Jun 22-24, TA for STI

• Trend - Downtrend
• Momentum - Oversold
• Support - 3000 (new lower low formed)
• Resistance - 3100 or 20D MA (3090)
• Volume - Average
• Candlestick - Dark Cloud Hanging - Bearish reversal.

After just 2 days of gains, it started to show sign of bearish reversal candlesticks. In down trending, avoid LONG position as the it will tends to have Lower High formation which means that price will unlikely to hit resistance level. Instead, it's easier to SHORT at Resistance level or Lower High as it will goes much lower low. 

Interesting News,

http://seekingalpha.com/article/276180-fed-economy-weaker-yet-no-policy-changes

June 20-24, FA/TA for Mermaid

June 22-24, TA for Mermaid,

• Trend - Downtrend (Confirmed by MA and MACD)
• Momentrum - Oversold but upward slope forming
• Support - 0.295
• Resistance - 0.360
• Candlestick - NA
• Volume - NA

Note: This stock analysis is a requested by MW. I hope it will provide you a reason to LONG, to speculate it or Don;t Touch it.

In fact, TA for such low volatility is not quite effective. If you need to participate this stock, you can use the support/resistance or momentum as your entry/exit. 

Understanding the Financial Ratio of Mermaid, 

From the first FA simple scan, it has

1. Negative earning
2. No Dividend
3. 50% Discount NAV

So a 50% Discount NAV, it is attractive for you to investigate more. So I would say, Let's study about the Annual Report to give a fair Valuation. 

So what's actually happened in 2010 for Mermaid?
- Key Management resigned - this is what you want to note.
- Share Resources. (This explains why it's ROA (-2.6) is poor) - it has poor utilisation of Asset.

How it make Money?
- From it Asset, as it is a Off-shored Rigs Rental company. (If it generate a negative ROA, this is a serious problem. It's like a taxi company cannot rent out its fleets, parking at carpark).

Is the Off-shore Industry that bad?

- This article is an extraction of the Supply and Demand Curve for Off-shore rigs from the Annual Report. 

What it means?

- It is as simple as 

1. Supply more than Demand.  
2. Very competitive, low margin business

What is the intrinsic Value of the stock?

- Since it has negative earning, no dividend - All formula for Intrinsic Valuation cannot be used.

In short, it is a value buy?

- Yes, as it has a 50% discount NAV and Enterprise Value is more than Market Capital. 

- Yes, provided that you know that the new CEO and it's Asset Utilisation must improve, else this company is heading for trouble. 

From a General Value Investing standpoint, always avoid such company.

 - Negative Earning

 - Negative ROA

 - Current Asset < Total Liability, which means if it is to liquidate now, it just goes burst immediately. Shareholders will get ZERO dollars but a "thank you" note. 

My personal comment, don't touch this stock. As there are many others better value stocks that is being highlighted in this blog. Why you need to risk your investment for such company? 

June 21, FA/TA for ComforDelGro

TA for ComfortDelGro, (Monthly Chart)

• Trend - Down
• Momentum - Oversold
• Support - 1.26
• Resistance - 1.40
• Volume - Slight below Average
• Candlestick - NA

ComfortDelGro is defensive stock and usually, it is very flat. What I would like to highlight to you that the number of months, ComfortDelGro falls below 1.40 is relatively short as compared to >1.40.

FA - Simple Quantitative Analysis,

• NAV - 0.8826 (Not a discount NAV)
• PE - 12.6x (Not an attractive NAV)
• Yielding - 0.055 per share or 3.9% (> inflation of 2.8%)

If using Benjamin Rules for Entry and Exit, this is not an attractive stock.

FA - Intrinsic Value Calculation,

This stock has a stable and predictable growth rate, at least, it is constantly in position. This is the type of stock that you would like to invest. If you need to invest and understand the recommended Value that you need to entry or Exit. You can use the Dividend Discount Model - DDM - Single Growth Model.

