Sembcorp Marine share price in final fantasy with Temasek Holdings

Since my last article on this counter, Sembcorp Marine share price rose from the grave to reach a high of $1.40 in recent days. The spectacular form of Sembcorp Marine share price was surely a welcome sight for investors. This is because this counter had been on a trashy form since its subsidiary in Brazil, Estaleiro Jurong Aracruz Ltda (“EJA”), had been stormed by the Brazilian authorities in early July 2019. The raid was in relation to a corruption probe, nicknamed “Operation Car Wash”.

Needless to say, the market went into overdrive after the announcement of the stunning partial offer by Temasek Holdings for Keppel shares. There were plenty of speculations that a merger between Keppel and Sembcorp Marine is finally on the cards. As a result, Sembcorp Marine share price is on fire.

Sembcorp Marine share price

But is it really the beginning of a much-anticipated recovery for Sembcorp Marine share price? Or yet another false dawn for investors? After all, the pre-conditions to the partial offer seem quite onerous to the extent that it seems like Temasek Holdings is buying an insurance for the deal.

One of the pre-conditions set by Temasek Holdings is that there must be no material adverse change to Keppel’s financial performance following the announcement for the next 12 months. This includes not having “a decrease of NAV of the Group by 10% or more”. And not having “a decrease of 20% or more from the cumulative profit after tax of the Group for the 12 months ended 30 September 2019 of $696 million”. With such pre-conditions for the partial offer, it is too premature to claim that the merger is a foregone conclusion. So expect much volatility for Sembcorp Marine share price in the next 12 months.

On the other hand, investors must be wary that …

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Keppel share price in winter wonderland with Temasek Holdings

What an explosive revelation. Keppel share price stormed to high heaven on the back of a shocking partial offer by parent company, Temasek Holdings. Will Temasek Holdings do a CapitaLand, which was formed through a merger between Pidemco and DBS Land in 2000? Incidentally, the stunning move came right after Keppel achieved a massive breakthrough with Sete Brasil, which was forced to declare bankrupt over a corruption scandal in Brazil. The corruption scandal had caused Keppel to be fined a whopping $570 million by authorities, rupturing Keppel share price in the process.

Indeed, Keppel investors had every reason to be angry with the corruption scandal. On looking back, Keppel share price was actually recovering since the outbreak of the oil slump in 2014. From a low of $5.00 in 2016, Keppel share price actually soared to a high of $8.70 in early 2018. The massive fine meted out had thrashed Keppel share price left, right, centre. Since then, this counter never really see daylight. If Sembcorp Marine is found guilty as well, then Temasek Holdings could be faced with a total fine of nearly $1 billion of fine (inclusive of Keppel’s fine).

Keppel share price

The partial offer of $7.35 by Temasek for each Keppel share is akin to offering a cup of hot milo to investors stranded in a protracted winter because it represents a premium of 25.86% to the last traded Keppel share price as of 18 October 2019. But should investors jump for joy or punch the wall at the perceived low-ball partial offer? After all, Keppel share price was trading at $8.70 only in January 2018. For those who had bought into that false dawn, it is unlikely that they find the offer appealing, much less accept the offer. But let’s delve into what Temasek Holdings may be up …

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SPH share price in Halloween nightmare

It is a battle that SPH can ill-afford to lose. SPH share price looks set for another horrifying meltdown following the release of a set of disappointing full-year results for FY2019. The latest results marked the fifth consecutive quarterly of decline. With such financial performance, investors should brace for yet another devastating run of SPH share price.

The declining business performance and ailing SPH share price come on the back of a change in readers’ lifestyle trend and reading habits. People are less likely to buy printed newspaper and prefer digital media for consumption of news. To make matter worse, Singapore is a small market for the Media segment to grow and I don’t foresee SPH embarking on overseas acquisitions to scale up its Media segment division.

SPH share price

In a bid to reposition itself in the era of digital age, the Group is undergoing a massive digital transformation and is retrenching 5% of its staff from the Media segment. The retrenchment will be the second exercise under the helm of CEO Ng Yat Chung. The last retrenchment exercise was also in October when the Group announced the FY2017 full-year results.

