22 May 2006
by Goh Eng Yeow
Investors should question if such debutants will pay off in thelong run MUCH hand-wringing and doomsaying accompanied last week's plunge in the local stock market, along with other regional bourses, as a series of factors, including Wall Street's sudden nosedive,
unnerved investors.
Still, despite the 6 per cent correction suffered by the Straits Times Index (STI) since it hit a record high of 2,659.65 points on May 3, most long-term blue chip i nvestors are still smiling, though not quite as broadly, as the STI has more than doubled in the past three years.
Sadly, the same cannot be said for those who had made heavy bets on recently listed China penny stocks - and the hand-wringing
and doomsaying may well ring a little more true for these investors.
A check with financial portal, Shareinvestor.com, shows that many suffered double-digit losses in percentage terms last week alone.
Somehow, nervousness over the likelihood of more interest rate hikes in the United States has finally shaken investors here to
their senses to question seriously whether betting on such debutants will pay off in the long run.
It may also be no coincidence that the explosion in interest in China stocks coincided with the biggest commodities boom in the
past 30 years.
Both are fuelled by a massive inflow of 'hot' money from hedge funds, now estimated to have anything between US$1.2 trillion and
US$1.5 trillion (S$1.9 trillion and S$2.4 trillion) at their command worldwide.
But as recently as last November, China stocks here were still languishing in the doldrums in a hangover of oversupply and
lacklustre trading interest, after the near collapse of oil trader China Aviation Oil in late 2004.
But then came a rekindling of the love affair between China plays and fund managers here, starting with the purchase by US
investment group Templeton in December of just over 5 per cent of soya bean-based food and beverage maker Celestial NutriFoods.
Other fund managers, especially those running hedge funds awash with petrodollars, were believed to have followed suit.
Heavy bets were placed on Chinese IPOs, especially those linked to commodities, foodstuff, or bio-fuel, whose major shareholders were barred from selling any shares during the first six months of listing.
Recently, however, while global equity markets dived on interest rates jitters, Templeton slashed its stake in Celestial by a third,
raking in a tidy profit, since the share price has more than quadrupled in the past six months.
This raises a big question as to whether other fund managers will do the same with their holdings of China stocks.
While Templeton fund manager Mark Mobius maintained that the sale of Celestial shares was to give his fund company 'liquidity'
to pursue other investments, billionaire Richard Elman, the boss of global supply chain manager Noble Group, was more candid
on what he described as the 'disconnect' between realities - surging commodity prices and the overheating China economy.
In his usual folksy style, he described the hundreds of 'patently ridiculous apartment blocks, vacant shopping malls, and never to
be occupied factories' he saw in China as a 'fairyland'.
And he recounted riding on a 'massive, super-slick steel hungry Maglev train that is 95 per cent empty and operates only
sporadically' - all classic symptoms of a developing bubble economy.
Herein lies the catch. If China takes steps to tame its grossly overheated economy and cool rampant property development - a key
source of global commodity demand - it will hit the businesses of many Chinese firms very hard.
In many recent Chinese listings, ordinary investors may face a double blow from a possible sale of shares by both hedge funds and
pre-IPO investors who will soon be released from the lock-up period imposed on them when their firms were listed.
Many of these pre-IPO investors secured their shares at a fraction of the IPO issue price. This means that even if the stock prices
of these firms fall, by say, half, they will still reap a handsome profit when they sell off their entire holdings.
That said, investors should ask themselves whether they should value every Chinese IPO here, as though it is in the same league
as a Bank of China (BOC) listing.
BOC, which is tapping the markets for US$10 billion, is a play on China's striking economic growth, with 11,000 branches and
200,000 employees reaching all parts of China, besides controlling 65 per cent of Hong Kong's second-largest banking group.
The froth from BOC's impending IPO may have rubbed off on the China IPO market here.
Just think: As recently as early December, market sentiment on China was so sour that the boss of one Fujian plastic pipe-maker
was willing to list his company at a mere four times price-earnings ratio (PE).
Yet, only five months later, valuations of China IPOs have almost doubled.
Fibreglass products maker, Midsouth Holdings, the 100th Chinese firm to be quoted here, listed recently at about seven times PE,
and currently trades at 8.7 times PE.
The question to ask here is whether there has been such a big fundamental change in the Chinese economy to warrant a sharp
jump in valuations of its small and medium-sized firms.
Sure, there is vast potential for growth among many of these companies. But they do not have the scope of BOC and should not be
valued like one.
Some have also argued that Chinese stocks here may also benefit from China giving the go-ahead to its US$25 billion state-owned
pension fund to invest overseas.
But most of this money is likely to find its way only to the best blue chips among Chinese firms listed abroad, and may skip
Singapore altogether.
So, wise investors should track the China scene with prudence, given the turbulence experienced by global markets. Those hoping
to hitch a ride to riches via China stocks had better be prepared for some very nasty bumps.
China Stocks Here Should Not Be Valued Like BOC - The Straits Times
China To Pace Trade In Carbon Credits Foreign Investors To Pay Mainland Firms To Cut Back On Greenhouse Gases Output
South China Morning Post
23 May 2006
China's faltering efforts to clean up the environment stand to get a big boost from foreign investors eager to pay mainland power
plants and factories to reduce pollution in lieu of spending far more to cut emissions at home.
