking industry aren't confined to just one city. Economists are warning that the Wenzhou crisis could be the beginning of a much larger wave of corporate bankruptcies across the country.

It is unclear if Yangzijiang's micro-lending unit is affected at all by a potential rise in loan defaults or an interest rate cap imposed by the Wenzhou government. Neither is it clear if its held-to-maturity investments have taken a hit.

No one will be any the wiser because the company has chosen to keep mum on the subject. But silence shouldn't be the approach to adopt, especially when these non-core activities are increasingly becoming a major part of the group's business.

While earnings contribution from the micro-lending business is not significant yet, there are signs that the group is interested in raising its exposure to micro-lending.

Just last month, Yangzijiang acquired a 31.5 per cent stake in another micro-lender, Wuxi Runyuan Technology Microfinance - a licensed lender to small/mid technology enterprises - for 94.5 million yuan.

In addition, the group also holds a 20 per cent stake each in two Chinese venture capital funds to provide seed funding to start-ups.

Risk profile

These non-core operations have certainly changed the risk profile of the group and investors are no longer buying into a pure shipbuilding company. Greater transparency on these non-core businesses is hence required and expected of the group.

And with the informal lending market in China potentially morphing into a sub- prime crisis of its kind, it is imperative for Yangzijiang to shed some light on its lending activities. This would help shore up investors' confidence for the counter in a market fraught with much uncertainty. It's one area that no doubt warrants some probing at the next shareholders' meeting.


Source/转贴/Extract/Excerpts: www.businesstimes.com.sg
Publish date: 14/10/11

Notion : Staying afloat (Hwang)

Notion VTec
BUY RM1.69
Price Target : 12-Month RM 2.10 (Prev RM 2.50)

Staying afloat
• Flooding in Thailand could drag FY12F earnings, but NVB could try to secure contracts from affected MNCs
• Cut FY11E-12F earnings by 6%-19% on weaker camera sales
• Downside capped by attractive valuation & strong balance sheet; cut TP to RM2.10, maintain Buy

Thailand floods may be blessing in disguise. Ayutthaya is one of several Thailand provinces affected by severe flooding recently. This has forced NVB and its key camera customer to temporarily shut down their plants. We understand the impact is minimal on NVB because its Thailand plant contributes <3% of Group revenue (FY11E). Additionally, NVB is insured against damage caused by flood on property, plant and equipment. However, we think the flood could adversely affect NVB’s Camera division due to potential order loss from its major customer, whose plant was also shut down. Given that it is an established manufacturer of SLR camera and HDD components, the flood turn out to be an opportunity for NVB to gain new contracts from MNCs in Thailand which components supply had been disrupted.

Cut FY11E-12F by 6%-19%. We cut FY12F Camera division revenue to factor in lower sales due to flooding and lower expectation for sub-assembly of SLR lenses (currently averaging 3k units/mth). We also nudged down sales of 2.5” base plates for FY11E (previous estimate too optimistic).

Downside capped by attractive valuation & strong balance sheet; maintain Buy with lower RM2.10 TP. NVB’s share price has fallen 26% from its peak in Apr11 (RM2.28). We attribute this to Japan’s twin disasters that disrupted the supply chain and shaky global fundamentals weakening consumer demand for electronic products. We think NVB has been oversold given its attractive valuations now at -1.5 SD of its mean PBV multiple (vs trough -2 SD) and trading below book. Our revised target price is pegged to 7x PE (between mean and - 1 SD). Moreover, a strengthening USD vs RM may be a relief to NVB because of its high USD exposure

Highlights
Flooding in Thailand - boon or bane? Seasonal rains that are heavier-than-usual have caused widespread flooding in some provinces in Thailand. This includes Ayutthaya, where NVB and its key camera customers’ plants are located. NVB has c.30 units of CNC machines in the plant. Both NVB and its key customers have shut down their plants temporarily. The extent of damage and losses is not available currently, but NVB has insurance coverage against damage caused by flood to property, plant and equipment.

The flood will likely affect NVB’s Camera division because of lost orders. But given NVB’s entrenched position in SLR camera and HDD component manufacturing, this might be an opportunity for NVB to gain new contracts from MNCs in Thailand which supply chain had been affected. This could
be a win-win situation for NVB and MNCs in Thailand, as NVB would get to use up its excess capacity, which is 20- 30% of its total 1,200 units of CNC machines in Malaysia. Potential new contribution from Auto/Industrial division – a small positive. We expect NVB to secure some new customers for its Auto/Industrial division (contributed c.17% of Group FY10 revenue), with maiden contribution in early- 2012 (RM5-10m revenue p.a.). This is expected to partially mitigate potential earnings loss at its Camera division.

Cut FY11E-12F earnings by 6-19%. We lowered our revenue assumptions for the Camera division, mainly to factor in potentially lower sales due to the flooding in Thailand, as well as lower expectation for sub-assembly of SLR lenses (currently averaging 3k units/mth). We also nudged down our sales assumptions for 2.5” base plates for FY11E (previous estimate too optimistic).

Expect better 4QFY11 earnings QoQ. NVB is expected to announce its 4QFY11 result in the third week of November. Based on our revised FY11E earnings, we expect 4Q earnings to register c.RM11m net profit (+11% QoQ) on the back of RM60m revenue (flat QoQ). But this momentum is unlikely to be sustainable in 1QFY12F.

Key Risks
Global recession, which could dampen demand for consumer electronics like personal computers, notebooks, and SLR cameras (consumer discretionary of higher up the value chain, costs about four times more than compact cameras).

Fluctuations in forex rates. The USD is NVB’s major operating currency, with c.90% of its sales and 25% of total costs denominated in that currency. As a rule of thumb, NVB normally hedges c.50% of Group receivables if the USD rate is expected to trend lower than the quoted rate for its selling prices. In order to reduce its USD exposure, NVB plans to increase its RM-based revenue by selling aluminium ingot (grade ADC12), which is processed from aluminium scrap. We understand that total investment is minimal at c.RM3m. It is currently in pre-production trial run and expected to be commissioned in Dec11.

Valuation
Downside capped by attractive valuation and strong balance sheet; maintain Buy with lower RM2.10 TP. NVB’s share price has fallen 26% from its peak in Apr11 (RM2.28). We attribute this to the disrupted supply chain post-Japan disasters and shaky global fundamentals forcing consumers to cut back on discretionary (more expensive) electronic products. We think NVB has been oversold given its current attractive valuations at -1.5 SD of its mean P/BV multiple ( compared to its trough of -2 SD in early-Apr09) and trading below book..


Source/转贴/Extract/Excerpts: HWANGDBS Vickers Research
Publish date:14/10/11

The chips are still down (CIMB)

The chips are still down

The sector catalyst, demand recovery, is nowhere in sight. The external environment continues to deteriorate, there is risk of excess inventory, competition is on the rise and capital spending is heading south.


The headwinds buffeting the sector point to increased earnings risks, leading to cuts in our earnings, target prices and calls for both Unisem and MPI from Neutral to Underperform. The sector is downgraded from Neutral to UNDERWEIGHT.

Demand recovery nowhere to be seen
We expect a weak 3Q and 4Q as demand is unlikely to recover in these two quarters. It has in fact replaced supply fears following the impressive recovery efforts in Japan. Utilisation rates are unlikely to improve materially for Unisem in 3Q and 4Q. Meanwhile, MPI has also guided for a fairly tepid 3QCY11.

