Stocks

SingPost shares took a hit as the company announced a stunning quarter loss of $65.2 million. The loss came about after SingPost decided to write off $185 million for the ill-fated TradeGlobal, S$20.5 million for Postea Inc., and S$9.3 million for an industrial property at 3B Toh Guan Road East.

The latest setback for Singapore’s postal service provider came at a time of transformation for the 150 years old institution. As more and more companies switch to electronic statements, SingPost is transforming its business to eCommerce logistic. At the centre of the storm was the significant impairment of TradeGlobal, which was only acquired by SingPost less than two years ago.

Many investors were shocked that SingPost decided to write off its investment in TradeGlobal so soon. Two years are considered a relatively short time frame to judge a company’s potential growth. One plausible factor could be that the management is not convinced of a turnaround for TradeGlobal and hence, made the decision to cut losses early. It was reported that instead of a projected profit of S$9.4 million for FY16/17, TradeGlobal incurred a significant loss of S$25.8 million.

Given the extent of the impairment to SingPost’s investment in TradeGlobal, SingPost also appointed FTI Consulting, an independent global business advisory firm, which has verified that the impairment provision was properly calculated following an appropriate review process and that the assumptions adopted were reasonable.

The month of May had been horrendous for investors of Noble Group and many of them must be wondering if the shares would ever see daylight again. The short answer to this would be: not at the moment.

After two years of struggling, Noble Group was about to stage an impressive recovery when it announced a shocking quarterly loss of USD 129 million in May. That stunning news really knocked the wind out of investors and led to the collapse of its share price. The free fall of its shares also turned off potential white knight, Sinochem Group, which subsequently gave Noble Group the snub.

The financial results raised fresh question marks over the management’s ability to revive the company’s fortune and fulfill the debt obligations. Because of this, credit ratings agencies had been ferociously downgrading Noble Group’s credit ratings for the past few weeks. On 26 May 2017, it was reported that Fitch Ratings Ltd cut the commodity trader’s rating for the second time within the space of 10 days.

As far as I can recollect, it is very rare for a credit ratings agency to downgrade a company’s rating within such a short span of time. While such downgrading was common during the Great Financial Crisis period, we are talking about peace time here.

On 2 June 2017, SingTel received SGX’s approval to list NetLink Trust on the Mainboard, paving the way for the mega IPO of the year. This will be a short post to provide an update on the NetLink Trust IPO.

Since 9 February 2017, SingTel had announced that it had hired three banks to manage the initial public offering for its broadband subsidiary NetLink Trust. This is pursuant to Singtel’s undertaking to the Info-communications Media Development Authority (IMDA) to divest its stake in NetLink Trust, a 100%-owned associate of Singtel, to less than 25% ownership by 22 April 2018.

NetLink Trust designs, builds, owns and operates the passive infrastructure for Singapore’s Next Generation Nationwide Broadband Network (NextGen NBN). Under the IMDA’s structural separation requirements for the NextGen NBN, Singtel does not have effective control in NetLink Trust.

Most Singaporeans would be more familiar with OpenNet, the predecessor of NetLink Trust. In 2008, OpenNet used to be owned by a consortium consisting of SingTel (30%), SP Telecommunications (15%), Singapore Press Holdings (25%) and Canada’s Axia NetMedia (30%). However, in 2014, SingTel, through NetLink Trust, bought over all the shares of OpenNet from the rest of the major shareholders.

As a result of the acquisition, OpenNet ceased to exist and was renamed to NetLink Trust.

The gloves are off as SingTel engages in a battle with Australian rival, TPG Telecom. In late last year, TPG Telecom won the rights to become Singapore’s fourth telco operator. In early April this year, TPG shocked the market by winning the rights to become Australia fourth mobile operator in Australia.

It is still early days to assess the impact of the heightened competition from TPG but SingTel is at a cross-road as it has to compete with TPG in both the Singapore and Australia market. While the impact of a fourth telco in Singapore would have minimal impact on SingTel, the same cannot be said for the entry of a new competitor in Australia. This is because the Australia market is very important to SingTel, which traditionally derived the bulk of its earnings from the regional businesses.

