NextInsight - Latest News (Main) https://www.nextinsight.com.sg/ Sat, 26 May 2018 17:51:40 GMT FeedCreator 1.8.0-dev (info@mypapit.net) AEM HOLDINGS: CIMB's target price is $1.78 http://www.nextinsight.com.sg/story-archive-mainmenu-60/940-2018/12222-aem-holdings-cimb-s-target-price-is-1-78 Exerpts from CGS-CIMB report


Analyst: William Tng

lokewaisan4.18AEM executive chairman Loke Wai San speaking with investors. NextInsight file photoAEM Holdings’s 1Q18 core net profit at 18% of our full-year forecast was below expectations.

The results came in lower than our expectations due mainly to the higher operating expenses arising from its three recent acquisitions.

AEM

Share price:
$1.49

Target: 
$1.78

Assuming a 17% corporate tax rate, 1Q18 core net profit formed 24% of AEM’s FY18 guidance (pre-tax profit of at least S$42m).

Given that AEM is still the sole supplier to its major customer, the key risks going into the rest of FY18 are order delays or reduced orders from its major customer.

AEM has commented that based on its own observations, its major customer is likely to have satisfied its requirements for new machines and, going forward, less predictable replacement demand (for customer’s legacy machines) will kick in.

williamtng4.14William Tng, analyst, CGS-CMB.On a positive note, there remains room for AEM to raise its FY18 pre-tax profit guidance of at least S$42m as the visibility for the fourth quarter is limited.

We believe AEM will have better visibility on the outlook for 4Q18 when it announces second-quarter results sometime in Aug 2018.

AEM will also launch its own Test Handler product and hopes to announce customer wins in the 2H18/FY19 time frame.


The impact of a trade war on AEM is hard to quantify.

If we apply a 25% and 50% haircut to our earnings forecast for FY19 and maintain our target P/E of 10x, the revised down target prices will be S$0.905 and S$1.36, respectively.

Our current scenario is a TP of S$1.78 based on 10x (17% discount to sector average) FY19 earnings.

Full report here. 

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ct.leong@nextinsight.net (Leong Chan Teik) Fri, 25 May 2018 04:13:58 GMT http://www.nextinsight.com.sg/story-archive-mainmenu-60/940-2018/12222-aem-holdings-cimb-s-target-price-is-1-78
ALLIANCE MINERAL ASSETS: 2 funds become substantial shareholders this month http://www.nextinsight.com.sg/story-archive-mainmenu-60/940-2018/12221-alliance-mineral-assets-2-funds-become-substantial-shareholders ship4.18@ Bald Hill: Lithium concentrate ready to be trucked to Port Esperance for shipment to offtaker Burwill Holdings in China. Photo: CompanyThis month is quite a happening month for Singapore-listed lithium producer Alliance Mineral Assets (AMA).

AMA stock 

36.5 c

52-week range

21 – 46 c

PE (ttm)

--

Market cap

S$231 m

Shares outstanding

632 million

Dividend 
yield (ttm)

--

1-year return

11%

Source: Bloomberg

In early May, the first shipment of lithium concentrate from Bald Hill Project -- 50-50 owned by AMA and ASX-listed Tawana Resources -- left for China.

The lithium product -- which has been bought under an offtake agreement with Burwill Holdings -- will be processed in China for use in the making of lithium-ion batteries for electric vehicles.

And within weeks of each other, two institutional funds bought significant stakes in AMA, whose Bald Hill Project is the first Australian lithium mine since 2016 to reach production status.


Date

Buy price

Shares bought

New
stake

Total stake

Regal Funds Management
(Sydney)

2 May 2018

33 c

34.17 m

34.17m

5.41%

LIM Advisors
(Hong Kong)

21 May 2018

35 c

30.0 m

60.35m

9.5%


On 2 May 2018, Regal Funds Management crossed the 5% shareholding threshold with its 34,172,804 shares (a 5.41% stake to be precise).