Deteriorating external environment
We believe that demand will also be weighed down by the external environment. Our economics team has cut its 2011-2012 GDP forecasts for the second time since Aug to reflect the financial strains and falling stock prices. The US recovery remains sluggish, reflecting the deteriorating financial conditions. In Europe, the ongoing debt crisis is expected to drag the stalled growth into a sharp slowdown in 2H11, pushing it into recession in 2012.

Other headwinds
With demand heading south, excess inventory has been growing to elevated levels, triggering concerns. Also, competition is stiffening as giants in the packaging and test sector and foundry business are encroaching into Unisem’s and MPI’s space. The perennial bugbear of the currency and elevated raw material cost remains an issue although there has been some reprieve of late. Customers of Unisem and MPI have also cut their sales forecast.

1. BACKGROUND
1.1 Dismal times
The semiconductor sector has been blighted by seasonality, slower demand, negative operating leverage and the unfavourable external environment for 1H11. In Aug, chip sales inched up 0.7% mom, driven by strong demand from tablets and PCs, higher sales in Japan due to recovery efforts and output from fabrication facilities and the increased semiconductor content in cars. The growth in tablets and PCs is encouraging but lower consumer and industrial demand from a wide range of products is keeping overall sales lower than expected at this point.

The share prices of both Unisem and MPI reflect the companies’ earnings performances, which have been poor. Unisem’s share price has underperformed, plunging 46% compared to the 6% fall in the benchmark index as its earnings disappointed investors in the first two quarters of the year and the industry is going through a softer patch. MPI’s share price has also underperformed the market, falling by 43% on a YTD basis, largely because of its disappointing earnings in the first two quarters of the year and the overall sluggishness for the sector. The KLTEC Index has fallen by a smaller 30% compared with the two tech stocks.

2. OUTLOOK
2.1 Turning more negative
We believe that chip sales growth will now range from flat to low single digit given i) the uncertain outlook for global economies and rising fears of a double-dip recession, ii) uncertainty over demand recovery, iii) households’ indebtedness and more cautious spending, and iv) the high unemployment rates that will dampen consumer spending. This is in spite of strong product cycle launches for a range of smartphones including the iPhone 4S, the slew of media tablets and increasing electronic content in auto sectors given the string of safety regulations being implemented by advanced economies.

Market researchers have turned more bearish as well, cutting their projections for 2011 and 2012 as they are still concerned about slowing demand, weak economic conditions, consumer pessimism, the build-up of excess inventory and overcapacity.

2.2 Demand is now the key question
Demand is now the key concern in the sector as supply fears recede into the background given the admirable recovery and reconstruction efforts going on in Japan. Both Unisem and MPI have cautioned that 3Q will be fairly muted as visibility remains poor.

Unisem’s utilisation rates have fallen to the 60% range for the first two quarters of this year, as shown by Figure 3, exacerbated by falling demand resulting from the turbulence in the global economy demand. In addition, the effect from the earthquake manifested itself in late 1Q/early 2Q which added to the headwinds in the sector. That said, the picture is partially distorted as Unisem is aggressively adding capacity which pulled down the average utilisation rates.

We understand from our recent conversation with Unisem that there is not that much upside to 3Q and 4Q relative to 2Q as order flows have remained weak and customers continue to be cautious. Utilisation rates are expected to hover around the 60% mark for the next two quarters. Even in China, which is expected to be the main growth engine, order flows from existing customers have fallen and many are waiting until 2012 to provide more bullish forecasts. That said, we gather that the loading for its tier-1 customer has commenced and the customer has not cut back on its ramp schedule although it is coming from a low base.

Similarly, MPI does not expect a dramatic recovery in 3QCY11 as the market has been modest given the economic troubles and the remaining overhang from the Japan earthquake. Visibility remains hazy and although MPI had not ruled out a burst of activity in Sep/Oct, we regard this scenario as less likely given the poor economic outlook and tepid consumer spending

2.3 External environment deteriorating
Our economics team sees significant downside risks in the US and eurozone economies as the sharp sell-off in equities and abrupt tightening of financial conditions would eventually exert prolonged downward pressure on the real economy, leading to a sharp retrenchment in household spending and business investment. A range of global indicators shows a significant increase in the downside risk to global growth thereby pushing the global economy to the brink of a recession, as seen in 2009.

Growth estimates cut as external uncertainties mount. Our economics team has cut their 2011-2012 GDP growth forecasts for advanced economies and emerging Asia for the second time since Aug to reflect the ripple effects of the heightening financial strains and falling stock prices on the household and business sectors. For 2012, the base case scenario is a continuation of sluggish growth in the US and a recession in the euro area, the epicenter of the debt crisis.

US recovery remains sluggish. The recent data points for the US economy have been mixed indicating a continuation of sluggish growth. Consumers have been reeling from the pressures of falling housing and stock prices and the high unemployment rate. The anaemic job growth and the sustained rise in jobless claims is a worrying sign as bleak labour market conditions will continue to cripple consumer spending growth. Our economics team has cut their GDP growth forecast for the US to 1% (from 1.5-2% before) for 2011 and 0.8% for 2012 (from 1-2% previously) due to faltering business and investor confidence. The worst case scenario is a contraction of 0.8% for 2012.

Eurozone in recession mode. The deepening ongoing debt crisis is expected to drag the already stalled growth in the euro area into a sharp slowdown in 2H11, pushing it into recession in 2012. Sovereign debt troubles have quickly spread across Europe. Our economics team has cut the GDP growth in eurozone from 1-1.5% to 0.7% for 2011 and expects a contraction of 0.8%, reflecting the full-blown impact of the financial strains.

2.4 Mixed signals from customers and major tech firms
Subdued guidance from customers. Most of Unisem’s and MPI’s customers are fairly cautious about 3Q even though this is traditionally a strong quarter.
- Intersil has in its mid-quarter guidance lowered its revenue projection for 3Q to a drop of 10-12% from a -2% to +2% growth in topline first announced in its 2Q results as demand has been weaker than expected in all of its end markets and there is some excess inventory.

- Another of Unisem’s soon-to-be-qualified customers has forecast a qoq revenue contraction of 0-6% for 3QCY11 due to increasing uncertainty in many parts of the global economy.

- ST Microelectronics expects qoq growth of -5% to +2% for revenue for 3Q as it is cautious given the unclear economic conditions in certain countries.

- Texas Instruments in its mid-quarter update revised its guidance for 3QCY11 to a drop of 3-7% on a qoq basis compared to the earlier guidance of -2% to +7% growth. This is due to broadly lower demand across a wide range of products, markets and consumers.

- Micrel is projecting a -4% to +3% topline growth in 3Q11 on a qoq basis. The overall weakness it is seeing so far is split evenly across all markets, leading it to believe that it is overall macroeconomic conditions rather than any particular weakness in any particular end market.

Tech majors also reporting weaker-than-expected numbers. We provide a snapshot of some of the tech majors’ performance and guidance.

- TSMC posted a drop of 11.3% in sales on a mom basis in Sept due to rush orders in Aug. Its chairman said that sales are expected to remain flat in 4Q compared to 3Q. He noted that the global economy is unlikely to have a turnaround from now to 2013 amid concerns over fundamentals in US and Europe and China is also fighting inflation by tightening liquidity which will also impact economic growth.