Interestingly, in FY2017, the net profit was $395 million, an increase of 29% as compared to FY2016. Two years after the fateful retrenchment in 2017, the net profit for full-year FY2019 collapsed to $260 million, underscoring the level of decline in its media business segment. Needless to say, SPH share price had been falling against such challenging backdrop. SPH share price would have suffered a worse fate if not for the aggressive shares buy backs conducted by the management. For the financial year, 3,947,600 shares were bought back, the second highest for the past 11 years. The share buy backs provided critical support for SPH share price.

Unlike the …

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Singtel share price to explode with data centre REIT?

Will the management drop the bombshell? Singtel share price became the talk of the town in recent days when DBS analysts claimed that Singtel may cut dividend payouts to $0.13 to $0.15 for FY2021 and had set target price of $3.12 for Singtel share price. On the other hand, there were market speculations that Singtel could possibly monetize its data centres through REIT, thereby unlocking value and freeing up cash flow for capital expenditure and dividends.

DBS’ argument is that results of Singtel’s regional associates will cause harm to Singtel’s bottom-line and roiled Singel share price in the process. To this end, I do not dismiss such a possibility. If investors looked back, share of pre-tax profits from regional associated reached an alarming 6-year low of $1.5 billion in FY2019, resulting in net profits to collapse to $3.1 billion. If the regional associates continued to underperform, things would surely spiral out of control.

Singtel share price

Then again, do you think Singtel management will leave it to fate? To be frank, I have never been a big fan of banks’ stock analyses, especially those generated by DBS. I always take their stock analyses with a pinch of salt because their target prices were often so off-tangent and out of touch with reality. Take for example, in November 2018, DBS suggested that there would be strong rebound for Starhub in FY2020 and had a BUY recommendation with target price of $2.45 for Starhub share price. Fast forward a year later, Starhub share price suffered a gut-wrenching meltdown to reach a low of $1.30. In this regard, I will share my insights on whether Singtel share price will sink or swim in the coming months, taking into the possibility of the listing of its data centres.

Note that this is an opinion article and …

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SIAEC share price and ST Engineering in bizarre tales

As an engineer working in the aviation industry for 15 years, I have seen the rise and fall of the sector. Inevitably, when we talk about the aviation industry, investors would likely to draw comparison between the two Singapore titans – SIAEC and ST Engineering. Between the two, SIAEC share price had lost considerably shine in recent years, making it one of the biggest falling stars in SGX mainboard. Will SIAEC share price ever see light at end of tunnel?

Both entities had dominated the local aviation industry for decades and are majority-owned by Temasek Holdings. Nonetheless, the similarities ended here as both companies took on entirely different destinies due to a series of unfortunate events and different business strategies. From the lens of investors, it seems that someone up there has decided to write intrigue scripts for SIAEC share price and ST Engineering share price.

SIAEC share price

Whilst SIAEC and ST Engineering had ruled the local aviation industry for decades, both are fundamentally very different companies with niche business models. The former is mainly engaged in the regional airlines maintenance and technical services businesses while the latter is engaged in the maintenance and  modification businesses, with special focus in the United States MRO market and passenger-to-freighter conversion capabilities.

In this article, I will share my insights on the unfolding narratives for both SIAEC share price and ST Engineering share price. Given a choice, I will pick ST Engineering as a long-term investment based on a few factors which I will reveal in the latter part of the article.

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in SIAEC or ST …

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Hongkong Land share price to suffer Trojan Horse?

With a history of 130 years, Hongkong Land is certainly one of the most venerable listed companies in Singapore. Possibly, only Boustead, OCBC’s Great Eastern and UOB’s Haw Par Corp can match Hongkong Land in terms of pedigree and history. If you are talking about prestige, Hongkong Land is even more impressive as its parent company is none other than the famous Jardine Matheson Holdings. Together with Dairy Farm, Jardine C&C, Jardine Matheson Holdings and Jardine Strategic Holdings, Hongkong Land forms the “Hong Kong Five Tigers” that ruled Straits Times Index (STI) for many years.

The Hong Kong Five Tigers are all part of the Jardine Matheson Group and this network of companies established an impenetrable fortress in the SGX mainboard. Nonetheless, what can float a boat can also sink it. In this regard, will the unfolding Hong Kong protests be a Trojan Horse for Hongkong Land share price?