Over the next six years, China is expected to become world's biggest supplier of greenhouse gas emission rights under the terms of the Kyoto Protocol to the UN treaty on climate change. Since these rights are transferable, traders predict a large market for this unusual kind of security will develop.
According to the United Nations Framework Convention on Climate Change website, China is expected to generate 16.61 million carbon emission reduction units annually up to 2012, or 30.67 per cent of the global total from registered projects. One unit equals one tonne of carbon dioxide emissions.
Since only seven projects have been registered so far, or just 3.83 per cent of the global total, many more are clearly in the pipeline.
Indeed, 46 mainland projects have been approved, involving 50.94 million carbon emission reduction units, according to data from the National Development and Reform Commission which must sign off on the projects before they can be submitted to a third party and registered with the UN.
They include hydro, wind and biomass power generation as well as waste heat and gas recycling projects.
Developers of registered projects that reduce pollution or produce clean energy earn so-called carbon credits that they can then sell
to polluters faced with mandatory emission-reduction targets in other countries. Often it is far cheaper to achieve a given amount of pollution reduction by investing in projects in more polluted emerging market countries such as China than by cutting emissions at facilities in more advanced economies where stricter controls are already in place.
Since the US has refused to accede to the terms of the UN pact, most of the potential buyers of credits are in rich European countries, which have committed themselves to cutting emissions by at least 8 per cent to 10 per cent from 1990 levels by 2012. The goal is to slow down, if not avert, global warming.
Many European power companies have installed scrubbers to filter out easier to control pollutants and the cost of achieving the next level of pollution reduction would be far higher, said Thorsten Ansorg, managing director of Noble Carbon Credits, a unit of energy, agriculture and industrial products trading and logistics firm Noble Group.
Despite China's late entry into the carbon credit market, the government has caught up fast. Beijing has clarified its regulatory regime and is considering imposing a pollution tax in a bid to give polluters more incentive to invest in emission controls.
"The Chinese market could become the main supplier of certified emission rights by 2012 but it still has a long way to go," Mr Ansorg said. "The potential is there, the willingness is there as well as political support and readiness of the companies to [supply]."
However, financing is a key hurdle. "You see many projects being proposed but the majority do not have financing," said Toru Kabo,
the Asia Development Bank's clean development mechanism specialist. "So one may enter into a contract with a [credit] buyer and
the project may never happen."
Last November, the bank provided US$15.8 million for a project in Liaoning province that collects methane from coal mines and channels it to households and industry for use as fuel. It is also seeking credit buyers for other projects.
Good Company Buy Back Their Own Stock?
If you find the topic interesting, read Here
Cheers
Niversphere.
Excellent website to share with you
Focus Investor.com: The Focus Few
I read quite a number of investment related books before and little numb up there. however this website contains a wealth of information gathered in a single website. Gosh, if only I had stumpled upon it earlier and I am sharing it with you here.
"To be the Best, Learn from the Best"
My ratings for this website: EXCELLENT 
Cheers
Niversphere.
Noble Group
Just added more Noble Group after looking through my watchlist and could not resist the value of this company in the long term.
Previous Posts On Noble Group:
Undervalued Business Model
Cheers
Niversphere.
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Please read the prospectus and perform your analysis before making any investment decision. The above does not constitute a recommendation to apply for this company. I will not be liable for any losses incurred by anyone who invests based solely on the above-mentioned information
Memory Devices :: Just A Step Away From Being Top Of The World
Memory Devices( MDL ) has a relatively short history from 2001, however its achievements thus far is nothing short of amazing. From a small office in Dongguan to a company acquiring 100% of TwinMos Technology. I remember vaguely that MDL share price was lingering around its IPO price for some time. Too bad then, I did not gave it a second look.
MDL is principally engaged in the research and development of solid state memory, DRAM and Flash memory and is widely used in consumer electronics such as MP3 players and thumbdrives. The is also a secular trend that consumers are upgrading or fitting their devices with higher memory capacity with after purchases of digital devices like digital camera and handphones. As the pixel on digital cameras or handphone camera increase, the need for higher portable memory increases. There is also rumors that Microsoft is launching its own version of PSP. However, that is still pure speculation. Without doubt is the increase demand for portable memory like Flash.
MDL aims to be a No.2 market player in the solid state memory products industry which, in according to source from iSuppli and compiled by DigiTimes - April 2005, is dominated by only one strong player with revenue of US$2.45 billion in 2004. The next two larger players had revenue in the range of US$726 million to US$740 million in 2004.
MDL had publicly expressed that it will be actively looking for opportunities to expand its geographical reach and grow it revenue, organically as well as through merger and acquisition.
MDL entered into a share exchange agreement to acquire the entire issued share capital of TwinMOS for US$96.8 million by way of the issue of 375.2 million new MDL shares priced at 42 SGD-cents per share. The acquisition is intended to elevate MDL a few more rungs up the ladder in the multi-billion dollar global solid state memory market. The acquisition is expected to be completed in 3Q of 2006. For readers who are clueless about TWINMOS.