- Despite the weaker PC segment, Intel posted very strong 2Q results, with revenue surpassing US$13bn, driven by growth in the data centre business, rapid growth of embedded business, continuing enterprise PC refresh and growth of the emerging markets. It is seeing relative strength in enterprise and emerging markets but softness in the consumer segment. It is still expecting a seasonal uptick in 2H11. Intel believes that the PC unit growth will be around 8-10% for 2011, down from its earlier guidance due to weakness in the netbook segment.

- UMC forecasts a decline of 10-12% on a yoy basis for revenue, driven by lower volume with capacity utilisation ranging in the 70% mark. The consumer and computing segments are expected to outpace the communication sector. UMC remains cautious, noting that customers have adjusted order patterns to consume elevated inventory levels due to overstocking after the earthquake. This will offset the traditionally high-demand 2H season. It also posted fairly disappointing sales numbers for Sept as it fell 0.3% on a mom basis and 25% on a yoy basis. It is expected to record a 5-10% qoq drop in sales in 4Q.

- IBM delivered 12% yoy growth in topline for 2Q, fuelled by transactional businesses in hardware and software. It has raised its operating EPS forecast by US$0.10 to at least US$13.25. It has been executing its growth market strategy, building IT infrastructure and focusing on leadership in certain industries.

- SMIC has warned that the overall demand for both international and domestic consumer is weaker than expected due to the relatively weak end-market consumption and the high inventory. This will have an adverse impact on its 3Q revenue although it did not quantify the amount. The visibility for 4Q is limited and the overall global economic outlook contributes to the uncertainty. As it does not see any particular strength in the back-to-school sales or from the holiday season, it is more cautious on the overall outlook for 2H11.

- Sony has lowered its full-year sale guidance from ¥7.5bn to¥ 7.2bn due to the deterioration of the electronics market in the US and Europe and the appreciation of the yen.

2.5 Market segments are mixed
PCs – According to Gartner, worldwide PC shipments rose 3.2% yoy in 3Q11, below its projection of 5.1%. The inventory build-up which had slowed growth the last four quarters was mostly cleared in 3Q. However, the PC industry has been performing below normal seasonal patterns, according to Gartner. As expected, the back-to-school PC sales were disappointing in mature markets, reaffirming the weak consumer PC market. The popularity of non-PCs took consumer spending away from PCs.

Phones – The phone market grew by 11.3% on a yoy basis in 2Q11 despite a weaker feature phone market which declined for the first time since 3Q09. The shipment was below IDC’s forecast of 13.3% for 2Q and below 1Q11’s 16.8%. The feature phone market shrank 4% yoy in 2Q11, especially in mature markets as users shifted to smartphones. The feature phone outlook is not expected to improve in any year and will not grow by more than 1.1% in any year, as forecast by IDC.

Media tablets – This segment has been growing very strongly, led by the iPad. iSuppli recently revised upwards its forecast for media tablets as Apple ramps up production at a faster-than-expected pace. The forecast now calls for 60m units to be shipped in 2011, up 2.45x that of 2010. The forecast also now projects tablet shipments to hit 275m units by 2015 compared to its previous forecast of 262m.

Memory – iSuppli has forecast a dramatic oversupply and freefalling prices in 3Q for DRAMs, resulting in a turbulent 2H11 for DRAM suppliers. The ASP for DRAM is projected to fall by 24% in 3Q before a further 22% drop in 4Q10. In 2Q, the industry saw low shipments because of bloated inventory and the transition to new process technologies.

LCD TV – According to iSuppli, worldwide shipments of flat-panel TVs dipped by 1.3% on a qoq basis due to soft demand from consumers and an uncertain global economic climate.

Others – IDC forecasts that the auto and industrial segments, which together represent about 16% of the semiconductor market, will grow by around 5% in 2011 and notch up 8% CAGR in 2010-2015. The auto segment will be driven by increased auto sales worldwide and higher semiconductor consumption. The outlook for LED is negative, according to Gartner, due to a glut in LED, reduction of BLUs per LCD TV, lower demand for PCs and a decrease in ASP for LED lamps. However, the long-term growth prospects remain strong, with LED lighting set for explosive growth in 2012-2015 as it replaces traditional lighting systems, aided by falling prices.

2.6 Excess inventory and book-to-bill
The book-to-bill ratio has been below the 1x mark for the 11 consecutive months. In Aug, preliminary figures showed the book to bill ratio dropping to 0.8x. Weaker DRAM demand, foundry spending reductions and near-term uncertainties over electronics demand are reflected in declining sales trends for new semiconductor manufacturing equipment. The billings are at levels last seen in June 2010. We believe that bookings are unlikely to pick up for the rest of the year unless there is a return of consumer spending. The semiconductor players are also more restrained in their capex given the uncertain economic environment. Given the slowing consumer demand, semiconductor players are bound to withhold further investments for the fear of building excess inventory.

Excess inventory – According to iSuppli, semiconductor inventory in 2Q11 has swelled to levels not seen since the start of the last downturn in early 2008, raising concern over the near-term outlook of chip sales. Inventory turnover rose to 83.4 days, exceeding 1Q08’s record high. This is the first time in 12 consecutive quarters that it has exceeded the 80-day mark. iSuppli expects the inventory correction process to only conclude in mid-2012. Gartner too has forecast that inventory days will plateau in 3Q at worrisome levels given current conditions and the likelihood of weaker-than-expected consumer and business spending. It expects inventory correction in late 2011

2.7 China is the engine of growth
China will be the main engine of growth for the two semiconductor players as they invest heavily in this market and ride on its growth.

MPI – According to MPI, Phase 2 of its Suzhou plant is progressing well as it has reached 70% completion and is expected to be fully completed by end of this year. Production will ramp up in Jan before running at full tilt by 1H12. The Phase 2 expansion will triple the capacity of its existing plant in China. It has secured an anchor customer which will take up a substantial portion of the new capacity. It expects the China plant to contribute about 40% of revenue in the medium- to long-term, up from roughly 12-16% currently. The expansion of MPI’s China plant is designed to provide access to the vast China market while reducing the group’s reliance on China.

Unisem – Unisem too has grand ambitions for its China facility as it hopes that it can contribute about 30-40% of its revenue over the next couple of years compared to the current 25%. Similar to MPI, it has secured an anchor customer that will take up half of Phase 2A. The facility is mostly focused on QFN packages but could cater for wafer bumping technology in future.

China fabless firms – iSuppli noted that the China fabless semiconductor companies in China will generate about US$10.7bn in revenue by 2015, which is slightly more than double the US$5.2bn generated in 2010. For 2011, revenue is projected to grow by 11%. In 2010, the fabless companies benefited from the booming demand for semiconductors used in cell phones. We believe that this strong growth could translate into opportunities for Unisem or MPI although they still constitute a small fraction of the overall semiconductor pie.

2.8 More competition throughout the entire industry?
ASE noted that the global outsourced production value for wire-bonding packaging of low pin-count ICs including logic and discrete ICs will record a CAGR of 19% for 2010-2015. It will use its in-house developed technologies to compete for outsourcing orders for such packaging from IDMs by having costs that are 10-20% cheaper than IDM’s in-house packaging.

On the higher-end front, TSMC has undertaken in-house high-end packaging of ICs produced by its foundry processes for fabless IC design houses in the US and Europe mainly, which pit it against some of the Taiwanese competitors. It focuses on the high-end packaging of ICs including flip chips, chip scale packaging (CSP), and wafer level CSP (WLCSP). That said, no Taiwanese-based IC design house has thus far accepted TSMC’s higher quotes for the packaging services.