In the fourth quarter ending 31 March 2017, EBITDA from Optus, SingTel’s subsidiary in Australia, was A$741 million, more than half of the Group’s EBITDA of S$1.31 billion. This is not surprising given that the Australia market is so much bigger than Singapore. Net profit was up 1% to A$250 million while operating revenue rose 1.6% to A$2.11 billion.

Against the backdrop of increased competition, Optus continued to enhance the competitiveness of its network – with A$1.5 billion in capital expenditure.

ISOTeam, a Catalist-listed company that specializes in eco-conscious Repairs and Redecoration (“R&R”), Addition and Alteration (“A&A”) and complementary niche services specialist in Singapore, announced a set of mixed financial results for 9MFY17. The group maintained its net attributable profit at S$5.1 million for the nine months ended 31 March 2017 despite a 5.2% dip in revenue to S$61.2 million.

One question that I have been asking myself is whether ISOTeam is over-rated. ISOTeam is Nippon Paint’s exclusive applicator of paint works for R&R projects and both companies had formed strategic partnership over the years with Nippon Paint taking up stakes of approximately 5.93% in ISOTeam through a shares placement in 2014.

Despite this, investors must realize that the R&R segment is an extremely low barrier industry and basically many companies can do the jobs that ISOTeam are doing. To put things into perspective, the exclusive applicator of Nippon Paint would not provide much competitive advantage for ISOTeam.

At the end of the day, when public organizations or companies tender R&R jobs, it is all about dollars and cents. The company which can do the jobs “cheaper, faster and better” will win the contracts.  This is apparently the case when ISOTeam’s topline in both 3Q2017 and 9M2017 was affected mainly by the decline in revenue generated by its core R&R business, which had faced intense price competition.

It is a battle that Noble Group cannot afford to lose. Today, the company requested for trading halt after it’s share price plunged by 32% following news of credit rating cut by S&P Global. This latest setback came after yesterday’s report that potential white knight, Sinochem Group, was not interested to invest in the embattled commodity trader.

The latest blows sent the Noble share price into tailspin, causing its market value to shrink to USD 400 million, a massive decline from USD 6 billion in 2015. This dark chapter of Noble gripped the market in maximum fear. Many shareholders would not be able to sleep well, fearing the worst for their investments. Can the beleaguered company turn the tide and emerge from the battle victorious?

The unfolding events of Noble Group are nothing short of intriguing. Once the largest Asia’s commodity trader, it used to be among the elites and was part of the Straits Times Index (STI) as recent as last year. In 2010, it’s share price was even trading at a high of $3.43. Those days must be surreal to existing shareholders who watched in horror as the share price keep falling over the past two years.

Some investors blamed the founder, Richard Elman, for the current situation that Noble Group is facing and there were calls demanding for him to step down as Chairman.

Sheng Siong is a local supermarket chain with 43 outlets located across Singapore. Listed in the Singapore stock market, this counter is popular among investors. When it got listed in the SGX mainboard on 17 August 2011, the IPO price was $0.33. Fast forward six years later, the share price has surged past the $1.00 milestone recently but investors must be wondering if Sheng Siong share price is inflated.

With a population of 5.3 million, the market for supermarket chain is very small in local context. Furthermore, the market is also saturated with other players, not to mention the mom-and-pop stores. Sheng Siong’s closest rivals are NTUC Fairprice and Dairy Farm which operates the Cold Storage and Giant outlets. Among the trio, Sheng Siong is the smallest operator. To compete effectively against these big boys, Sheng Siong must have the economy of scale and operating margin.

For many years, Sheng Siong’s gross profit margin had been excellent, averaging at least double digits. For 1Q2017, the gross profit margin was 25%, a slight increase of 0.5%. However, operating margin was only 9.5% for 1Q2017. What is the difference between gross profit margin and operating margin? Why is it important for investors to understand this financial metric?