Hongkong Land

Hongkong Land share price in trouble

Troubles certainly come in troops for Hongkong Land share price. Indeed, since the start of the Hong Kong protests, Hongkong Land share price got bombed out, falling from USD6.60 to the current USD5.50.  However, investors who are planning to buy on the cheap and sell on the upside should be mindful of the business dynamics affecting Hongkong Land share price.

As a matter of fact, Hongkong Land had suffered two major corrections (2015 and 2018) prior to the Hong Kong protests. So to attribute the current bearish form of Hongkong Land share price entirely to the civil unrests would not be right. To complicate matters, Singapore government’s cooling measures actually had a hand behind the meltdown of Hongkong Land share price. Also, just like Singapore, the Hong Kong premium office market had just emerged from a supply overhang issue started in 2015, causing …

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Keppel REIT a time-bomb waiting to explode?

Amid the current rally in the S-REIT sector, Keppel REIT is one of the rare counters that is majority-owned by Temasek Holdings (49%) and at the same time, an S-REIT that remained elusively laggard thus far. The current Price/Book value stood at 0.875, indicating that Keppel REIT unit price is trading at an undervalued level.

With a strong sponsor in Keppel Land and a solid backer in Temasek Holdings, Keppel REIT can be considered a blue chip among the S-REIT community. Total market capitalization is about $4.2 billion. So the poor form of Keppel REIT unit price, against the backdrop of a powerful rally in the S-REIT sector, must have left investors singing the blue. Then again, unitholders must count their blessings. After all, Keppel REIT’s net income consistently fell for the past five years. It is a miracle that the unit price had not suffered a meltdown.

Keppel REIT

In my opinion, there are a few factors that attributed to the current form of Keppel REIT unit price. However, the investment merits will be highlighted as well so as to provide a balanced view of this counter. Fundamentally, Keppel REIT is not a company in crisis but there is a need to be mindful of the dark side. Recent developments suggested that all may not be well for Keppel REIT as it recently sold several assets to raise $1 billion cash.

One particular financial metric looks disturbing to me and it is something that investors should be aware of. Again, investors should do their due diligence and thread with caution before entering this counter.

Keppel REIT a golden goose for Keppel Corp

For the past few years, Keppel Corp’s business had been affected by the oil slump and the dearth of oil rig orders. Therefore, Keppel REIT provides a form …

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OCBC share price in for an explosive thrashing?

Will OCBC share price bomb out on 5 November 2019, which is the day it announces its third quarter financial results? In my view, investors should brace themselves for a wild ride as there are signs that point to OCBC share price breaching the critical support level of $10.00 in the coming weeks.

2019 had been such an intriguing year for OCBC share price. Despite posting good financial results for 1QFY2019 and 2QFY2019, OCBC share price tumbled after the announcement of the financial results. For example, on 10 May 2019, the bank achieved net profit of $1.23 billion for the first quarter of 2019, representing an increase of 11% to 1QFY2018. Yet in that month, OCBC share price plunged from $12.10 to a low of $11.00.

OCBC share price

Then on 2 August 2019, OCBC share price corrected from $11.40 to $10.50 on 26 August 2019. The decline was puzzling because 2QFY2019 results showed that net profit had increased by 1% to $1.22 billion from $1.21 billion reported a year ago. Although the data indicated that growth for OCBC is slowing, the bank is still making healthy level of profits. In this regard, will 3QFY2019 be the final straw that break the camel’s back?

Despite the anticipated volatility of OCBC share price in the coming weeks, investors should stay calm. This is because the management has a track record of buying back OCBC shares. For the last financial year, a whopping 15.83 million shares had been repurchased from the market. For this financial year, a total of 6.58 million shares had been repurchased. The series of shares buybacks provided much support for OCBC share price for the past few months.

In this article, I would provide my insight on the major factors that could shape OCBC share price in the coming weeks.

OCBC

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DBS Group share price set for another hellish ride?

After delivering ten consecutive quarter of increasing profit, DBS Group share price should logically be in heaven right now. However, in life, things aren’t always so straightforward. Whilst the business fundamentals of the bank remained positive, the narrative for the global macro-economic conditions had turned dark. Against this backdrop, DBS Group share price hit the skid to reach the current $24.50 after smashing a record high of $30 in April 2018.