Sydney-based Regal had bought all the shares at 33 cents apiece via a placement by AMA.


Then a fund in Hong Kong bought 30 million shares from Living Waters Mining (Australia), the investment vehicle of Tjandra Pramoko, the ex-CEO of AMA, and his spouse Simone Suen.

The shares are held by LIM Asia Special Situations Master Fund Limited whose investment manager is LIM Advisors, which manages more than US$1 billion of assets.

Substantial Shareholders

Number of shares held

% stake

Burwill Holdings

80,388,728

12.72%

LIM Advisors

60,350,000

9.5%

Jonathan Lim
Keng Hock

46,074,788

7.29%

Living Waters
Mining (Australia)

37,104,574

5.87%

Regal Funds Management

34,172,804

5.41%

The fund paid 35 cents a share in the married deal, raising its stake to 60,350,000 shares, or a 9.5% stake in AMA.

Prior to that, LIM Advisors, according to market talk, had bought a load of placement shares, alongside Regal Funds Management, from AMA on 2 May 2018.
 
Without naming them, AMA said it had placed out 76,522,804 new shares to 3 "sophisticated and institutional investors in Australia and Hong Kong". The deals, at 33 cents a share, raised gross proceeds of S$25.3 million.

The two funds' acquisitions of AMA shares came ahead of a major catalyst for the stock -- an announcement, expected within this quarter, of an upgrade to the lithium reserves of Bald Hill Project.

Broker Canaccord Genuity in Australia, in April 2018, estimated that the reserve upgrade could see the life of mine of Bald Hill more than double from 3.6 years currently to ~8 years.

regspencerReg Spencer, analyst, Canaccord Genuity"We continue to see further resource upside at Bald 
Hill, and in our view this is reflected in Tawana's plans to assess a second DMS circuit. 

"We 
estimate that this could see concentrate production increase by ~90% to 380ktpa. To maintain an 8 year Reserve life at the expanded rate, Indicated resources would need to increase to ~20Mt, which we don't believe is a low probability outcome given current Ind/Inf Resources of 19Mt, and the under-explored nature of the Bald Hill project area."

For more, see: 

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ct.leong@nextinsight.net (Leong Chan Teik) Fri, 25 May 2018 01:14:29 GMT http://www.nextinsight.com.sg/story-archive-mainmenu-60/940-2018/12221-alliance-mineral-assets-2-funds-become-substantial-shareholders
BILLION&BELOW model portfolio: What stocks have "great potential"? http://www.nextinsight.com.sg/story-archive-mainmenu-60/940-2018/12217-billion-below-model-portfolio-what-stocks-are-in Excerpts from RHB Research report

After a long hiatus, we mark Billion&Below’s (B&B) return with a quarterly update and new remodelled portfolio. The mandate stays the same: to invest in quality small-mid cap names in Singapore with great potential in delivering positive returns.

 

Price (S$)

Target

% Upside

P/E
Dec-18F

P/B Dec-18F

Yield (%) Dec-18F

GSS Energy

0.15

0.25

62.3

11.0

1.6

1.8

HRnetGroup

0.86

1.14

32.6

17.9

2.6

2.8

ISOTeam

0.36

0.42

18.3

13.1

0.7

1.9

Kimly

0.36

0.43

21.1

18.5

4.7

2.7

Moya

0.10

0.15

57.9

9.6

1.8

--

Silverlake
Axis

0.56

0.65

17.1

23.7

4.0

4.9

Valuetronics

0.85

0.96

13.6

8.9

1.6

5.6

Source: Company data, RHB


After a long hiatus, we mark Billion&Below’s (B&B) return with a quarterly update and new remodelled portfolio. The mandate stays the same: to invest in quality small-mid cap names in Singapore with great potential in delivering positive returns.