Noble Group suffered another major setback when its shares experienced yet another bout of massive sell-offs, triggering the activation of SGX circuit breakers. Upon the commencement of trading on 12 May 2017, shareholders of Noble Group ran for their lives and dumped the shares like no tomorrow. The rout resulted in the activation of circuit breaker at 9:01 am.

However, the circuit breaker was futile in stopping the carnage. Share price continued to fall by as much as 22% compared to the day before. The sell-off came fast and furious, prompting another circuit breaker at 9:54am. At the rate of declining, Noble Group was set for an explosive free fall.

The crisis in confidence came about as the commodity trader issued a profit guidance of a loss of USD130 million loss for Q1FY17. This incurred the wrath of shareholders and ignited the meltdown of Noble Group shares.

The circuit breaker system was introduced by SGX only in 2014. Following the plunge in penny stocks of Blumont Group, Asiasons Capital and LionGold, SGX saw the need to introduce circuit breakers. According to SGX, “the circuit breaker is activated when an incoming order could potentially match an existing order in the order book at a price outside the circuit breaker price bands.

Fresh from a 10-into-1 shares consolidation, Noble Group share price free fall by 33% at one point during the trading day of 11 May 2017. The sharp correction was due to the bombshell dropped by Noble Group announcing that it is likely to record a net loss of around USD 130 million for 1Q2017. Investors must be wondering if the embattled Noble Group will sink or swim after two years of roller coaster ride.

After reporting a profit of USD 8.6 million for FY16, the commodity trading company recently irked investors with the ill-timed shares consolidation. It was reported that massive number of investors stormed out of the special general meeting, even though the proposed consolidation move was eventually approved.

The shares consolidation raised a lot of controversies because it came in the midst of a respite from a horrendous USD 1.6 billion loss in 2015 and negative reports over its accounting practice. Amid the vicious short-selling attacks, the share price tumbled to record low of $0.12. Recent positive financial results and reports of major investor’s interest in Noble Group led to a brief recovery in share price. Nonetheless, Noble Group did itself no favor by announcing this shock shares consolidation exercise.

On 12 April 2017, SingTel shares experienced heavy shelling by short sellers. On that fateful day, the short sales volume was 21.7 million, with market value of $82.7 million. The heavy attack led to a decline in SingTel share price from $3.84 to the current $3.75. What could have caused the big boys to do massive short selling on SingTel shares?

The short selling of SingTel shares was disturbing because it has been on-going for several weeks. From 3 to 7 April, there was 16.7 million of short sales volume, with total value of $65.4 million. The week before it was 21.7 million short sales with total value of $85 million being shorted. Prior to that, another ferocious attack occurred in the week 13 to 17 March, with 20.4 million short sales volume of $81 million value.

It may sound far-fetched to investors but the reason for the SingTel shares attacks could be attributed to short-sellers plotting to pull back the Straits Times Index (STI), which closed 0.98 percent lower on 17 April 2017. Being the stock market bellwether in Singapore, it makes sense for the big boys to target SingTel in a bid to engineer a stock market correction in Singapore.

Following the news of OCBC Bank looking to sell its stake in United Engineers Limited last year, the share price of the famous local bank has been on a mighty hot streak. On current bullish form, breaching the $10 per share support level seems inevitable. Will OCBC Bank rock the market with more divestment news?

In my previous article, several readers expressed cynical at my valuation of OCBC shares. Based on the valuation of its equity stake in United Engineers, there is no way OCBC Bank shares would hit the $10 mark. On this, I did not dispute. But market sentiments always play a part in a stock performance. As Warren Buffett often said, price is what you pay but value is what you get. There is often a gap in the intrinsic value of a stock vis-à-vis its market price.

Previously, I have written a few analysis on OCBC Bank shares that I feel are must-read for investors of OCBC. Readers may want to check out and read the following blog posts:

1. Will Ezra sink OCBC share price?
2. OCBC considering the sale of United Engineers Ltd
3. OCBC multi-billion worth of hidden assets

For OCBC Bank, its hidden assets consist mainly of properties and securities worth $6.45 billion in terms of unrealized valuation surplus.