We believe that the foundry players and some of the larger test and packaging outfits are encroaching on the territory of Unisem and MPI. This could lead to some pricing pressure and loss of market share. In addition, the attempt by Unisem to move into more advanced packages such as WLCSP (though still a small contributor) would also result in more competition and perhaps less price uplift.

That said, on the positive side, we note that qualification will take time, the customers of Unisem and MPI may be quite niche, the customers also have established relationships with the local test and packaging companies and may have difficulty breaking away, the packages are outside the expertise of the foundries and Unisem is working on securing tier-1 customers.

3. RISKS
3.1 Economy continues to be the wild card
Our economics team sees significant downside risks in the US and eurozone economies. A range of global indicators show a significant increase in downside risk to global growth, thereby pushing the global economy to the brink of recession, as seen in 2009. This remains one of the biggest bugbears for the sector as the economic slowdown in economy is restraining consumer spending and has a knock-on effect on demand and order flows for the semiconductor players.

3.2 Costs are being rebased
Costs are gradually being rebased locally as the government attempts to roll back subsidies and electricity tariffs will be reviewed every six months. We earlier estimated that the rise in tariffs would crimp the net profit of both MPI and Unisem by around 2-4%.
Besides that, the price of gold has been soaring although there has been some reprieve of late. The local semiconductor players have looked at the possibility of following the industry trend of going into copper but their products are not as well suited as they have low pin counts and require less wirebonding. While adders are in place, there is a lag effect, leading to margin compression. The push into copper while lowering margins will also result in less revenue given the lower pricing. In addition, other costs such as labour costs have been creeping up as China has revised its minimum wage on several occasions over the past year or so. Operators have to contend with the constant upward pressure on prices and could perhaps turn to more automation to counter some of these effects.
3.3 Currency and competition
Currency – The perennial challenge is the currency factor although the RM has been weakening. Our currency strategist has revised his projections from RM3.08/US$1 to RM3.30/US$ 1 by year-end. That said, the fluctuating currency is one of the key risks as all of the revenue of the semiconductor players is in US$ while only a portion of costs is in the same currency. The semiconductor players also do not hedge as they prefer not to get burnt or be caught on the wrong end of the hedge.

Competition – There is the very real threat of larger players encroaching on the territory of Unisem and MPI. ASE is now making a bigger push into low pin-count packages, bringing it into direct competition with the two local semiconductor players and leading to more pricing pressure and perhaps a loss of market share. Similarly, foundries are beginning to offer more advanced packages. Although their prices are higher, it introduces more competition into the advanced packages in which Unisem is trying to establish a beachhead.

3.4 Inventory and in-sourcing
Higher inventory. According to iSuppli, the rising inventory days could herald the beginning of a critical inventory adjustment period and one that is reminiscent of the dark days leading to the last recession. This is all the more apparent as the inventory level in 2Q was 11% above the historical seasonal average usually recorded for the period. That said, iSuppli does expect 3Q days of inventory to dip by 2% to 81.3 days as the suppliers recalibrate their inventory and also reduce their capacity utilization.

More in-sourcing. In times of slowing demand, integrated device manufacturers (IDM) are more likely to in-source their own requirements to fill up their own internal capacity. By virtue of being at the back of the value chain, test and packaging players such as MPI and Unisem would be the first to suffer from reduced outsourcing.

4. VALUATION AND RECOMMENDATION
4.1 Downgrading call on sector
The tech sector has gone through swings this year as chip sales were fairly resilient in the early part of 2011 but were dealt a blow by the tragedy in Japan and the slowdown in the world economy. The sector’s malaise is unlikely to lift given the ominous signs for the world economy and lower guidance by many tech majors. Both the local semiconductor players we cover, MPI and Unisem, have also guided for weak near-term earnings for the next two quarters.

We are turning more negative on the sector, which we cut from Neutral to UNDERWEIGHT for several reasons 1) A demand recovery is not imminent as order flows are shrinking and customers are turning more cautious, 2) consumers are increasingly wary about spending given their debt burdens, high unemployment and economic vagaries, 3) the external environment has deteriorated, and 4) investors will be more risk-averse and plump for more defensive sectors. While dividend yields for the semioonductor sector are a healthy 7%, we do not believe that they can compensate fully for the risk of earnings disappointment.

4.2 Downgrading stocks
Downgrade Unisem. In view of the muted guidance for the next two quarters and a flattening utilisation rate, we are now cutting our sales assumptions, which leads to a downgrade of our FY11-13 EPS by 22-32%. We also scale back our target price from RM1.42 to RM1.19 as we widen the discount to its 5-year historical average P/BV of 1.0x from 10% to 20% to factor in the slowdown in demand and also the weak earnings for the next 1-2 quarters.

We downgrade Unisem from Neutral to Underperform in view of our sector downgrade, the uncertainty in demand recovery, lower utilisation rates and growing aversion to cyclicals in this volatile environment.

While the share price has cratered by some 46% YTD and valuations have fallen to all-time lows, we do not see any catalysts and believe that the share price is bound to remain depressed until there are signs of improvement in the global economy and also a recovery in demand.

Downgrade MPI. Similarly for MPI, we chop our FY12-14 EPS forecasts by 28% after cutting our sales and margin assumptions to reflect the weakening earnings momentum, lower utilisation rates and rising cost pressures. We also cut our target price from RM3.75 to RM2.75 to incorporate the earnings changes and as we widen the discount to its 5-year historical adjusted P/BV from 50% to 60% in view of the ongoing malaise within the sector and the limited visibility. We downgrade our call from Neutral to Underperform as it appears to be more vulnerable to lower loadings and there is increasing earnings risk. Like Unisem, MPI’s share price has been on a downward slide. The de-rating catalysts are poor demand and low utilization rates.

Uchi is the broader tech pick. Our top pick is Uchi (Outperform, TP: RM1.67) for its attractive valuations and strong net yields of 8%. The stock may be re-rated if order flow turns out better than expected or if it sees relief to sales and margin pressure.


Source/转贴/Extract/Excerpts: CIMB Research
Publish date: 14/11/10

Unisem: The chips are down (CIMB)

Unisem
Current RM1.22
Target RM1.19
Previous Target RM1.42

The chips are down
We are turning more negative on Unisem as demand has been less than anticipated, utilisation rates are not expected to improve and we are more negative on the sector.

We downgrade Unisem from Neutral to UNDERPERFORM. Earnings are also cut, along with our target price as we now apply a wider discount of 20% (from 10%) to its 5-year historical average P/BV. De-rating catalysts are poor demand and low utilisation rates.

Unexciting sector outlook
We downgrade our sector call from Neutral to an UNDERWEIGHT as the demand recovery is not imminent since order flows are shrinking and customers are growing more cautious. The external environment is deteriorating and investors are becoming more risk averse and plumping for more defensive sectors.

Turning more negative
Our recent conversation revealed that 3Q and 4Q should not see much upside relative to 2Q. Customers have turned more conservative in light of the economic turmoil and order flows have dried up. Utilisation rates are expected to hover around the 60% mark and there is no certainty that demand will recover even in 2012.

Increased competition in the sector
ASE intends to move into low pin-count packaging, encroaching on Unisem’s territory. Similarly, the foundries’ move to offer more advanced packages will lead to heightened competition at a time when Unisem is attempting to make inroads into these segments.



