Outlook

Seems like its going to be a peaceful week ahead. Fluctuations at around STI 3100 to 3200. Time to relax a bit and observe for new potentials.

Current Stock Watch : Sapphire, Capitaland, Capitamall, Lifebrandz, Asiapharm

Market Pulse

I always believe that the real mover ans shaker of the stock market is the US. After disappointing results from pharmaceutical and energy sectors (due to dropping oil prices), Dow Jones dropped 0.94%. Even with the better than expected Microsoft results, the index was still down. This, of course, affects the whole Asian market.

Singapore market took a beating yesterday (largest single day drop since May) and today. Analysts from UOB Kay Hian expects a strong support at 3050/3070 for STI, after which a rebound is very much expected.

Current Stock Watch: Genting Int, Asiapharm, Pine Agritech, Lifebrandz, Sapphire

Asiapharm...again!

6-month MA price graph of Asiapharm

Applying simple technical analysis,for a 10 day - 20 day moving average comparison, there is a upward trend for Asiapharm. Applying simple fundamentals: rising price, good trading volume, good company fundamentals, good corporate news, strengthening of Chinese yuan, potential growth in pharmeceutical sector.....all points toward a buy for this stock! DBS Vickers recommends a BUY for the stock with price target of S$1.00.

Other stocks heavily invested in China which will be likely to benefit from the strengthening of yuan include Keppeland, Capitaliand, Cap-China REIT etc.

Current Stock Watch: Lifebrandz, Capitaland, Asiapharm, Sapphire

Market Outlook

It's been a while since last posted....was quite confused on the market outlook these days. Seems that the high volume is going back to the penny stocks! Will another bull market result like the previous post-SARS period? I also notice the drop in volume on warrents. Government announcement on the 1% cut will benefit the big companies, and from the 70 plus point raise in STI, a trend can be observed, i.e. buying in of the blue chips.

I have also decided to include a Current Stock Watch section after my posts. They will represent the stocks I will be observing and eyeing on.

Current Stock Watch: Sapphire, Lifebrandz

Stock Focus - China Stocks

Research by Deutsche Bank: China Stocks
(copyright of Deutsche Bank Research)

I picked a few companies to zoom in on:

Hong Leong Asia (HLA SP) - S$1.970 (mid-day 17Jan07)

1. The white goods market is growing at 10% pa, reflecting rising penetration of
   refrigerators into the Chinese population. Investors generally expect strong earnings
   growth for Xinfei, reflecting cost efficiencies and a higher effective stake. Xinfei also
   plans increased product launches and capacity expansion in 2007 to drive the
   growth momentum.
2. For the diesel engine business, FY05 earnings took a beating due to a weaker
   product mix. Management has started seeing indications of demand patterns
   normalizing, which could result in improved margins.
3. GPac continued to generate losses due to delays in ramping up sales. Customers
   were taking longer than expected to change products. Breakeven could come later
   this year if an order from an anchor customer is secured.
4. The building materials business was boosted by an uptick in construction activity,
   which resulted in an increase in selling prices for ready mix concrete (5%), cement
   (9%) and granite (17%) in 2006.

AsiaPharm Group Ltd (APHM SP) - S$0.800 (mid-day 17Jan07)

1. Following its latest acquisitions of cancer treatment injection drug CMNa and an
   oncology pharmaceutical unit Nanjing Kanghai Pharmaceutical Ltd, AsiaPharm will
   continue to explore other accretive acquisitions.
2. Distribution agreement with international drug distribution agency KKC Corp in South
   Korea should enable AsiaPharm to pave its entry into the South Korean market and
   extend its regional footprint.
3. Management believes that the key success for AsiaPharm depends on the
   integration of its existing and newly acquired businesses

Jiutian Chemical (JIUC SP) - S$1.400 (mid-day 17Jan07)

1. The group believes that demand for DMF was ~500,000 ton in 2006 and is
   forecasted to grow >30% for 2007. To leverage on it, the group will focus on
   capacity expansion in the medium term.
2. The DMF plant is on track to expand from the current 30,000mt capacity to
   150,000mt and is expected to commence by 3Q07. Management aims for 100%
   production ramp-up by 4Q07.
3. Management explained that the company did not export its products because of
   strong domestic demand and good working relationships it has established with
   local customers. Further, DMF are sold domestically at ~RMB6,200/ton compared
   to the export price of RMB9,000/ton, which is not significantly lower.