By now, investors of Noble Group must be feeling jaded. Investing in this SGX-listed commodities trader has been challenging with the wild swing in share prices in recent months. The roller coaster ride was a result of various key developments taking place within a short span of time. So, is Noble Group really doomed?

The past two years had been a scary nightmare for Noble Group as the group was initially criticized by research house, Iceberg Research, over its accounting practice. The negative report unexpectedly led to ferocious short-selling attacks and caused the share price to plunge to frightening new lows.

As the management fend off the relentless attacks, former CEO Yusuf Alireza resigned in May and Chairman Elman announced that he would step down within 12 months. To make things worse, Noble Group announced a record loss of USD 1.6 billion for 2015, its first loss in almost 20 years. Many investors feared the worst for Noble Group.

In my previous article, I wrote an analysis of Noble Group and determined an entry price of $0.12 which provided me a level in which I would feel comfortable to invest in. Honestly, in my point of view, it is unlikely that Noble Group will fold because of its long history of strong backing from China’s sovereign wealth fund, China Investment Corp (CIC).

Billionaire investor, Paul Tudor Jones, has a stark message for fellow investors in Singapore. Years of low-interest rates, avers the legendary macro trader, have bloated stock valuations to a level not experienced in the country since 2000. He states that it happened before the tumble of the Nasdaq, which stood at 75% over a period of more than two years. He argues that such a value of the stock market in relation to the status of the economy should be a cause of concern for investors.

Hedge fund warning

Jones was speaking at a Goldman Sachs Asset Management closed-door conference, as revealed by people privy to the meeting. The billionaire investor was voicing what many hedge fund and financial managers, including companies such as CMC Markets, have been warning other investors in Singapore. Stock trading has hit unsustainable levels. However, not many of them can be as explicit as Jones, predicting a major market tumble by year end.

Just last week, Scott Minerd of Guggenheim Partner, admitted that he expected an early fall this summer – or a significant correction. Another entrepreneur, Philip Yang, seems to agree with Minerd. Yang, who has been running Willowbridge Associates since 1988, foresees a stock plunge of between 20% and 40%.

When Kimly Group, a local coffee shop chain, was listed in Catalist a couple of months ago, it generated much interests among investors and local finance bloggers. With a market capitalization of only $288 million, Kimly Group does not fall in the league of the big boy category nor the blockbuster type of listing that SGX mainboard should be gunning. In this regard, all eyes must be on the mouth-watering NetLink Trust IPO.

To put things into perspective, if SGX’s strategy was to sell itself as “Asian Gateway”, then it must seriously start to attract billion dollar listings. Aircraft lessor, BOC Aviation, which is based in Singapore and used to be owned by Singapore Airlines, has previously given SGX the snub. The lessor chose to list in Hong Kong instead. It was a massive blow for SGX as the company is estimated to be worth a whopping $6 billion.

Then again, with a slew of privatisations taking place, SGX management has more pressing issues to settle than attracting billion dollar listings. Among the many delisted companies, homegrown OSIM applies for listing in Hong Kong as V3 just months after exit from Singapore stock market. This shock move should be a wake-up call for SGX and something drastic should be done to stem the decline.

At a time when Starhub and M1 share prices are dropping like flies, Singtel share price is in supreme form. The corrections for Starhub and M1 shares are due to the announcement of the entry of the fourth telco player, TPG Telecom, which made the winning bid of $105 million for the licence in December 2016.

When investing in stocks, always place your bets on the players with the biggest investment moats in the industry. Size matters and you don’t want to catch a falling knife investing in smaller companies which cannot withstand changes in market forces.

Singapore market

Over the past twenty years, the telecommunication industry in Singapore has witnessed an explosive growth in mobile phone penetration rate, growing from 20% to the current 150%. In view of this, the market is already very saturated and the potential for growth is also limited because of Singapore’s small market size. Investors who had placed their faith on domestic players like Starhub and M1 must have reality check as these companies’ growth hinge purely on Singapore market.

Starhub and M1 have amassed huge following among Singaporean investors because of their attractive dividend payouts over the past decade. But experience has taught me that while past performance is relevant, it cannot guarantees future performance.