2018 Top 20 Jewels – how did they fare? April was not a good month for the small-mid cap sector, with the FTSE ST Small Cap Index (FSTS) declining 4.3% since 9 Mar. This was the closing price for the jewels in our Small Cap Book 2018. We have tracked the performance of our jewels since then, and their performances have been rather disappointing – interest within the Singapore market is still focused towards large caps. Out of the 20 jewels, 20% have fared better, with Japfa, HRnetgroup and Yoma Strategic leading the gains. The biggest declines are seen in APAC Realty, Avi-Tech Electronics (Avi-Tech) and Asian Pay TV Trust.


Model Portfolio

Price (S$)

Quantity

Value (S$)

GSS Energy

0.152

1,200,000

182,400

HRnetGroup

0.83

350,000

290,500

ISOTeam

0.35

300,000

105,000

Kimly

0.35

300,000

105,000

Moya

0.095

1,000,000

95,000

Silverlake Axis

0.55

240,000

132,000

Valuetronics

0.83

100,000

83,000

Cash

   

7,100

Total

   

1,000,000

Model Portfolio – what are the new names and why? With a starting portfolio size of SGD1m, we have an initial 1.2m position in GSS Energy (GSS) at SGD0.152/piece.

We remain optimistic on its prospects and expect many potential catalysts to come in the near future, both in the precision engineering (PE) and oil & gas segments.

A 350,000 position on HRnetGroup at SGD0.83 a piece is also added, as we like its strong PATMI growth as shown in 1Q18.

oilwell8.14GSS Energy is expected to reap first revenue soon from its oil production in Indonesia.This is coupled with a SGD290m net cash balance sheet for potential incoming acquisitions to further boost PATMI.

We continue to like ISOTeam despite a weak quarter, and include a 300,000 position at SGD0.35/piece. Its orderbook remains at a healthy SGD84.4m level, with ISOTeam still expecting to add to this with a few larger project tender results, which are to be announced over the next few months.


We are more positive on the consumer sector this year, especially on defensive consumer names like Kimly, with its rich cash flow generation. We have added 300,000 shares in the group at SGD0.35/share. Kimly has also reported a positive 2Q18. We think the new outlets it invested in during 2017 – and those coming up in 2018 – are likely to be profitable in 2019-2020. In addition, with M&As in the pipeline, we believe that growth will be exciting in the coming years.

For Silverlake Axis, we have added 240,000 shares at SGD0.55/share, as we believe the removal of the GST will be positive to its margins going forward. In addition, we believe that this should be its earnings cycle’s bottom, as the company has managed to clinch new key banking projects in the last few months. These have bumped up Silverlake Axis’ orderbook quite significantly to >MYR380m, which ought to result in strong earnings growth in FY19-20.

For Valuetronics, we add 100,000 shares at SGD0.83/share, as we think the sell-down is overdone, as its fundamentals and growth remain intact. In addition, with the trade war between the US and China seemingly solved, prospects will be bright for Valuetronics.

Full report here. 

]]>
ct.leong@nextinsight.net (Leong Chan Teik) Thu, 24 May 2018 02:07:25 GMT http://www.nextinsight.com.sg/story-archive-mainmenu-60/940-2018/12217-billion-below-model-portfolio-what-stocks-are-in
UNI-ASIA GROUP: 1Q2018 profit highest quarterly profit in 5 years http://www.nextinsight.com.sg/story-archive-mainmenu-60/940-2018/12215-uni-asia-holdings-1q2018-profit-highest-quarterly-profit-in-5-years Uni-Asia Group's 2017 profit (attributable to shareholders: US$6.2 million) was its biggest in five years -- and there was a 6.25 cent/share final dividend that came with it.

briefing1Q18CFO Lim Kai Ching @ 1Q18 results briefing.Going into 1Q2018, Uni-Asia stayed strong, with a 50% increase in net profit to US$3.3 million. Highlights:

• The two business segments -- shipping, and property & hotel -- grew their net profit 10% and 92% y-o-y, respectively. (See table for details)

MichioTanamoto3.18Executive chairman Michio Tanamoto. NextInsight file photo.• Ship charter income was buoyed by the recovery in the shipping market and improved charter rates.