Source/转贴/Extract/Excerpts: CIMB Research
Publish date: 14/11/10

Investing in Singapore Market in Q4




Source/转贴/Extract/Excerpts: CNBC
Publish date:14/10/11

SunREIT Capital receives approval for RM3bil notes programme

The Star Online > Business
Saturday October 15, 2011

SunREIT Capital receives approval for RM3bil notes programme

KUALA LUMPUR: Sunway REIT Management Sdn Bhd said that its unit SunREIT Capital Bhd had received the Securities Commission’s approval to establish a RM3bil medium-term notes (MTN) programme.

SunREIT Capital is a special-purpose vehicle formed specifically for the issuance of the MTNs under the programme whose shares are held by OSK Trustees Bhd on behalf of Sunway Real Estate Investment Trust (SunREIT).

SunREIT Capital is the wholly owned subsidiary of SUNREIT, which in turn is managed by Sunway REIT Management.

HSBC Bank Malaysia Bhd, Maybank Investment Bank Bhd and RHB Investment Bank Bhd are the joint principal advisers and joint lead arrangers for the programme.

The first issue of the programme shall entail RM1.56bil MTNs in nominal value comprising of a few classes.

The programme has an expected tenure of up to 18 years and a legal tenure of up to 20 years.

The proceeds of the MTNs shall be utilised for the purpose of advancing to SunREIT where the REIT Trustee shall utilise such proceeds for financing (including repayment of cash used by SunREIT to part finance) the investment activities of SunREIT or refinancing of its existing and future borrowings for investment activities.

The proceeds will also be used for working capital requirements of SunREIT and to defray expenses incurred in relation to the MTN programme as well as to refinance maturing MTNs on their respective maturity dates.


Source/转贴/Extract/Excerpts: The Star Online
Publish date: 15/10/11

Affordability vs yields

The Star Online > Business
Saturday October 15, 2011

Affordability vs yields

By EUGENE MAHALINGAM
eugenicz@thestar.com.my

Balancing the need for affordable housing with property market speculation


SHANKAR, a 27-year old law degree holder, works as a paralegal with a law firm in Kuala Lumpur and earns below RM2,000 a month. He is currently studying part-time for his Certificate in Legal Practice (CLP).

Shankar and his fiancee, a kindergarten teacher, hope to be able to buy a home by the time they get married later next year. He admits that with both their salaries combined, affording a home in the Klang Valley is indeed a tall order.

Shankar is hopeful that once he is a qualified lawyer (after completing his CLP and once he has been called to the Bar) and earning a better salary, both his wife and him will be able to afford a nice place in the city.

“It is our dream to have our own house,” Shankar says. Both his fiancee and him currently live in their respective parents’ houses, some 50km apart.

Here’s the irony. Once he completes his CLP, but before he can be called to the Bar, Shankar has to do nine months of chambering (pupilage). During that nine months, his salary would actually drop (because he would be hired as a student instead of an employee)!

“It’s how the (legal) industry works, sadly. It does not help that property prices are also very high in the Klang Valley. Sometimes I wonder if we would even realise our dream of buying our own house,” laments Shankar.

Shankar’s plight is shared by many Malaysians with low salaries who, while struggling to make ends meet, are also hopeful of having a permanent roof over their heads – one that they can proudly declare their own.


The residential property market in 2012

It does not help that residential property prices are constantly on the uptrend.

“Property is unique, in the sense that they’re big ticket items that are virtually recession-proof. Today, it’s at one price, tomorrow it will definitely be higher,” says one industry observer.

According to data by the National Property Information Centre (Napic), the price of the “average house” in Malaysia reached RM206,513 in the first quarter (Q1) of 2011. The price increased steadily from the previous four quarters; RM189,604 (Q1 2010), RM194,286 (Q2 2010), RM199,085 (Q3 2010) and RM203,903 (Q4 2010).

“The highest prices were recorded in Kuala Lumpur at RM438,150, Sabah at RM325,676 and Selangor at RM307,586. Johor registered the price at RM147,441 while the lowest prices were noted in Perak at RM127,096, Kedah at RM126,940 and Perlis at RM115,072.

“In Q2 2011, the price of the “average house” in Malaysia increased marginally by 1.1% to RM208,725. Kuala Lumpur continued to record the highest of all house prices at RM442,864,” said JPPH.

Next year, property price increases are expected to continue in Malaysia, albeit at a lower rate, due to rising inflation and slower economic growth.

Citigroup in a recent report says global economic growth (at current exchange rates) is expected to slow from 4% last year to 3% this year to 2.9% next year. This was a downward revision from its forecast last month of a 3.1% growth for this year and 3.2% for next.

Property consultancy DTZ Nawawi Tie Leung Sdn Bhd executive director Brian Koh reckons that housing prices could increase 4% to 5% “across the board” next year.

“We expect a soft landing of property prices next year due to rising inflation. Furthermore, people are more cautious (about their spending),” he says.

“After strong increases in property in the last two years, especially within the Kuala Lumpur area, we expect price increase to be more gradual next year,” Koh adds.

Property consultancy, VPC Alliance (KL) Sdn Bhd managing director James Wong says he does not expect the outlook for the local housing sector next year to be as vibrant as it is this year.

“The economy is facing a slight slowdown and disposable income will be less. This explains developers’ push to launch as many projects as possible.

“Next year, we are expecting less recorded transactions and launches within the primary housing market.”

With fewer launches in the primary housing market, many buyers will look to the secondary market, Wong says.

Real Estate and Housing Developers’ Association Malaysia (Rehda) in a recent briefing says it is “cautiously optimistic” of the housing market outlook in the first half of next year despite a marked increase in building material and labour costs as well as a slowdown in economic activity.

Respondents to a Rehda survey reveal that developers are more optimistic about the second half of this year than the first half of next year. Most respondents said prices would likely rise by up to 20% in the second half of this year, with 47% of respondents planning to increase selling prices by at least 15%. The survey showed that launches in the period were equally split between strata-titled and landed properties.

At the briefing, Rehda president Datuk Seri Michael Yam reportedly said the industry was concerned about how the local economy would be affected by external forces including the pressure on the sovereign debt ratings of Malaysia’s developed market trading partners.

Research houses, meanwhile, have started to downgrade the property market.

HwangDBS Vickers Research in its recent research report says there are signs of property sales slowing down, due to less mortgage applications and approvals (due to banks becoming stricter with financing margins), developers delaying launches and buyers cancelling bookings.

“Mortgage approvals and applications eased from July to August 2011, after hitting record highs in June,” it said. However, for the first eight months of 2011, mortgage approvals and applications grew 25% and 10% respectively year-on-year, which was still ahead of the total banking sector average of 20% and 4% year-on-year respectively.

The research house also says it sees a risk to Malaysia’s economic growth amid the current global financial malaise.

“As property sales correlate strongly with GDP (gross domestic product) growth, demand will likely weaken going forward, which could dampen property prices. If there is a recession (in 2012) property sales could drop by 10% year-on-year on lower volume sales and average transacted prices.”


The need for more affordable housing

With rising inflation and spending power being curbed, the chances of people like Shankar are a little bleak. Fortunately for people like him, there is the My First Home Scheme (MFHS). Launched by the Prime Minister in March, the scheme allows 100% financing for first-time house buyers earning less than RM3,000 a month to purchase homes below RM220,000.