Recently, I received the following email query on The Hour Glass Limited, one of the famous brands for luxury watches in Singapore. Hence, I decided to craft a post to capture some quick thoughts on this SGX-listed stock.

Hi there,

Chanced upon your blog while doing research on The Hour Glass Limited. Could I know whats your take on the management shuffle going on now? Quite a few board level executives are moving on.

Cheers

To be frank, apart from the resignation of Ms Wong Mei Ling as the Managing Director of Singapore, I am not aware of any major management shuffle going on within The Hour Glass Limited.

I have previously written an investment analysis on The Hour Glass Limited. Check out the report here.

According to the SGX filing, Ms Wong was responsible for the business development and management of The Hour Glass’ Singapore Division and her departure was due to her pursuit of other interests. Prior to that, Ms Lim Jee Yah resigned as Managing Director of Luxury Enterprises in July 2016.

Family feud

Ultimately, investors must note that The Hour Glass is a family-owned and family-run business. So the departure of Ms Wong and Ms Lim should not be major concerns as the company founders are still managing the business.

On 20 February 2017, Raffles Medical Group announced a record revenue of S$473.6 million for the year ended 2016, demonstrating its ability to maintain growth amid challenging economy. The result was impressive because it presented a 15.4% growth from 2015, driven by positive contributions from all business divisions.

Investment moats

Raffles Medical Group is one of my favorite stocks which I am not vested in but am constantly monitoring its progress for future investment purposes. Being one of the leading private healthcare service providers in Singapore, this company sets itself apart from the rest of its competitors with its strong investment moats.

Raffles Medical boosts RafflesHospital as its flagship, offering a wide range of specialist medical and diagnostic services for both inpatients and outpatients. Raffles Medical clinics form one of the largest networks of private family medicine centres in Singapore while RafflesDental is a team-based dental group in Singapore comprising of a specialist dental practice at Raffles Hospital and a network of general dental clinics. RafflesHealthinsurance provides healthcare insurance to corporate and individual clients.

However, Singapore market is too small and with local competition heating up over the past few years, it is inevitable for Raffles Medical to expand overseas to seek growth.

On 3^rd February 2017, SIA Engineering Company announced 3Q results for 2016/17. It wasn’t exactly an impressive set of results but the data certainly reveals some interesting aspects of the company’s performance against the backdrop of a challenging operating environment for the maintenance, repair and overhaul (MRO) sector. This will be another research report on SIA Engineering Company (SIAEC).

Traditionally, SIAEC has a solid business model because it provides maintenance, repair and overhaul (MRO) of aircraft, engines and related components and offers the complete MRO suite of services. The business is recurring and with its vast network of joint ventures, the MRO stalwart managed to build an impressive investment moat in Singapore, rivalled only by local competitor, Singapore Technologies Aerospace.

However, the emergence of new generation aircraft with high reliability looks set to disrupt SIAEC’s business model because of the decline in demand due to extended maintenance intervals and lesser work-scope. In light of this, the management has started to position itself for the future through several initiatives.

Given that its joint ventures contribute a substantial amount of profits consistently to SIAEC, the management rationalized its portfolio of joint ventures periodically to extract value for shareholders. Some of these initiatives include restructuring and merger of associated entities and development of capabilities to support new generation aircraft.

On 14 February 2017, OCBC reported a net profit after tax of S$3.47 billion for the financial year ended 31 December 2016, a decline of 11% compared to last year. Not surprisingly, the decline in earnings was due to an increase in net allowances for loans, mainly in the ailing Oil and Gas (O&G) sector. The bank has $15.8 billion exposure to this sector and Non Performing Loan (NPL) has crept to $1.3 billion. Will Ezra sink OCBC share price?

Ezra is an offshore contractor and provider of integrated offshore solutions to the global O&G industry. The Group has three main business divisions, namely Subsea Services (“EMAS AMC”), Offshore Support and Production Services, and Marine Services offering a full range of seabed-to-surface engineering, construction, marine and production services globally.