Question now is will Singapore’s DBS Group share price join Hong Kong protest? 11 November 2019 will be destiny day for DBS Group share price as the bank will announce its 3rd quarter financial results for FY2019. Many investors are holding their breath for the release of the financial data. This is because Hong Kong market contributed the second highest profit to the Group (due to Dao Heng bank).

DBS Group share price

To illustrate how important Hong Kong market is to DBS Group share price, the net income from its Hong Kong subsidiary for 1HFY2019 was $755 million while Singapore contributed $2.24 billion. The rest of Greater China contributed only $145 million while the rest of the world provided $118 million. Assuming that the property disposal gain of $86 million in last year was excluded, the net profit actually grew 15%. Thus, Hong Kong market turned in a very strong performance prior to the protest.

In my view, investors should brace themselves for another hellish ride upon the release of 3QFY2019 results. When 1QFY2019 results were released on 30 April 2019, DBS Group share price bombed out from $28.40 to reach $24 in end of May. Then 2QFY2019 results also led DBS Group share price to crash from $26.60 to a low of $24 in end of August. For the record, in both 1Q and 2Q, DBS Group had delivered …

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Keppel DC REIT share price in unstoppable form

What an explosive bull run! From $1.00 in 2016, Keppel DC REIT share price went on a rampage to reach a high of $2.00 in 2019, representing a 100% increase in value within a span of just three years. Unitholders of Keppel DC REIT must be laughing all the way to the bank. Amid the current rally in S-REITs sector, is the current form of Keppel DC REIT share price sustainable?

Hailed as the first pure-play data centre REIT listed in Asia on SGX, Keppel DC REIT is certainly riding on Singapore’s aspiration to become the Smart Nation. During its IPO, the portfolio comprised of only eight data centres. In the blink of eye, the portfolio has grown to 15 data centres spanning across Asia and Europe. The number of data centres will rise further to 17 as Keppel DC REIT is recently acquiring two data centres in Singapore – KDC SGP 4 located in Tampines Industrial Park and 1-Net North DC in Woodlands. As 67% of the portfolio is in Asia while 33% is in Europe, the management has built a diversified portfolio indeed.

Keppel DC REIT

Being a data centre service provider, Keppel DC REIT is an interesting long-term REIT play because the business is relatively immune to economic cycles. During market downturns, people are likely to shop less at shopping malls and dine out at restaurants less often. However, it is unlikely that people will reduce their usage of data even during market downturns. Furthermore, with 5G rolling out, demand for data will only increase exponentially in the future. Thus, if the management played the cards right, the long-term prospect would be very bright for this S-REIT.

One of the biggest merits of Keppel DC REIT is that the weighted average lease expiry (WALE) is 7.8 years. This is much …

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CapitaLand share price set for explosive bull run?

It has been a lost decade for CapitaLand share price as the real estate developer endured crisis after crisis ranging from the Great Financial Crisis to the European sovereign debt problem to the slew of property cooling measures unleashed by Singapore government. For sure, investors of CapitaLand had a roller coaster ride and suffered plenty of sleepless nights. But the sluggish CapitaLand share price looks set for a turbo-charged spin in the next six months. Read on to find out why CapitaLand could possibly stage a “return of the king” in the coming months.

Being one of the marquee assets of Temasek Holdings, CapitaLand is obviously one of the big boys in the real estate business. The company’s real estate and hospitality portfolio spans more than 120 cities in over 20 counties. In addition to this, CapitaLand also manages eight REITs and business trusts and twenty private funds. Given the diversified global portfolio (worth $129 billion), understanding this real estate giant is never easy but the biggest question among investors must be why CapitaLand share price had consistently been laggard for the past few years.

CapitaLand share price

If investors looked back, CapitaLand share price peaked at $7 to $8 back in 2007 but collapsed to the abysmal level of $2 during the Great Financial Crisis in 2009. Since then, CapitaLand share price never recovered to the peak and had been trading at the $3 to $4 bandwidth. Those who had bought at the peak in 2007 would have lost their pants even if the total dividends issued since 2007 ($1.20) had been factored in.

Despite the above, the current Price/Book Value is only 0.656, meaning that CapitaLand share price is trading at a level significantly below its book value. At current level, CapitaLand share price is certainly attractive in my point …

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