Microft is expected to launch its VISTA operating system next year in 2007 a delay from its proposed launch date. As yet, the system hardware requirements are yet to be confirmed. One thing certain would be that it would be memory intensive just like Looking glass from SUN. However, I saw some new laptops with the sticker, Vista ready. Judging from the specs, I observed that at least 512MB DDR2 memory is needed. I expect end users will be buying new computers then fitted with more main memory( DDR2) which could potentially boast the bottomline of MDL specially after the successful acquisition of TWINMOS. This is a demostration of the ambitious management. The acquisition of TWINMOS allows MDL to reap economies of scale and consistent supply of memory chips for its own manufacturing. Maybe the delay of the launch of Vista by Microsoft may work in favor of MDL. A concern would be overstocking of inventory by manufacturers would cause a drop in prices of DRAM prices. It is just a low possibility.
Wired.com
Higher Ram prices may affect Vista
Vista to use more memory?
Windows Vista makes case for 2 GB of system memory, says Samsung
MDL recently concluded an exciting tie up with POTEVIO(http://www.potevio.com/en_new/index.asp), China's biggest handset maker. The increasing need for higher storage in mobiles will help drive the demand for Flash memory. Flash is lighter and more hardy than HDD based memory storage. The outlook for MDL looks bright indeed. POTEVIO is an IT products manufacturer and distributor as well as a service provider in the telecommunication industry where it is involved in both fixed line and mobile communications. It is one of the top 100 enterprises in China’s IT industry and was ranked No. 1 amongst the top 100 Chinese Electronics & Information Enterprises in 2001 and 2002. In 2003, POTEVIA was ranked by the Ministry of Commerce of China as the 5th largest enterprise, both amongst the top 500 largest import and export enterprises and the top 200 largest export enterprises. This Chinese biggest mobile phone producer has four self-owned product brands (Capitel, Eastcom, Bird and POTEVIO), four joint venture product brands (Ericsson, Nokia, Panasonic and Motorola) and two co-brand products (POTEVIO Sanyo and POTEVIO Toshiba) in China. In 2003, it achieved a production and sales volume of over 50 million units of handsets.
In its 1Q06 results, MDL announced a 59% increase in turnover with a corresponding 53% increase in gross profits. This is within my expectations.However 2Q results should be lower as expected as contribution from DRAM is seasonally lower in the 2Q. You can similarly get this information from chip testers like UTAC.
Based on DCF, 
Today's share price of 0.37 represents a 22.8% discount to its intrinsic value. However do note that, I was conservative in my calculations taking into account the cyclical nature of the industry it is in.
Cheers
Niversphere.
Moore's Law: An empirical observation by Gordon Moore, co-founder and chairman of Intel.
Observation: New generation memory chips was introduced every 3 years woth 4 times memory capacity as that of the previous one. Alternatively, number of transistors on the memory chip becomes 4 times every 3 years or double every 18 months.
==================================================
Please read the prospectus and perform your analysis before making any investment decision. The above does not constitute a recommendation to apply for this company. I will not be liable for any losses incurred by anyone who invests based solely on the above-mentioned information
Ausgroup :: Tapping on Aussie Development
Ausgroup is a recent Sesdaq listed company (27 April 2005). It issued 52 million shares at 22 cents apiece during its IPO raising $8.1 million to fund working capital. I had swore off investing in Sesdaq listed company after an unpleasant experience with Automated TouchStone. Never heard of it? It's ok, you would miss it. However, Ausgroup is such a gem comparatively and is really hard to ignore and I decided to invest in Ausgroup for this exception. Ausgroup's operations are mainly focused on Australia.
Ausgroup is an integrated multi-disciplinary engineering services provider serving mainly the oil and gas and mining-related which includes extraction and processing of mineral ores industries. From industrial construction to maintenance services, the Group is able to provide total engineering solutions and specialist services across a variety of fields.
The Group's principal activities are undertaken through its engineering division and services division respectively. The engineering division comprises of its oil and gas, LNG ("Liquefied natural gas") projects, fabrication and industrial construction business units while the service division is made up of its maintenance, protective coatings, insulation and refractory linings business units.
The Group services the needs of renowned customers from the Energy sector (oil and gas, LNG) Apache Energy, Woodside, Shell, BP, Chevron and Roc Oil and Mining Resources( Iron Ore, Nickel, Gold, Coal, Alumina)Rio Tinto, BHP, Wesfarmers, Alcoa World Alumina and Worsley Alumina.
The business model of Ausgroup is similar to the water treatment companies. It a basica Build-Maintain-Upgrade business model. This provides Ausgroup with recurring income from completed projects which is nice to have. However, I observed some projects completed by Ausgroup are on a rolling contract basis for maintanence probably favoring the other party. This could be a slight concern for investors in Ausgroup. However, the management touched on the point that maintanence is always in demand and could buffer Ausgroup's performance even in difficult times. True to a certain extent, but not to be too optimistic about.
Based on Ausgroup's Investors Presentation, they provided an insight to their growth prospects of the industry they are in. 
* information is based on insider information, the integrity of the news cannot be verified. 
Ausgroup book order already looks promising going into 2007.
The management highlight several strategies going forward.
In Australia, Ausgroup continued to focus on Energy and Mining activities,target defence contracting and continue to grow their services business unit. To form joint ventures and alliances with Gorgon modules and defence ship building. The management possibly hinted at future mergers and acquisitions in the near medium term.