The struggling Ezra recorded a net current liability position of US$887,220,000 for the financial year ended 31 August 2016. It seems that Ezra has miscalculated the business risks and this led to  various obligations owed to financial lenders and trade creditors. The troubled company recently flagged that it could possibly write down $170 million worth of investment due to problems with one of its joint ventures, EMAS Chiyoda Subsea.

Amid all these troubles, Ezra announced that it is undergoing a restructuring exercise to “preserve value for the Group”.

The rationale for this stock research arises from my recent decision to invest in a reputable REIT with a consistent track record of cash distribution per unit (DPU). Another factor of consideration is the quality of the management in strategizing growth for the company. Suntec REIT seems to fit the bill and hence, this shall be my first analysis on this venerable SGX stock.

New chapter for Suntec REIT

Listed on 9 December 2004 on Singapore Exchange mainboard, Suntec REIT is the first composite REIT in Singapore, owning income-producing real estate that is primarily used for retail and/or office purposes. 2016 had been an eventful year as the company expanded its footprint in Australia and navigated through the soft retail market reasonably well. For 2017, the change of CEO of the Manager will herald a new chapter for Suntec REIT.

On 2 December 2016, it was announced that Mr Yeo See Kiat would retire as CEO with effect from 31 December 2016. Mr Yeo has been CEO of the Manager of Suntec REIT for 10 years and has steered the company through significant milestone events through the decade. Some of his notable achievements include overseeing the $410 million asset enhancement of Suntec City, divestment of Park Mall for $411 million and Suntec REIT’s foray into Australia.

On 29 December 2016, SingPost finally unveiled a new Chief Executive Officer (CEO) through appointment of Mr Paul William Coutts who was previously from Toll Global Forwarding, one of the five divisions in the Toll Group. On the basis of the 2Q2016 financial performance, the new CEO will have his work cut out for him. This article contains my analysis of SingPost.

Suffice to say, the business model has been disrupted by digital technologies, which led to declining traditional letter mail volumes in recent years. 2Q2016 financial results revealed that SingPost is a company still “work-in-progress”. Underlying net profit for Q2 fell 27.9% which the company attributed to “transformational investments and challenges”. Total expenses increased by 23.7% due to higher expenses in the eCommerce business and costs related to the new Regional eCommerce Logistics Hub.

As the management embarks on its business transformation journey, the incoming CEO has an unenviable task of leading an institution that has faltered in recent years. While the company is still making profits, operating profits across all its business units declined by doubt digits compared to last year. Its eCommerce unit lost $6.8 million and $10.3 million in Q2 and H1.

The eCommerce unit will likely to continue burning cash as SingPost seeks to enhance the eCommerce logistics capabilities to better serve the region growing online retail markets.

Despite the challenging economic condition, ISOTeam secured a series of new contracts worth $22.7 million, including a third and single largest renewable energy installation project, worth around $6.3 million.

ISOTeam is an eco-conscious Repairs and Redecoration (“R&R”) and Addition and Alteration (“A&A”) specialist in Singapore. I have previously covered this company in my blog before. Founded in 1998 and listed on Catalist of the Singapore Exchange, ISOTeam has successfully undertaken more than 300 public and private sector R&R and A&A projects for more than 3,000 buildings and counting since inception.

With  market capitalization of only $121 million, ISOTeam is considered a small player in SGX. However, the company differentiates itself from its competitors by branding itself as an eco-conscious enterprise. They integrate green methodologies in their R&R, A&A and Others projects, and actively work with strategic partners and technology companies to develop and commercialise green solutions / products.

Its foray into the renewable energy segment is also in line with the government’s SolarNova programme, which aims to have solar power contribute 350 megawatt-peak (MWp) to Singapore’s energy supply by 2020. There were 400 HDB blocks with solar panels in 2015, and the programme targets to have around 5,500 blocks by 2020, or clean energy for 55,000 four-room flats annually.

OCBC started the year with a bang by announcing that it is considering the sale of United Engineers Ltd (again). Two years ago, the local bank had tried to divest United Engineers (UEL) but the deal did not materialize.