The limit was increased to RM400,000 by Budget 2012, with joint loans between spouses. This comes into effect next January.

“Increasing the amount will allow both of us to apply for our dream home,” says Shankar, who is happy with the Government’s recent budget announcement.

According to reports, seven areas within the Klang Valley have been identified under the scheme, namely Damansara, Cyberjaya, Putrajaya, Shah Alam, Puchong, Rawang and Klang.

“The MFHS is a good move, so is the move to increase the price of the homes to RM400,000 from the previous cap of RM220,000,” says VPC’s Wong.

According to Napic, more than 214,000 transactions took place in the property market in the first half year of this year. Of that number, the majority (66% or 142,600 transactions) was made up of properties priced below RM200,000. Just 10% (or 22,500 transactions) were properties priced at more than RM500,000.

“With the bulk of transactions below RM200,000, the MFHS is timely,” says one industry observer. The scheme has also received criticism – opponents have argued that RM400,000 is deemed too high to be considered as “affordable housing.”

“RM400,000 is too high for a first-time buyer. We need affordable housing at sustainable prices. The scheme doesn’t send out the correct message,” one industry observer says, while another analyst says he is supportive of the move to increase the limit to RM400,000.

“It would encourage more developers, especially renowned ones, to build properties for first-time buyers. They may be put off from buying homes worth RM220,000 and below, especially with higher raw material prices.”

Some developers have, however, expressed intention to develope mass housing projects. Mah Sing Group Bhd earlier this month announced plans to launch linked beginner homes, with prices estimated to begin from RM390,000 in Rawang by as early as the first half of next year.

Earlier this year, SP Setia Bhd also proposed to purchase 1,010.5 acres in Ulu Langat, Selangor to build starter homes priced from RM300,000.


Curbing speculative prices

Budget 2012 also proposed that a real property gains tax (RPGT) of 10% be applied to properties held and disposed of within two years. Meanwhile, the rate of 5% will be maintained for properties sold within the third, fourth and fifth years after purchase.

The current RPGT, imposed after Budget 2010, is 5% for all properties sold within the first five years of purchase. Following the budget announcement, industry observers opined that the 5% increase in the RPGT, for units sold within the first two years after purchase, would have little impact on speculative activities in the property market and escalating house prices.

“The minimal increase is unlikely to curb speculation,” says an analyst.

Wong concurs: “The 10% imposed is not much as it is only imposed on the gains and is a manageable quantum.”


Source/转贴/Extract/Excerpts: The Star Online
Publish date: 15/10/11

Boost from KL International Financial District

The Star Online > Business
Saturday October 15, 2011

Boost from KL International Financial District

THE Kuala Lumpur International Financial District (KLIFD) is a key enabler to strengthen the position of Kuala Lumpur as the global financial city of choice, transforming Kuala Lumpur into an international hub for banking and finance as well as related professional services.

KLIFD has been identified by the Government as an Early Entry Point in its comprehensive Economic Transformation Programme to more than double per capita income by 2020. The Government wholly owns 1Malaysia Development Bhd (1MDB), the master developer for KLIFD.

The RM26bil project is located in the heart of Kuala Lumpur’s southern tip. It sits on 75 acres encompassed by Jalan Tun Razak, Jalan Sultan Ismail and the Putrajaya elevated highway. It will be overseen by 11 local and foreign consultants appointed by 1MBD to push forth its development.

In March, 1MDB carried out a pre-qualification and request for proposal process through its subsidiary 1MDB Real Estate Sdn Bhd.

Among the selected local companies are traffic management consultant Perunding Trafik Klasik Sdn Bhd, quantity surveyor Perunding NFL Sdn Bhd, landscape architect Akitek Jururancang Malaysian Sdn Bhd and land surveyors Jurukur Perpaduan Sdn Bhd and Jurukur ESA Sdn Bhd.

The infrastructure engineering consultants are EDP Consulting Group Sdn Bhd and Buro Happold Consulting Engineers, a UK and US consultant which also acts as KLIFD’s sustainability consultant.

Others include security and risk engineers ARUP Jururunding Sdn Bhd (from Malaysia) and Hong Kong-based ARUP Group International. A consultant from Qatar, KEO International Consultants, has been selected as programme management adviser.

The appointments are in addition to the two master planners, Akitek Jururancang Malaysia Sdn Bhd and Machado Silvetti & Associates, recently selected from an international design competition.

1MDB owns the 30.35ha on which the KLIFD will be developed. The entire financial district is slated to be completed in two decades, with its first phase operational by 2016.

Under Budget 2012, to accelerate the development of the KLIFD, the Government will offer income tax exemption of 100% for a period of 10 years.

Also, property developers in KLIFD will benefit from income tax exemption of 70% for a period of five years.


Source/转贴/Extract/Excerpts: The Star Online
Publish date: 15/10/11

The global effect on property

The Star Online > Business
Saturday October 15, 2011

The global effect on property

By THEAN LEE CHENG
leecheng@thestar.com.my

THE signs of the times are here, and they are not unique to Malaysia. The concerns about the global economy are real. Whether one is an avid property watcher or a young person considering a downpayment on one's first home, there are certain things to take into account.

Says property consultant and valuer Elvin Fernandez of the Khong & Jaafar group of companies: “It is clear and becoming clearer by the day that the growth will slow down because it cannot keep up with just continuous stimulus around the world. Whether this state of affairs will continue depends on how sales fare as we complete this year and move into next. It is also clear that volatility will continue into the new year, which explains why developers are revamping their plans and changing strategies.”

Analysts have downgraded the property sector or had a negative outlook on it after they noted that average take-up rates of launches by property developers dropped from 80%-90% a year ago to a forecast 50%-65% in the second half of this year.

To understand what is going on in our current property market and to get some pointers about its future direction, we need to look back a little.

When property prices began to inch upwards in the second half of 2009, in the wake of the fall of Lehman Brothers in September 2008, there was cheer all round. But as prices continue to escalate into the first half of 2010 and then the second half, property watchers and buyers began to take note of the ballooning values in the landed property sector. The momentum shifted to high-rise, although to a lesser degree.

In response, developers fast-tracked their launch programmes. Some were quick enough to launch products in the second half of 2010, while many of the rest were able to do so this year.

Housing Buyers Association vice-president Brig-Gen (R) Datuk Goh Seng Toh said: “People bought in anticipation of higher prices later on.”

This situation of “buying before price goes up further” is evident not only in the Klang Valley but was especially so on Penang island.

Says Real Estate & Housing Developers' Association (Penang) chairman Datuk Jerry Chan: “Because of land scarcity and worries that prices will go even further, people bought. Why? Because it was anybody's guess what was the ceiling. Is it too much to pay? That was difficult to answer because prices seem to have gone beyond what people expected.”

It was this frenzy of buying in selected locations that fed the worries about a bubble, coupled with the easy credit and low interest-rate regime. This double whammy of easy credit and low interest was not just evident in Malaysia. It has also played out in China, Singapore and other countries in the region.

Banking on property

What is interesting is that the United States has gone through this situation a couple of times.

Says Fernandez: “The United States in the 1950s and 1960s were idyllic. After World War II, there was a certain amount of stability but there was this belief that a little inflation will boost the economic engine in exchange for more jobs.”

It worked and the US economy flourished. Inflation inched up and as it did so, workers demanded wage increases to keep up with higher prices, companies raised prices to compensate for the rising wages, and it became an upward spiral. Recession was the only thing that can break the cycle, and it came in the mid-1980s.