Ausgroup recently placed out a total of 39,477,000 new ordinary shares at the issue price of S$0.2896 for each placement share. The placement increased the total issued shares to 339,477,000 ordinary shares. This took place on 5th May 2006. EPS will be diluted to 1.0 Australian cents from 1.2 Australian cents based on the 6 months ended 31 December 2005.
The estimated net proceeds from the Placement, after deducting expenses will be S$1.2 million. The net proceeds will be used for working capital. My opinion on this share placement is a positive development for Ausgroup. It increases the liquidity of Ausgroup shares which usually plagued small share issues, healthy take up of new share issued and provides long term investors an opportunity to take part in the infrastruture building of Western Australia.
Extracted from the article Hu Jintao's visit to Australia:
"..............
While speeding up strategic economic restructuring, we are vigorously implementing the strategies of revitalising China through science and education, of sustainable development, of the development of the west and of renewal of the old industrial base of north-east China.
China enjoys a vast market, abundant labour, social and political stability and a vibrant momentum for development.
A stronger and more developed China will bring growth opportunities and tangible benefits to other countries in the world.
China and Australia are highly complementary economically.
Blessed with a vast territory and rich resources, Australia boasts of economic and technological successes.
The potential for China-Australia economic cooperation is immense.
Past, present or future, we see Australia as our important economic partner.
China-Australia trade grew rapidly in recent years from $US87 million ($A124.67 million) in the early years of diplomatic relations to $US10.4 billion ($A14.9 billion) in 2002.
China has become Australia's third largest trading partner, the fourth largest export market, and the fastest-growing one.
Australia is China's ninth largest trading partner and the biggest supplier of wool.
Over the years, China has purchased large amounts of iron ore and aluminium oxide from Australia which has such energy and mineral riches.
Last year, the two countries signed a 25-year, $25 billion deal on LNG in Guangdong, thus laying a solid foundation for bilateral energy cooperation. ......"
Another related article:
President Hu Jintao Meets Australian Business Leaders and New South Wales Governor Marie Bashir and Premier Robert Carr
Thread from CNA on AusGroup:
CNA Market Forum - Ausgroup
Investor Relations - ZaoBao IR
Based on DCF, 
Today's share price of $0.305 represents a terrific 96.7% discount from its intrinsic value.
Cheers
Niversphere.
==================================================
Please read the prospectus and perform your analysis before making any investment decision. The above does not constitute a recommendation to apply for this company. I will not be liable for any losses incurred by anyone who invests based solely on the above-mentioned information
Memory Devices
Memory Devices has a relatively short history as were all tech company. It was established in 2001 and managed to be listed on the Mainboard of the Singapore Exchange on 9 November at an issue price of 20.5 cents. Memory Devices is in the business of research and development, manufacture and sale of solid state memory storage products for use in personal computers, notebooks, servers and networks as well as a wide array of consumer electronics, industrial and communications applications.
Its products, broadly categorized into DRAM memory modules and Flash memory products are sold to both ODM and OEM customers.
He makes BIG MONEY in shares, not soccer - By Joyce Lim
Great work there Chyelink.
Cheers
Niversphere.
Article excerpted from He makes BIG MONEY in shares, not soccer
* LAST WORLD CUP: Civil servant turns down friends' offer to bet on matches, instead he buys shares
* Now: They've gone broke, but he's worth $800,000. His salary? Just $3,000 a month
MR Roger Koh aims to become a millionaire in less than 10 years.
And it is not just a pipe dream for the 33-year-old civil servant, even though he draws a monthly salary of just $3,000.
In fact, he's just $200,000 shy of it.
Like some Singaporeans, Mr Koh has $500,000 in CPF, insurance and housing.
--Joyce Lim
But unlike many Singaporeans, he has $300,000 in cash and shares. His four-room HDB flat in the west and Japanese saloon car have also been fully paid for. This brings Mr Koh's total assets to $800,000.
Showing his latest bank and CPF statements to The New Paper on Sunday, Mr Koh proudly declares that he is debt-free.
And in a country where Singaporeans are quick to swipe and sign, Mr Koh is a rare breed.
He claims he has never owned a credit card.
Indeed, Mr Koh, married with a 1-year-old son, hates spending on credit and prefers to pay with cash or by Nets.
But he might not have the comfortable life he's leading now if he had gambled on the World Cup four years ago.
He contacted us after reading our report about a man who became a bankrupt after he gambled away all his money on World Cup matches.
The story struck a chord with Mr Koh as he too had once come close to losing his life savings on soccer bets.
He recalled: 'My friends and colleagues asked me to chip in on their bets. They told me, 'Sure win'.
'But I didn't believe them because they were soccer fanatics, and every match to them was a sure win.
'I'll place my money only on something I know well. Though I like playing soccer, I don't really follow soccer news or watch the matches.'
So Mr Koh watched from the sidelines as his friends placed huge bets.
'When I told my friends, 'No, thanks', some of them made fun of me and called me kiasu and kiasi (afraid to lose and die in Hokkien),' he said.
'When they won, they would say to me, 'See, told you to buy, but you didn't want'.'
STOOD HIS GROUND
Many times, he was tempted to take the plunge, but each time he said he stood his ground.
Instead, he put his money in shares, even though the stock market was languishing then.