A Simple Stocks Story

Hahaha..its time for another short story to end the week..or should I say start a new week....Lesson number 2: When trading with Singapore stocks, unless they have really good fundamentals, neber hold for long term!

I remembered some time back, I asked my Business Finance teacher Mr Bobby, "Sir, if you are to buy a stock, would you choose on positive techinical analysis or positive fundamental analysis?"

He replied."Fundamentals of course. Technicals are for short term and unless you feel extremely confident, go with the basics, i.e. companies with good fundaments."

It was a number of years back when I started trading stocks. One of the first local companies which I invested in was Allied Technologies Ltd. It was a good move then. The market was booming and all the technology stocks were all in high volume. Allied Tech was one fo them. I see it grew beyond 100% profit! I was trilled when I calculated that I could earn a neat sum of 10k if I was to sell at that moment in time! My first mistake was my greed and I wanted more thinking the stock should be able to reach a higher peak.

Disaster struck and it went tumbling down...everyday. My second mistake was watching it fall withou doing anything! I was thinking..."whatever goes down will go up again!" Of course a person's greed will make him fall. I was thinking that why should I settle for a profit much lesser than before! I mus wait for that moment again! But....that moment never came. It fell rock bottom and now that stock has dropped beyond the price which I initially bought! It was a turnover of at least 150%!

It was a painful lesson which I have learnt and never will forget! Always monitor the market closely; Do not let greed guide you instead of fundamentals; Minimise losses or profits when necessary.

Stock Focus - Construction Sector

I believe the recent uptrends in the small cap stocks in the construction sector is but a mirage. Going through their recent projects and their financial results, the outlooks are positive for some, but not impressive. I believe that fundamentals do play a big part in the market, but if the technical analysis do not show positive signs as well, I try to avoid. In the Singapore stock market, I stick with my views that all are but speculations, unless their financial results proved otherwise. I foresee the trend in construction sector breaking soon, because they are due for correction. Personally I was quite tempted to buy in a few because of their high volumes and the low prices, but keep in mind that even though you may earn more, you may also lose more.

Companies in view: CSC (S$0.300); Lian Beng (S$0.275); BBR (S$0.150); Sapphire (S$0.050)

Stock Focus

So far the stocks I have looked into are quite on track I should say.

1) Genting International

Stock price rised trmendously for the past few days, reaching a peak of S$1.20 on 04Jan2007. I was monitoring the stock closely for these few days, thinking of when the stock will drop. I sold mine at S$0.915 on Wednesday, thinking the stock would at most float around S$1.00. But it finally broke yesterday and it now stands at S$0.91 at mid-day. Previous post on Genting, the price was S$0.765.

2) Asiapharm

The director called for a trading halt two days before, while the market was on a boom. It was pretty demoralizing seeing all the others stocks rising while Asiapharm lost its chance. But the last time a trading halt was called, the company bought another chinese drug company that produce a cancer drug no other company is producing. Asiapharm has monopoly on that drug. Yesterday the halt was lifted and I was expecting good news from the company again. I was right and the stock rose S$0.10 to a mid-day price of S$0.77, from my previous post when it was S$0.665.

A Simple Warrants' Story

Seeing the listed Warrants on the SGX website reminds me of a story on how Warrants can make or break. By the way the story's lead is me...hahahaha....anyway I did quite a lot of research on a few companies that have very high volume for their warrants back then...including DBS, Capitaland, Semcorp Marine etc.

My first trade of warrant, I pocketed a net profit of 2K from a DBS warrant offered by Deutsche Bank. My second trade was Capitaland's warrant....profited another 2K....another Capitaland for my third trade...yet another 2K....and all these was earned within a month or I should say three weeks....I was excited by the high returns....so I bought SemMarine warrants thinking the good outlook for the company will push the warrants sky high....but disaster struck and the market was due to a huge correction....blue chips went way down..and due to the gearing effect..the warrants fell big time.I was at a loss whether to minimise losses or to wait for post-correction. The decision has to be made FAST because the warrant was going to expire soon!

I made a wrong move and i waited....within 3 weeks or waiting....I lost 6K which offsets all my efforts for the past 3 trades! I was very frustrated that all my hard work went down the drain. But well, its was a good lesson learnt.

An analogy: If the small fishes want to swim slowly and steadily, they take the calm seas. All is peaceful but takes longer time. If the small fishes want to swim further faster, anticipate the big fishes and swim with them through the stormy seas. But when the big waves come, the big fishes live, but all the small fishes will die.