For example, a 1-year charter for a handysize bulk carrier has gone up from roughly US$5,200 a day in 2016 to US$10,200 currently --which is a profitable level for Uni-Asia, according to mangement.

• Uni-Asia's property segment was boosted by a US$1.0 million reversal of impairment losses following the sale of a hotel in Japan.

Uni-Asia's cashflow trend is encouraging:

Rising operating cashflow (US$’m)

2013

2014

2015

2016

2017

1Q2018

12.14m

4.80m

10.30m

12.33 m

14.10m

4.43m


Uni-Asia in 1Q2018 recorded the highest first-quarter profit (US$3.3 million) in 5 years.

Stock price 

$1.40

52-week
range

$1.02 - $1.55

Market cap

$67m

PE (ttm)

6.7

Dividend
yield

4.37%

P/BV

0.37

Data: Bloomberg

The bulk of that came from its shipping segment -- specifically, sub-segment Uni-Asia Shipping -- which  recorded a profit of US$2.6m.

Of that, US$0.75 million arose from a reversal of impairment for a 17-year-old bulk carrier, Orient Sunrise, after it was sold. This reflects the recovery of the value of vessels along with charter rates.

Uni-Asia Shipping's fleet is made up of 8 handysize bulk carriers (post disposal of Orient Sunrise).

The bulk carrier sector is buoyed by limited new fleet growth and buoyant global seaborne dry bulk trade of commodities such as iron ore and coal.

Here's a quick look at the segmental performance:

US$’000

 

1Q2018

% change

Shipping 
(and related financial services)

Revenue
Net Profit

11,982
2,620

9%
10%

Property & Hotels (and related financial services)

Revenue
Net Profit

13,603
1,805

13%
92%

Headquarters
(Shared corporate services)

Revenue
(Net Loss)

18
(1,109)

38%
(9%)

Group total

Revenue
Net Profit

25,550
3,316

11%
57%

 

Set against the two positive one-offs (ie, reversal for Orient Sunrise and the Japan hotel) was a net fair valuation loss of US$1.4 million booked in 1Q2018, mainly for tanker and containership investments.

In the property investment in Hong Kong, Uni-Asia is looking to receive proceeds from the completion and disposal of its second project (a commercial office building) in 2Q or 3Q.

Uni-Asia holds a 13.4% stake in the investment which is carried out with a consortium.

Uni-Asia Group

Share price: 
S$1.40 

Target: 
S$2.00

Uni-Asia stock (recently at S$1.40) trades at a substantial 65% discount to its Net Asset Value, as of 31 March 2018, of US$3.00 a share.

KGI Securities, in its 22 May report, set a S$2.00 target price for the stock. 

It said: "Uni-Asia is positioned to ride the growth in its 3 business segments:
1) dry bulk shipping recovery,
2) completion of its 2nd /3rd HK property and investment into its 4th/5th HK property in 1H18, and
3) an increase in hotel rooms under operations ahead of two of the world’s largest sporting events to be held in Japan."



For the 1Q18 Powerpoint materials, click here.  

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ct.leong@nextinsight.net (Leong Chan Teik) Fri, 25 May 2018 01:41:41 GMT http://www.nextinsight.com.sg/story-archive-mainmenu-60/940-2018/12215-uni-asia-holdings-1q2018-profit-highest-quarterly-profit-in-5-years
CAPITAL WORLD: Mega mall project obtains approval cert, targets to open in 3Q http://www.nextinsight.com.sg/story-archive-mainmenu-60/940-2018/12213-capital-world-megal-mall-project-obtains-certificate-of-completion-and-compliance-to-open-in-aug Johor's largest retail mall, Capital 21 Mall, is on track to open in 3Q this year as it has just received the all-important Certificate of Completion and Compliance from the authorities.