'My friends, who won in the soccer matches, laughed at me for putting my money in stocks. They said that the market will keep going down. But I thought otherwise,' said Mr Koh, who holds a local diploma in business studies.
'I recalled how there was a rebound in the stock market after the 9/11 incident. So I decided to take the chance and invested all my money then.'
'I spent my time reading up on financial news and wrote e-mails to company CEOs to ask about their financial reports.'
With a capital of $30,000 in his CPF account and $50,000 cash, Mr Koh first invested in unit trusts and stocks.
Withing a year, he made $100,000.
His current portfolio includes shares in HTL International, Unisteel, BestWorld and TPV.
In four years, his investment portfolio increased by more than 160 per cent.
His friends, on the other hand, landed themselves deep in debt - many of them got burnt by gambling on the World Cup.
Mr Koh said: 'They lost their promotions, advancements, and most importantly, their loved ones, as the debt was too much for them to handle.
'Some of them tried to borrow money from me. But I refused because I didn't think it would do them any good.
FRIEND DECLARE BANKRUPT
'One of them, a property agent, was more than $50,000 in debt and finally had to declare himself a bankrupt.
'Another colleague's career was affected when his boss found out about his gambling from debtors who visited him at the office.'
Looking back, Mr Koh said he was glad he stayed away from football betting.
'Now, I aim to help my friends or relatives in their investment portfolio.
'I don't just concentrate on making money. I also want to give back to society by donating blood 100 times before I reach 50. I have since donated blood 42 times.'
And since the World Cup is just round the corner, Mr Koh has pasted The New Paper on Sunday report at his work desk to remind his colleagues about the pitfalls of soccer betting.
'I'm glad your paper ran the report. I hope it can serve as a reminder to readers not to blindly place their money on something they don't know about.'
--------------------------------------------------------------------------------
Odds are stock market will be hit
FORGET about the stock market.
Come June, punters will be watching the likes of Ronaldinho, David Beckham and Roberto Carlos make their runs down the soccer field rather than the rise and fall of the Nikkei, Dow Jones and Hang Seng indices.
With Berlin 2006 kicking off in just over a month, punters are more likely to be putting their money on the World Cup.
Some analysts believe that many retail investors and contra players, who look for short-term gains in shares, will shift their resources to football betting.
Remisier James Quek, 30, feels that the World Cup will ease share-trading activities.
'There will probably be less speculative trading,' he said.
'Even though share trading and soccer betting are two different things, the latter is still an opportunity to make money.'
HYPE
With less liquidity, share prices are set to fall.
'Some people may just take advantage of the situation and come in during the World Cup period,' said Mr Quek.
There are bound to be some brokers who will be distracted by the World Cup and their work attitude will be affected.
'Maybe there'll be a lot of hype in the first few matches. The middle part will be quieter until the finals,' said Mr Quek.
During the last World Cup in 2002, turnover on the SGX was almost halved in June, compared to the previous month. Share prices also took a hit.
However, a veteran remisier, who declined to be named, feels that today's market cannot be compared to four years ago.
She said: 'There was the crisis back then. Our economy has since recovered and we've recently been seeing a high volume of China stocks here.
'Also, with the General Elections, the market will do well,' she said.
Share investor Andy Ang, 28, agreed.
'In fact, people are speculating that the STI will go up even more,' the engineer said.
He is looking forward to the World Cup's kick-off on 9 Jun, but said he will not neglect his stock market activities.
Most of the investors we spoke to also said they would not be dumping their money into football preferring shares.
Though share speculation is also a form of gambling, it is still safer than soccer betting as losses can be reversed if the share price recovers.
Share investor Andy Ang said although he is looking forward to the World Cup's kick-off on 9 Jun, he will not neglect his stock market activities.
Engineer Ray Tan, 30, is also not bothered by the World Cup.
'I don't give a damn about the World Cup. Not everyone is into soccer,' he said.
'Some investors will probably be watching soccer matches and be less focused on the stock market.
'In that case, fewer stocks will be traded, which could result in depreciating share prices.'
This means the World Cup may actually be a good time for investors to go bargain hunting.
Why Global Testing share price not affected by recent share placement?
I have been reading some forums on Global Testing and noticed that some investor's education(in stocks) less than satisfactory. There was another thread which claimed that TMSC and other shareholders are selling Global Testing on the open market following the share placement news.
To clear some doubts, i wrote this article here. Global Testing placed 245,000,000 Ordinary Shares comprising:- (A) 175,000,000 New Shares; And (B) 70,000,000 Vendor Shares. The net asset
Thanks for your question as to why Global Testing’s net asset value (NAV) went up instead of down after the issue of 175 million new shares. Why isn’t there a dilution of its NAV?
The NAV went up because the new shares were issued at 31.25 cents which is higher than the pre-issue NAV of 22.54 cents.
The 175m new share actually was supposed to cause a dilution in the share price as the issue price of 175m new shares was at a discount of 4% to the prevailing market price of 32.5 cents (if my memory serves me right). The announcement of the new share issue caused a pull back in share price for only a day or so. When the market realized that the proceeds would be used for expanding and upgrading the production facilities in anticipation of a soaring demand, the share price then reversed its pull back and skyrocketed to 38 cents within a matter of days.