That, both Fernandez and Chan agrees, is what is happening in the United States and then Europe today. In the 1990s, the then US Fed chief Alan Greenspan also kept interest rates too low for too long, which led to a speculative bubble in real estate.

“We are ignoring the dangers of the twin combination of easy credit-low interest and a speculative property market,” warns Fernandez.

The prices of stocks and homes are every bit as vulnerable to inflation as chicken and sawi. He adds: “This notion that one will always make money on property investments is made popular by people who have speculated and gained from such activities, and their success stories are told time and again. We are now seeing in Europe, the United States and previously in Japan, that one can lose with property investment.”

He says although the property market has some distinctive factors, like any other market, it still runs on demand and supply and underlying fundamentals. “Because it is a market that has no shorting mechanism, it has a tendecy to rise rather than fall, unless the fundamentals pulling it down are strong,” Fernandez points out.

In Malaysia, this enchantment with properties the last two years has intensified because of a lack of alternative investment options, the availability of easy credit and as an hedge against inflation.

The government moves are a factor as well. Last year, the Government announced seven mega development projects to spur the economy. Two of these were mentioned in Budget 2012 the development of government-owned land around Sungai Buloh and the KL International Financial District (KLIFD). Both are expected to take off in the second half of next year. The Government has invited some developers to participate.

The finance sector has also profited from the property boom, with property loans being the main driver of growth for the banking industry, accounting for 40.6% of the overall credit expansion. The residential segment accounted for 27% of total loans. Analysts expect property loans to remain the key driver of credit expansion this year and in the near future. Although there was a slowdown in loan applications for residential mortgages after the implementation of the 70% loan-to-value cap on the third and subsequent house financing, the momentum has picked up again since March.


Making a mark in new

territories

The sovereign debt problems brewing in Europe and the United States can impact consumer sentiment in property purchases, said RAM Ratings head of financial institution ratings Promod Dass. “The fact is, property is a cornerstone of any economy, and there is a property angle in just about any major venture. Even the proposed my rapid transit (MRT) system is known as “a property-and-rail play.”

Says Fernandez: “Many of the country's plans are property-dependent. We may not be able to live up to that expectation. It is like a father having too many children, and all of them want to spend his salary.”

The demand for property is driven by many factors. In today's prevailing uncertainty, demand is driven by job security, sentiment and affordability, says Tan Sri Leong Hoy Kum, managing director and group chief executive of developer Mah Sing Group Bhd.

“We have a relatively young population, which means there will be a demand for starter homes. Whether for landed units or condominiums, the demand for larger units and high-end housing will definitely be slow. So we are changing our strategy,” he adds.

“Instead of concentrating on high-end housing, we will do mid- to high-end on fast-turnaround basis. We will launch three to nine months from the day we buy the land. If semi-detached units, it will be RM1.4mil and below. If it is a landed strata, it will be priced lower, and if it is high-rise, the built-up area will be smaller. Our focus will be on affordability.

“The high-end sector will definitely soften in terms of sales in the next 12 month or so. Houses in the RM5mil and above range will be difficult to sell. The same goes for big units. The European crisis may be prolonged but we are hoping for a soft landing.”

About two weeks ago, Mah Sing announced that it has purchased 90ha in Rawang. The move to less-prime locations will be another strategy to aid affordability and to overcome land scarcity in the popular areas. The company is the second top developer to recently signal this move to less-prime locations.

SP Setia Bhd is the other; it bought 673 acres in Rinching, located mid-way between Semenyih and the Bangi old town.

As the woes in Europe and United States cast a pall over global economy, what will be ahead for locations around the iconic Petronas Twin Towers in the Kuala Lumpur City Centre, often regarded as the pinnacle of Malaysian property?


Signs of slowing?

Henry Butcher Marketing Sdn Bhd chief operating officer Tang Chee Meng says developers have noted the signs of an imminent slowing of the market. “Developers are today revamping their sizes. They are taking their projects to Singapore, China and Britain to sell. Or they work with banks to provide innovate mortgage packages. Some developers are also having friend-bring-friend commission in order to move sales.

In a buoyant market, this will not happen. The larger units completed a couple of years ago in the KLCC market may continue to remain vacant with pressure on rentals.

“Today, the majority of the sales are from developers, the primary market. In the secondary market, property agents are not getting many calls. The situation with huge leaps in prices is not as serious as last year or in the first half of this year. It is only certain type of properties in selective locations.”

“The European woes are weighing on investors. In that sense, the market is correcting itself. Developers may say these external global situations do not impact us. But there are many discerning people out there and they take note of what is going on in the US and in Europe,” says Tang.

A real estate agent specialising in properties in Mont'Kiara, another location that is closely watched, says the Sunrise MK28 has reduced its original price of about RM680 to RM700 per sq ft to RM590 to RM600 per sq ft. In Desa ParkCity, where prices of landed units have gone up by as much 300% or even more, the larger units of some of its latest launches are still available.


Comparing prices

About a decade ago, especially when the interest in KLCC-Petronas Twin Towers began, and in tandem with the proliferation of high-end landed and high-rise residentials, developers and property professionals took great pride comparing property prices in Malaysia with regional countries and concluded that the prices of Malaysian properties were far below those of China, Hong Kong, Singapore and Thailand. Projects around the Petronas Twin Towers were compared with London's Hyde Park and New York's Central Park. Today, such comparison continues to be made.

Says Fernandez: “This comparison has not stood the test of time. This suggests that our properties are not open to such comparisons and that such comparisons are not an appropriate measure. The drop in prices of between 20% and 25% soon after the 2008 crisis show that the market is mainly driven by our own governing fundamentals.

“The KLCC market, until today, has not rebounded to their original levels. The second point is that location is driven by a large expatriate community, which we do not have.”

Which is another sign of the times we are living in today.


Source/转贴/Extract/Excerpts: The Star Online
Publish date: 15/10/11

HSBC: Stay Long SGD & CNH




Source/转贴/Extract/Excerpts: CNBC
Publish date:13/10/11

S'pore economy expected to grow 5.0% in 2011



Source/转贴/Extract/Excerpts: http://www.channelnewsasia.com/video/
Publish date: 14/10/11

Singapore's growth forecast trimmed to 5% for this year

Singapore's growth forecast trimmed to 5% for this year
by Yvonne Chan
04:46 AM Oct 15, 2011
SINGAPORE - The Singapore economy grew 5.9 per cent in the third quarter compared to the same period a year ago and narrowly avoided a technical recession, as annualised quarter-on-quarter growth edged up 1.3 per cent after a contraction of 6.3 per cent in the previous quarter.

Releasing advance estimates yesterday, the Ministry of Trade and Industry (MTI) also trimmed its growth forecast for the full year to "around 5 per cent", down from the previous forecast range of 5 to 6 per cent.

The improved economic performance in the third quarter - which surprised many economists - was mainly due to a pick-up in growth in the biomedical manufacturing cluster.

On a year-on-year basis, the manufacturing sector expanded by 13.2 per cent in the third quarter, after contracting by 5.8 per cent in the previous quarter. On a quarter-on-quarter annualised basis, the sector grew by 8.9 per cent, reversing from the 23.7-per-cent decline in the previous quarter.

"This largely reflected a surge in output in the biomedical manufacturing cluster, which more than offset the decline in the electronics cluster," the MTI said.