Cap21Capital City: Comes with an indoor theme park, a hotel, a retail mall, and serviced suites & apartments. Artist's impression
This comes about four years after construction started in 2014 -- and a year after Capital World became listed on SGX via a reverse takeover. 

With the certificate, Capital World can collect the final 10% of the sale proceeds from the buyers (most of whom have bank financing).

The cashflow from this, based on sales of units to date, is estimated to be RM50 million.


siowchienfu2.18Siow Chien Fu, CEO of Capital World. NextInsight photoMr. Siow Chien Fu, CEO of  Capital World, said, “With the CCC, we look forward to the opening of the mall soon.

"The complexity of this integrated project, which houses the biggest indoor theme park and shopping mall in Malaysia with a gross floor area of approximately 1.2 million sq ft in total, epitomises Capital World's executional capabilities.”

The mall is integrated with the upcoming 315-room Hilton Hotel and one of the world's largest indoor theme park -- and 630 units of hotel-style serviced suites and 690 units of serviced apartments.

The entire project, dubbed Capital City, is located on Jalan Tampoi, a 15-minute ride from the Causeway and a 30-minute ride from Senai International Airport.

Capital World reckons that Capital City is poised to be a key tourist attraction in Johor. 

RM’m

9M2018

9M2017

Change

Revenue

133.6

120.3

11.1%

Gross Profit

99.1

92.6

7.0%

Gross profit margin

74.2%

77.0%

(2.8pp)

Net Profit after tax

56.3

62.3

(9.5%)

Net profit margin

42.2%

51.8%

(9.6pp)

Capital World's 9MFY18 (end-March 2018) net profit came in at RM56 million, down 9.5% y-o-y.

This was partly due to lower incremental increase in revenue recognition which is based on percentage of completion of the project. 

The project was 75% completed as at end-March 2018.

Notably, the net margin stayed high at 42.2%. 

Capital World's stock, which has fallen 67.5% since RTO, recently traded at 6.5 cents, which is below its Net Asset Value of 23.08 RM cents (about 7.8 SGD cents) a share.

As at end-March 2018, Capital World had cash and bank balances of RM12.1 million.

It has potentially another S$11 million to draw down by issuing convertible bonds to Singapore investor Dato Sri Chong Thim Pheng.  


For the 1Q Powerpoint materials, click here

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ct.leong@nextinsight.net (Leong Chan Teik) Mon, 21 May 2018 22:53:20 GMT http://www.nextinsight.com.sg/story-archive-mainmenu-60/940-2018/12213-capital-world-megal-mall-project-obtains-certificate-of-completion-and-compliance-to-open-in-aug
How Yale’s Endowment Fund Outperformed The Market Consistently Over 30 Years http://www.nextinsight.com.sg/story-archive-mainmenu-60/940-2018/12208-here-s-how-yale-s-endowment-fund-outperformed-the-market-consistently-over-the-past-30-years

Coin columnsPhoto: Freepik












34X returns.


That’s how much you would have made if you invested with the Yale endowment fund over the last 30 years. The Yale Investment Office has had annualised returns of 12.5% during this period.

For reference, if you had the brilliant foresight to put all your money in the S&P 500 and not touched it for 30 years, you would have made 19.5x. 


Many homeowners have probably been patting themselves on the back as they witnessed the surge in value of their square footage over the last 30 years, but it is likely that their homes have underperformed Yale significantly, and the S&P 500 for that matter. 

What is Yale’s secret sauce? 

 


The Yale fund is run by David Swensen. Sitting in New Haven, in a corner of Yale’s campus and away from the noise of Wall Street, Dr. Swensen has pioneered and implemented the ‘endowment model.’