Normally new share issues cause a dilution in share price but not NAV because NAV is usually less than half or even one third of the traded share price for manufacturing and trading companies and a smaller fraction for service companies like education or IT services. But for property and hotel companies, share prices are commonly 20 to 40 % below NAV. For such companies, a new share issue could result in a dilution of NAV.
The Wit and Wisdom of Peter Lynch - By Kaushal B. Majmudar, CFA
We were fortunate to have an opportunity to hear Peter Lynch speak at an investment conference in New York about a year ago. Peter is, of course, the famed ex-manager of the Fidelity Magellan Fund. Under his stewardship, the Magellan Fund, which he ran from 1977 to 1990 grew from a small $20 million fund to $14 billion in assets when he stepped down to focus on family and other interests. In 1983 (just 6 years after he took over), the fund had grown to $1 billion on the back of Peter's exceptional performance. More specifically, according to a secondary source quoting Valueline, Lynch achieved an average annual return of 29% per year over his 13 years running the Magellan Fund.
Besides his fame as an exceptional investor who helped thousands through the fund, Peter is also well know for writing two very good books on investing that became best sellers. Peter's fund continued to perform well even as the fund became the largest equity fund in the country. Peter Lynch was only 46 when he retired (no doubt to the consternation of his many investors) at the top of his game. According to Peter, the fund continued to outperform the market for the next 7 years after he left! Also interesting to students of investing and value investors in particular is that Peter's approach featured wide diversification and opportunistic flexibility to buy any company for the Magellan Fund without arbitrary size or value versus growth limitations (in today's parlance the fund had a "core" approach).
In sharing his comments, Peter was exceptionally funny and entertaining. Though he has probably delivered some version of this talk many times (indeed he had a handout with his main bullet points on it - summarized below), he also made some comments that were clearly off the cuff. For example, the host of the conference was an investment bank that was very proud of being the bank with the highest profits per employee and after Peter was introduced, he quipped that "It makes you wonder why they don't hire more people."
In any event, the meat of Peter's comments were essentially straightforward and very common sense oriented. Peter shared his rules/observations on investing (8 of them) and proceeded to share some thoughts on each point and then talked about 10 wrong-headed and dangerous things that people say (often to themselves) about investing. It never hurts to review the fundamentals and glean insights from superstars like Peter so we took the time to share the essense of his message below.
After each of Peter's fundamentals, we provide a brief synopsis of his key comments or message relating to that fundamental. The discussion below includes our own observations on the several parallels to Warren Buffett's wisdom on investing. At The Ridgewood Group, we find it encouraging that many long-term successful investors like Peter Lynch and Warren Buffett seem to share many of the same key fundamentals since it means that other investors also have a fighting chance to learn and learn to properly apply these same fundamentals in order to become better investors.
Peter S. Lynch's Fundamental's of Investing
1.) Know What You Own - Most people don't really know the reasons why they own a stock - you should. Ed's Note: Similar to Ben Graham and Warren Buffet's Businesslike Investing in your Circle of Competence
2.) It is Futile to Predict the Economy, Interest Rates and the Stock Market(So Don't Waste Time Trying) - "If You Spend 13 minutes per year trying to predict the economy, you have wasted 10 minutes" Focus on the "facts" now at hand rather than predictions about the future
3.) You Have Plenty of Time - to identify and recognize exceptional companies. If you bought WalMart AFTER it rose 10x in its first 10 years, you got another 60x return over the next 30 years. Bottom line: Don't be in a rush - look at plenty of stocks, but be patient. Note: Buffett's "Wait for the Perfect Pitch"
4.) Avoid Long Shots - his record was ZERO out of 25 investing in companies with no revenues but a "bright future" to sell. His advice if you run across a company that falls into this category but still excites you - do nothing and write down the name. Look at it again in 6 to 12 months and see if you still think it is good. If it is one of the good ones and went from 5 to 15 while you waited, per point #3 above, you probably still have plenty of time. Note: Following this rule could keep you out of trouble. Benjamin Graham and Warren Buffett talked about avoiding Speculations and focusing on Investments instead
5.) Good Management is Very Important and Buy Great Businesses - good management is very important - maybe even the most important consideration. It may also be the most difficult item on this list to get right. His advice: look for good companies because a good management in a bad business will probably fail. "Buy a business any fool can manage because eventually one will" Buffett has also observed that when a good management meets a bad business, it is the reputation of the business that generally prevails.
6.) Be Flexible - lots of unexpected things happen, some good and some bad. Many of his best investments happened for the "wrong" reasons, i.e. his original thesis was off, but the investment still worked out. Sometimes he was absolutely right about the growth but the investment was still lousy and he did not make any money. So be flexible and humble
7.) Knowing When to Sell is Hard - before you make a purchase, you should be able to explain why you are buying/own it in terms that an 11 year old could understand - three sentences at most. Remember this reason and sell the holding when the reason no longer continues to hold. Investing well does not take a genius - only need 5th grade math - so math has nothing to do with being a great investor
8.) There is Always Something to Worry About - and this makes things interesting. The 1950s were one of the best decades to own stocks, but from a geopolitical basis everyone was scared of nuclear war. In the early 1990s, everyone was scared about the Japanese taking over the world and beating America. Not coincidentally, more all-time worst market days occur on Mondays because people have the whole weekend to WORRY. His advice is to forget about all the global bad stuff because the key to good investing is not the brain/intellect, its having the stomach.