In the second quarter, gross domestic product grew just 1 per cent from last year, and fell 6.3 per cent on a quarter-on-quarter basis.

Yesterday, the Government warned that growth for the rest of the year could be weighed down by the softening global economic conditions. "In particular, the electronics cluster is expected to remain weak due to the easing of global electronics demand. Sentiment-sensitive activities within the financial services sector could also be dampened by heightened economic and financial uncertainties," the MTI said.

DBS economist Irvin Seah believes the economy is heading for a "rough patch". "The biomedical segment is the only factor keeping the manufacturing sector afloat amid the decline in global demand. This segment grew by an average of about 96 per cent, year-on-year between July-August," he said. "Such a robust trend in biomedical production, particularly for pharmaceuticals, may not persist."

He noted that some pharmaceutical plants are due to shift to different product mixes within the next two to three months, resulting in temporary shutdowns in their productions. "Current production levels are way higher than normal, implying an even higher risk of a pullback in production in the near term," he added.

Meanwhile, growth in other sectors was lacklustre. The construction sector grew just 0.4 per cent from last year in the third quarter, following the 1.5 per cent growth in the preceding quarter.

Quarter-on-quarter, the sector saw a steep contraction of 11.5 per cent, following two consecutive quarters of expansion, due largely to a decline in private sector building activities.

Services producing industries grew 3.6 per cent from last year, compared to the 4 per cent growth in the preceding quarter. On quarterly basis, the sector contracted marginally by 0.7 per cent. The transport-and-storage and financial services sectors saw relatively lower levels of activity compared to the preceding quarter.

UOB senior economist Alvin Liew said: "On the services side, as export is being impacted, trade related services will also likely receive some of the brunt of this hit. And because this is related to the banking sector, you could see some weakening in the financial services sector as well."

Source/转贴/Extract/Excerpts: TODAYonline
Publish date: 15/10/11

Singapore eases monetary policy as risks escalate

Singapore eases monetary policy as risks escalate
Agencies, with additional reporting by Lynda Hong
04:46 AM Oct 15, 2011
SINGAPORE - The Republic's central bank yesterday eased monetary policy for the first time in two years, as a worsening global economic outlook threatens to derail the island nation's export-dependent economy.

The Monetary Authority of Singapore (MAS) will continue to guide the local currency higher but at a slower pace, effectively putting less emphasis on containing inflation and more on supporting the economy.

The move came as the Government reported the economy posted only meagre growth in the third quarter, narrowly avoiding a technical recession.

The local currency rose as much as 0.7 per cent after the decision to relax policy.

The MAS, which uses the Singapore dollar as its main policy tool, said it will continue to target a "modest and gradual appreciation" of its undisclosed policy band for the Singapore dollar's nominal effective exchange rate (NEER) but it reduced the slope of the band. It did not change the width or level of the band.

The MAS cited an expected moderation in core inflation for its decision to ease the policy. Core inflation, which excludes private road transport and accommodation costs, should gradually ease to a range of 1.5 per cent to 2 per cent next year from an average of about 2.1 per cent this year, the central bank said. Headline inflation will be elevated for the rest of the year, averaging about 5 per cent before easing to 2.5 per cent to 3.5 per cent in 2012.

While the MAS does not reveal specifics on its monetary policy, balancing the challenges of both rising inflation and slowing economic growth appear to have weighed heavily in its bi-annual policy review.

A stronger Singapore dollar usually means that Singapore businesses will be less competitive in the global market.

Indeed, a Goldman Sachs report said that the MAS' growth outlook "warranted an easing to a flat stance" in its monetary policy. However, Goldman Sachs concedes that the high headline inflation numbers "probably made a further easing stance more difficult to justify at present, even though these are mainly backward looking".

Source/转贴/Extract/Excerpts: TODAYonline
Publish date: 15/10/11

Snapping up S-CHIPS at, or near, their 52-week lows

Written by Leong Chan Teik
Friday, 14 October 2011 07:24

WHEN S-CHIPS tumbled in recent weeks and months along with the broader during the eurozone debt crisis, key investors seized the opportunity to take stakes, or up their holdings, in a number of the stocks.

Zang LigenLizhong Wheel: At one of the largest aluminum alloy wheel manufacturers in China, its executive chairman, Zang Ligen, snapped up 2.3 million shares at 20 cents apiece on Wednesday (Oct 12) in the open market, according to a company announcement yesterday.

It was a bargain price for Mr Zang, as it was at the bottom of the 52-week trading range of 20-56 cents. The stock recently traded at 23.5 cents.

Lizhong Wheel's business prospects have just been lifted after it clinched its maiden order of aluminum alloy wheels from Shanghai General Motors Co., Ltd., China’s largest auto manufacturer.

The order came after a series of stringent tests and assessments over Lizhong’s product quality and logistics systems in the past years.

Shanghai GM joins a list of OEM customers to buy from Lizhong, including Toyota, General Motors, Nissan and Cadillac.

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Sunshine Holdings: Two investors have knocked on the doors of Sunshine, a Henan-based property developer whose stock didn't recover (see chart above) along with the market after the global financial crisis of 2007/08 ended.

Han Yong and Li Weiyi - nothing else is known about them - will take up a placement of 145.6 million and 50 million new shares of Sunshine, respectively.

The price: 3.96 Singapore cents a share, which is lower than the 52-week trading range of 4-8 cents.

It is also at a sharp discount to the Net Tangible Assets of 17.1 Singapore cents as at end-Dec 2010.

The new shares represent 16.7% of the enlarged issued capital of the Company and will bring in gross proceeds of S$7.7 million to the company.

The proceeds will be used for the expansion of business and/or working capital.

Sunshine suffered a RMB9.2 million net loss in 1H2011, and is looking for a new core business.

“In view of the declining revenue and profitability, it is the intention of the Group to diversify its core business to include the business relating to the management, exploration, exploitation, production, processing, sourcing and distribution of commodities, minerals and resources and the ownership, development and operation of mines,” it said in its 1H2011 financial results announcement.

Sunshine stock rose yesterday to close at 4.7 cents, up 6.8% on volume of 484,000 shares.

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Yanlord Land Group: An independent director, Ng Ser Miang, has accumulated Yanlord stock, raising his holding from 405,000 to 705,000 shares in 2 transactions from Aug through to Sept.

In buying 200,000 shares at 71.5 cents, he scored close to the 52-week trading range of Yanlord of 68 cents-$1.88.

Yanlord has developed a number of large-scale residential property developments in Shanghai and Nanjing with international communities of residents – such as Yanlord Garden, Yanlord Riverside Gardens and Yanlord Riverside City in Shanghai.

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There are many other S-chips which are trading at near their 52-week lows -- such as Sinopipe Holdings (18 cents yesterday vs low of 17 cents), Eratat Lifestyle (12.7 cents yesterday vs low of 12 cents), and China Animal Healthcare (24.5 cents vs low of 21 cents). Then there are Sunpower Group (23 cents yesterday vs low of 20 cents) and Sino Grandness (39 cents yesterday vs low of 34 cents).

Sino Grandness' chairman and Sinopipe substantial shareholder, Triumpus Capital, have been laying their hands on the respective stocks. Some S-chips are close to their all-time lows. Ziwo Holdings, at 13 cents yesterday, is an example.


Source/转贴/Extract/Excerpts: nextinsight.net
Publish date:14/10/11
Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
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