On 7 January 2017, OCBC and its subsidiary, Great Eastern Holding (GEH), appointed Credit Suisse (Singapore) Limited as their financial adviser in connection with the strategic review encompassing the whole of the combined stakes of OCBC Bank and GEH in UEL and WBL.

Both OCBC and GEH hold about 30% of UEL. If the move is successful, it will be a windfall for OCBC as the market capitalization of United Engineers is about $1.7 billion. In view of this, investors immediately bought into the news and chased OCBC share price to nine month high of $9.38.

I believe this time round, the sale of UEL is imminent as the company had been disposing its assets for the past nine months. This included the 42.2% effective interest in Multi-Fineline Electronix, Inc. (MFLEX); 62.6% effective interest in Suzhou Speedling Co., Ltd.; 100% interest in UES Holdings Pte. Ltd.and its subsidiaries and associates; 100% interest in UE Envirotech Pte. Ltd. and its subsidiaries; 100% interest in UE Asia Pacific (Beijing) Co.,

Will Noble Group do an OSIM or Swiber Holdings? The embattled commodity trader is currently at a cross-road as many investors wonder if it can pull off a dramatic recovery.

Once a blue chip stalwart in Singapore stock exchange, the Hong Kong based company is now trading at penny stock price level. The free fall of Noble Group share price wiped off billion of dollars from its market capitalization value and it would have being included in SGX’s watchlist had the Minimum Trading Price rule not being revised recently.

Crisis for Noble Group?

One of the worst fears among investors must be Noble Group becoming the next Swiber, which collapsed and went under judicial management in 2016. The fall of Swiber was due to the prolonged slump in oil prices causing oil and gas companies to cancel infrastructure projects. Another factor that led to Swiber’s shocking downfall was the amount of debts it took on. It was reported that it owed money to 10 banks and DBS alone had about $700 million worth of loan exposure to Swiber.

Those who invested in Swiber shares or its junk bonds are unlikely to get back their hard-earned money.

Similar to Swiber, Noble Group endured a challenging 2016 due to the collapse of commodity prices and the slowdown in China’s economy.

Crisis? What crisis? SGX mainboard-listed company, Challlenger Technologies Limited, appears unfazed in the aftermath of the closure of its 53,000 sqft megastore at Funan DigitaLife Mall since December 2015. Last year has been challenging due to the weak economic sentiment but on the basis of the 3Q2016 financial results, it seems that Challenger managed to reduce the impact of its megastore closure.

Last week. I visited the Challenger Technologies store at Bedok Point mall to purchase a software and was very impressed by their staff’s customer service and efficiency. Prior to the trip, I had done some research online and thus only spend less than 5 minutes in the shop. The whole experience had been positive but in the face of stiff competition from online and brick-and-mortar players in the market, Challenger faces a daunting journey ahead.

While Challenger tried to downplay the significance of the closure of its Funan DigitaLife mall through the rapid expansion of heartland retail stores, it has since moved on and announced a new flagship store at Bugis Junction. Spanning almost 14,000 square feet in space, the basement 1 location is set to open by the second quarter of 2017. In addition to complementing the existing Challenger store at level 3 Bugis Junction, the new flagship store will add to the Group’s overall portfolio of almost 50 stores island-wide.

While the rest of the SGX-listed companies huffed and puffed their way through 2016, SATS was flying high. The share price of this blue chip darling even stormed to a record high of $5.11 in September 2016, setting a gold standard among fellow STI players. Amid the sluggish SGX market performance, it seems very strange that its stock has been so bullish. Just what did the management do that set the company apart from the rest?

The key reason for SATS’ strong performance might be due to its investment moats in two niches –  Gateway Services and Food Solutions. Their Gateway Services encompass airfreight handling, passenger services, ramp handling, baggage handling, aviation security services, aircraft interior and exterior cleaning as well as cruise centre management. Food Solutions include airline catering, institutional and remote catering, aviation laundry as well as food distribution and logistics.

Being a dominant player in provision of gateway services and food supplies, SATS derived most of its revenue from the aviation sector. For 1H16/17, revenue of $752.4 million came from aviation sector, while only $110 million of revenue were derived from non-aviation and corporate.