In addition to the above points, Peter also shared his Ten Most Dangerous Things People Say About Stock Prices reproduced below. Even more than the points above, Peter's good sense of humor came through when he discussed these old saws:
1.) "If it's gone down this much already, how much lower can it go?" (answer: Zero)
2.) "If it's gone this high already, how can it possibly go higher?" (some of the best companies grow for decades)
3.) "Eventually they always come back." (no they don't - there are lots of counterexamples)
4.) "It's only $3 a share, what can I lose?" ($3 for every share you buy)
5.) "It's always darkest before the dawn." (Its also always darkest before it goes absolutely pitch black. Don't buy a business just because price dropped and it is cheaper now)
6.) "When it rebounds to my cost, I'll sell." (The stock does not know you own it! Don't take it so personally Note: this comment is explained by the well documented psychological tendencies called loss aversion and anchoring bias which are talked about in Behavioral Finance. If you liked it at ten, you should love it at 6 so either buy more or sell)
7.) "What me worry? Conservative stocks don't fluctuate much." (There is no such thing as a conservative stock - the average stock fluctuates between 50% to 70% from its high to its low price every year. There is a graveyard where all the "conservative" stocks get buried. Companies and businesses change!)
8.) "Look at all the money I lost - I didn't buy it!" (Don't beat yourself up about the missed opportunities because it is not productive - when he managed the Magellan Fund, he almost never owned one of the 10 best performing stocks in a given year, but he did fine anyway).
9.) "I missed that one. I'll catch the next one." (Doesn't work that way)
10.) "The stock has gone up - so I must be right" or "The stock has done down - so I must be wrong." (Technical analysis is not worth much. So many people like something at 20 and hate it at 12 - never made much sense to him).
Peter's fundamentals, like those of many other super investors are grounded in common sense and an understanding of human misjudgments and failings. At the Ridgewood Group, we draw inspiration from outstanding investors like Peter who remind us that in investing our greatest challenges are often internal and psychological.
Taiwan Semiconductor Manufacturing Co.
UPDATE 2-TSMC April sales up 44 pct y/y, sees better 2006
Wed May 10, 2006 5:03 AM ET
(Recasts with TSMC April sales, more details)
By Kirby Chien and Baker Li
BEIJING/TAIPEI, May 10 (Reuters) - TSMC <2330.TW>, the world's top contract chip maker, on Wednesday posted a 44 percent jump in April sales amid growing demand for new consumer devices that could help boost 2006 revenue up 22 percent from last year.
At a conference in Beijing, TSMC
"We should see $10 billion in sales this year," he said.
"For net profit, $4 billion." Chang did not elaborate.
A company spokesman later told Reuters that Chang's comments did not constitute an official forecast, saying the company does not issue annual financial forecasts.
Forecasts from 19 analysts surveyed by Reuters Estimates put TSMC's 2006 net profit at an average T$131.9 billion ($4.2 billion). TSMC earned a net profit of $2.91 billion in 2005.
Analysts expected the company to garner revenue of T$327.3 billion ($10.42 billion) this year, compared with last year's $8.23 billion.
"TSMC definitely can reach the target," said KGI Securities analyst Tiffany Chen. TSMC's 2006 sales and earnings forecasts were 2.5 percent and 5 percent lower than Chen's own estimates.
The rare forecasts came after TSMC reported a near doubling in first-quarter profit last month as it recovered from last year's chip glut. Analysts have widely expected the company's profit to grow quarter by quarter this year.
Later in the same day, TSMC reported sales of T$27.162 billion for last month, up from T$18.903 billion in April last year and slightly higher than March's T$27.107 billion.
While demand slowed after the year-end shopping season, new generation mobile phones, game machines and flat-screen televisions are gaining popularity, boosting demand for chips.
TSMC has forecast second-quarter sales to rise 2.2 to 4.8 percent from the first quarter, with gross margin up as much as 1.6 percentage points -- a guidance that was more conservative than its rival United Microelectronics Corp. (UMC) <2303.TW>.
UMC
Hurt by losses in U.S. peers, TSMC's ordinary shares slid 2.21 percent to end at T$66.50 on Wednesday, worse than the benchmark TAIEX's <.TWII> 0.87 percent drop. UMC shares lost 4.7 percent to T$21.30.
But so far this year, TSMC has risen 6 percent and UMC was up 15 percent as investors bought into their solid fundamentals.
Output of chips below 130 nanometre circuits would make up 50-55 percent of TSMC's total revenues in the second half of this year, compared with 49 percent in the first quarter. UMC also expected output using advanced technology to grow this year.
Both TSMC and UMC count Texas Instruments Inc. (TI)
References:
Global Test Website
Kim Eng - Global Test
Results Announcement :: China Sun BioChem
Another set of expected good results announced from China Sun Biochem. The challenge now is to utilise its expanded production capacity and gain more market share from its competition. The highlight regarding the issuance of the ethanol should be regarded as a potential growth driver however exercise against over excitement.