When he took over Yale’s ~$1 billion portfolio in 1985, it was 80% invested in US stocks and bonds. He transformed the portfolio and redeployed ~90% into a diverse mix of alternative asset classes, including foreign equities, private equity, venture capital, real estate, hedge funds and natural resources.

Take a look at Yale’s target allocation over the years:

Yale asset allocationSource: Yale Investment Office

Diversification is at the heart of the endowment model’s investment philosophy. Swensen applied the academic principles of the Modern Portfolio Theory to Yale’s sizable endowment and believed that achieving true diversification required allocating to asset classes with low correlation, which will reduce the volatility of a portfolio as a whole.

With a disciplined and long-term investment approach, the Yale endowment can commit to the markets and their strategy for an extended period of time, which means they can hold assets that are less liquid than the public markets.

Asset classes such as private equity and venture capital require at least eight to twelve years of commitment. Owning a forest or investing in a large infrastructure project may require fifteen to twenty years. Illiquidity is rewarded with what the industry calls the illiquidity premium, which experts estimate to be an extra 3% in returns per annum over the liquid (public) markets.

Unfortunately, ‘invest like Yale’ isn’t so simple. They have a few advantages over us:

  1. Time. They are uniquely able to take a very long-term view (theoretically an infinite horizon), which means that they can stomach illiquid investments and unwaveringly stick to their plan during periods of high volatility.

  2. Size and influence. Not only do they have huge sums of money to invest, Dr. Swensen has also achieved Jedi status in the investment world. Every money manager wants his stamp of approval and will roll out the red carpet for Yale.

  3. Access. They can access anything and everything they want, a much broader range of investment opportunities than us mere mortals. In most cases, even if we are able to access investments in alternative asset classes, any extra returns will get eaten up by the layers of fees. 

  4. Fees. Their size and clout also allow them to negotiate favorable fee terms.



Brilliantly Executed Diversification
Brilliantly executed diversification will improve risk-adjusted returns over the long-run (as proven by Yale), but may not work in any one year.

Yale underperformed the S&P 500 last year; this doesn’t mean they should have switched their portfolio into an S&P 500 ETF.

Dr. Swensen’s long tenure in running the fund and and sticking to his investment strategy has shown enviable outperformance and success over almost all investment strategies known to man.

Food for thought: What if we could pool our money together and invest like Yale?


This article is republished with permission from Dollars and Sense.

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simkih@nextinsight.com.sg (endowus) Sat, 19 May 2018 08:17:18 GMT http://www.nextinsight.com.sg/story-archive-mainmenu-60/940-2018/12208-here-s-how-yale-s-endowment-fund-outperformed-the-market-consistently-over-the-past-30-years

Share Prices

Counter NameLastChange
AEM Holdings1.450-0.020
Alliance Mineral0.360-0.005
AusGroup0.047-
Avi-Tech Electronics0.4100.005
Best World Int.1.2600.020
China Sunsine1.470-0.020
DISA Limited0.009-
Dutech Holdings0.290-0.005
Federal Int. (2000)0.2600.010
Food Empire0.670-0.005
Geo Energy0.230-
Golden Energy0.360-
GSS Energy0.151-0.001
Heeton Holdings0.5650.005
ISOTeam0.360-
KSH Holdings0.645-
Lian Beng Group0.630-
Miyoshi0.059-0.001
Nordic Group0.540-
Oxley Holdings0.460-
REX International0.051-0.001
Riverstone1.0000.010
Roxy-Pacific0.505-0.005
Serial System0.165-
Sing Holdings0.4350.005
Sino Grandness0.2250.005
Straco Corp.0.760-0.010
Sunningdale Tech1.3300.050
Sunpower Group0.495-0.005
The Trendlines0.125-
Tiong Seng0.395-0.010
Trek 2000 Int.0.155-0.001
Uni-Asia Group1.400-0.010
XMH Holdings0.245-
Yangzijiang Shipbldg0.980-0.100

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