SATS has many associates, joint ventures and subsidiaries but they contributed only $23.7 million profit in 1H16/17.

As 2016 comes to an end, it is timely to review the significant developments of some of the popular stocks listed in Singapore stock exchange (SGX). Beleaguered Noble Group certainly is in the hit list as it made the headline news for all the wrong reasons. Is the company really doomed or would there be a White Knight for Noble Group?

The free fall of Noble Group’ share price represents one of the most dramatic declines in modern-day equity market. Listed in Singapore stock exchange back in 1997 and backed by China’s sovereign wealth fund, China Investment Corp (CIC), the commodity trading company used to be one of the revered stocks in SGX. Make no mistake, at one point, it was even trading at a record high of $2.40 per share back in 2004. Now languishing at $0.16, those giddy days must seem so surreal to long-term investors of Noble Group.

In fact, Noble Group was still in the elite Straits Times Index (STI) earlier this year but got booted out of the list in March 2016. Then again, being included in the prestigious STI should be the least priority for the management at this moment because there are more pressing problems to deal with.

SIAEC share price crashed to 5 year low! Amid the global economic uncertainties and challenging aviation outlook, SIAEC’s performance continued to slide as revealed in the financial results for 1HFY2016/17. This article contains my latest SIAEC stock analysis. I am not vested in this counter but have been monitoring this maintenance, repair and overhaul (MRO) stalwart for many years.

Operating profit for 2nd quarter declined to $24.5 million as compared to $27.0 million last year. Cash flow from operations was a negative $7.4 million as compared to positive $2.4 million in the previous year. The dismal quarter results reflected the massive challenge faced by the management in navigating SIAEC through this storm.

It is certainly not business as usual for this MRO powerhouse as airlines are buying new aircraft like A350, B787, A320NEO and B737-MAX to replace their older fleets. These new aircraft require less maintenance checks and longer maintenance task intervals, especially in the first few years of entry into service. Arising from this new trend, the MRO sector in Singapore has seen a decline in business for the last 2 years. This is because about 90 per cent of the local aerospace work is tied to aircraft maintenance and repairs.

In August 2016, Singtel increased its investment moats aggressively through the acquisition of stakes in Thailand’s Intouch Holdings Public Company Limited (Intouch) and India’s Bharti Telecom Limited (Bharti Telecom) for a total consideration of S$2.47 billion from parent company, Temasek Holding.

This transaction will be funded through internal cash, short-term debt and proceeds from a share placement of 386 million new Singtel shares to Temasek totalling S$1.605 billion at a price of S$4.16 per new share.

Rationale for acquisition

Investors may think that this is just one of those asset transfers between the two Singapore entities but I view this development differently. To put things into perspective, it is difficult for Singtel to directly acquire foreign telecommunication companies because these are high growth entities and most governments are generally reluctant to let foreign entities own 100% such strategic assets. By purchasing these stakes in Intouch and Bharti through Temasek, SingTel can increase its regional market share without facing foreign regulatory resistance.

Being a regional player, Singtel derived only 29% of its net profit from Singapore in FY2016. The majority of its revenue and profit are driven by its regional joint associates because the management is smart to acquire strategic stakes in telecommunication companies with either number 1 or 2 market share in regional countries.

Listed in SGX’s Catalist board on 9 November 2015, Jumbo Group has Temasek Holding subsidiary and Osim boss among its investors. With such strong support from institutional investors, it is no wonder that its share price surged from $0.25 to the current $0.65. Jumbo Group’s shares is definitely on form but what will be its outlook for 2017?

The one thing I like about Jumbo Group is that its business is simple and easy to understand. Basically as a multi-concept dining food and beverage company, Jumbo has a total of 15 F&B outlets in Singapore and 3 F&B outlets in the PRC, under 5 restaurant brands – Jumbo Seafood, JPOT, NG AH SIO Bak Kut Teh, Chui Huay Lim Teochew Cuisine and J Café. It also manages 1 Singapore Seafood Republic outlet.

As a consumer, I have also patronized many of Jumbo restaurants before and [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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