For corn starch production, the major competitors are:-
1. Changchun Dacheng Corn Development Company Limited;
2. Yellow Dragon Food Industry Company Limited;
3. Shandong Zhucheng Xingmao Corn Developing Company Limited; and
4. Jiliang Cerestar Corn Industry Company Limited
For modified starch production, the major competitors are:-
1. Cargill, Incorporated;
2. National Starch and Chemical Company; and
3. Changchun Dacheng Corn Development Company Limited;
For other corn-based products, the competitors are:-
1. Yellow Dragon Food Industry Company Limited; and
2. Shandong Zhucheng Xingmao Corn Developing Company Limited
Highlights:-
* Group revenue jumped 45% on increased sales volume and enhancement of sales mix.
* Gross profit increased 27% and profit before tax increased by 24% despite rising material prices and administrative overheads.
* Positive outlook well-supported by increasing utilisation of Group’s expanded corn starch facilities.
* New ethanol plant to be completed within this year will be one of Group’s key performance drivers.
SGX Announcement - Financial Statement
SGX Announcement - Press Release
Cheers
Niversphere.
Ace Achieve SOLD !
Probably inspired by Steve Chia, "..unless there are enough people who hates PAP, i will not return to politics ..." In my case, unless there is enough genuine investors in Ace achieve, i would not buy back Ace achieve.
Is the investor relations in existence for Ace achieve? Communications company not communicating with shareholders. The email address that was given on SGX does not exist. Undeterred, i send in another email to the email published on their website. Waited patiently for the reply but not even a single reply from them and not even a single acknowledgement reply from them. If they do not respect us minority shareholders, i do not want myself involved in this company, frustrated! A good IR is important for any listed companies. Lose your IR, lose your shareholders.
For its highly visible low price earnings multiple and higher book order from customers, Ace achieve is now lower than its own IPO price of 0.20 and is at the same price a year ago.
However fellow investors whom are already vested in Ace achieve or interested in Ace achieve should look forward that results announcement is "expected" to be released soon. Make your decision based on facts.
For me, i am done with Ace achieve. Emotions are never good friends with investing in stocks.
Regards
Niversphere.
Please read the prospectus and perform your analysis before making any investment decision. The above does not constitute a recommendation to apply for this company. I will not be liable for any losses incurred by anyone who invests based solely on the above-mentioned information
Global Testing :: 1Q2006 RESULTS SNAPSHOT
GLOBAL TESTING’S 1Q2006 NET PROFIT SOARS 125 TIMES TO US$5.03 MILLION
- Revenue surges 110.0% from US$8.29 million in 1Q2005 to US$17.40 million in 1Q2006
- Surpasses prior sequential guidance for revenues for 1Q2006
- Maintains a strong operation margin level
- 2Q2006 set to see sequential growth in revenue of approximately 5% to 10%
- Target revenue growth of more than 40% in 2006 with further upside from recent new projects
- Gearing improved from a gross ratio of 64% in 4Q2005 to 54% in 1Q2006 and a net ratio of 48% in 4Q2005 to 39% in 1Q2006
Article excerpted from Announcement on SGX
Documentary - History of Stock Market - Modern Marvel
Part 1: Brief Introduction to the Stock Market History dating back to ancient Greece period
Part 2: How the stock market became exclusive to brokers and the bull and bear story, hear what the richest person then had to say and good things never changed a bit, and who was the first shortist
Part 3:Milestones: Telegram, DJIA Legend of Mergers: JP Morgan
Part 4: The Boom, extreme optimism and inflow of "uneducated" investors, margin calls => Panic and Run!!! => The Great Depression
Part 5: The reformation and Merril Lynch's contributions, Concept of diversification coined and earned the Noble
Part 6: Modernization
Cheers
Niversphere.
Just to share some light hearteners with ya readers
Received this from an email.
In Singapore, the majority of us live in Highly Dangerous Buildings (HDB), And most people have already got used to Paying and Paying (PAP).
Not only do you have to pay, you Pay Until Bankrupt (PUB).
If that's not enough, somebody still Purposely Wants to Dig (PWD) and get more from you.
So what more can you do when you are in the Money Only Environment (MOE)?
With the current Mad Accounting System (MAS), you are forced to Pay the Sum Ahead (PSA), Which will leave some people Permanently Owing Some Banks (POSB).
And forced to live on the Loan Techniques Always (LTA) system. When you fall sick and happen to be admitted to a Money Operating Hospital (MOH),
You might be able to use your Cash Prior to Funeral (CPF) fund.
If you are out of luck, you may meet doctors who Never Use Heart (NUH) to treat you, And you will be Sure to Give up Hope (SGH).
To help ease the traffic, motorists have to pay Cash On Expressway (COE).
If that doesn't help, they can always Eternally Raise Prices (ERP) on the roads.
If you don't own a car, you can always make a Mad Rush to the Train (MRT), OR get squashed in a bus Side By Side (SBS).
Lastly, under all these pressures, there are not many places we can relax, not even the good old place we used to go because it has become So Expensive and Nothing To See Actually (SENTOSA)!!!
Quotes For The Day
"Success in investing doesn't correlate with I.Q. once you're above the level of 25. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing."
~ Warren Buffet
(1930 Founder, Berkshire Hathaway)
"It is not how right or how wrong you are that matters, but how much money you make when right and how much you do not lose when wrong."
~ George Soros
(Founder, Soros Fund Management)