ComforDelGro - I have using 3 reference to estimate the Intrinsic of the stock,

• (a) Analysts Value - 1.75, 
• (b) DDM Value - 1.37 (with 9% expect return estimation rate) and 
• (c) Benjamin Quick Formula - 1.38. 

In our computation, as we are looking at Value Investing, we take the worst case Value - Benjamin Quick Formula - 1.38

In the worst case, My computation - ComforDelGro offer at least a Fair Value Entry at 1.40.

June 20, FA for HPH Trust

FA for HPH Trust, to calculate the Enterprise Value / EBITDA ratio.

• EV/EBITDA of HPH is at 9.5x and 
• PE ratio is at 25x

Is it a value stock, at EV/EBITDA of 9.5X ?
The answer is NO, as Fair Value is defined EV/EBITDA = PEx.

Analysts Research update,
0747 GMT [Dow Jones] STOCK CALL: HSBC upgrades Hutchison Port Holdings Trust (NS8U.SG) to Neutral from Underweight, noting its 12-month forward target price of US$0.81 implies a potential return of 3% (with 2% dividend yield, which includes only the interim dividend to be paid out in 2011). The target also implies 13X EV/EBITDA and 7.8% yield on 2012 estimates; "while the stock has underperformed the broader market by over 25% since listing, we believe that the stock is still not attractive at the current level." It says while a 7.8% yield may look attractive, especially in such a volatile environment, "we argue that growth beyond 2012E is not sustainable due to increase in tax rate, interest rate, higher stake of minority and capex." The house notes HPHT is the leader in China's slowest growing port region, the Pearl River Delta, which has been suffering from rising labor and other operational costs, "and we believe this poses near-term growth challenges." The stock is up 0.6% at US$0.820. (matthew.allen@dowjones.com

June 20-24, FA/TA for Oceanus

June 20-24, TA for Oceanus

• Trend - DownTrend
• Momentum - Oversold
• Volume - Very low
• Candlestick - NA
• Support - 0.19 (Near to Fundamental Support line of 0.185 which is aligned with NAV.)
• Resistance - 0.24

From TA prospective, even since the news of a possible M&A, it had moved up to 0.28 quickly. Since then, it has begin it slow and surely descending path - breaking the 0.24 and also the 20D MA cross down 50D MA - resulting in new 0.21. Just looking at TA, it should hit its 0.19 very soon.

Table 1: Calculating Enterprise Value / EBITDA as Entry

June 20-24, FA for Oceanus

From FA-quantitative analysis - We can use the simple Asset Approach (using NAV as entry) or Earning Approach (PE as Entry). Recently, there is another approach from Earning Approach to detect a more holistic valuation of an Enterprise known as "Enterprise Multiple" or simply in pure formula ("Enterprise Value / EBITDA). You can read my "FA Knowledge for more information".

In this Oceanus, the EM is about 5.43, which means Over-value if compare to current PE of 11x. 

Table 2 : Use Financial Ratio data as entry.

From a FA - Financial Ratio Analysis, and base on which School of Thought. 

At the moment, Oceanus still does not have any value investing, at the current rate of descending, this stock might soon be of value investing from "Discount NAV" aspect. Once it hit below 0.185, this stock should be one of your LONG list. 

Note: One of value investing principle is also to avoid stock that don;t paid Dividend. This is one of those company that don't paid dividend. Depends whether you subscribe to School of Benjamin or Warren.  

From FA - Qualitative Analysis, 

I would suggest that you download the Annual Report 2011 and read it. It is not a difficult business that you cannot understand. It is one of the world largest inland Abalone Farmer. One thing to note, is the restaurants business that is still incurring losses but looking at report, they are trying to get rid of those money losing restaurants. At least, one positive sign. 

Who are the backers for Oceanus in Dec 2010?

- Citibank and Merrill Lynch

Who are the 2nd biggest shareholders?

BestGlobal Enterprises Corp from 2.83% to 22.13% 

 (Rumours) News by Reuters

Why Oceanus is a target for M&A? 

http://www.reuters.com/article/2011/05/16/asia-lbo-niche-idUKL4E7GG05Z20110516?type=companyNews