Hongbao rally for market ahead of Chinese New Year

Published January 28, 2006

Business Times

By VEN SREENIVASAN
SENIOR CORRESPONDENT

A POSITIVE overnight close on Wall Street followed by strong sessions in other key Asian bourses - especially Tokyo - sent the Singapore market to one of its highest ever levels ahead of the Chinese New Year long weekend. 'It's a hongbao rally,' quipped a broker here.

Indeed, there was a palpable surge in the market undertone after the recent jitters on Tokyo and Wall Street. The Straits Times index gained 23.06 points to 2412.08, boosted by the likes of Singapore Airlines (SIA), DBS Group, Jardine Matheson and Fraser & Neave (F&N).

Overall market volume was strong, with some 1.5 billion units worth some $1.4 billion changing hands as rises led falls by almost four to one.

The strong uptick comes at the heels of the Dow Jones' 100 points overnight gain to 10,809. The Nasdaq Composite climbed more than 22 points to 2,283 on Thursday, while the Standard & Poor's 500 Index gained 9.6 points to 1,274 points.

It also helped that in Tokyo, the Nikkei seems to be recovering nicely from the Livedoor scare, and posted a 569.66 points gain to 16,460.68 points on the back of banking and consumer stocks.

And though blue chips lead the benchmark index higher yesterday, the gains were broadly based and supported by a noticeably upbeat market undertone.

Technology and China plays were among the day's volume leaders. The heavyweight risers were led by SIA, whose stock gained 40 cents to a new high at $14.20. Several brokerages have recently upgraded SIA in recent weeks, citing its strong market position, buoyant industry conditions and the potential cash from the sale of subsidiaries. DBS Bank was up 20 cents to $16.40, while F&N gained 70 cents to a new high at $18.80.

Chartered Semiconductor Manufacturing, which posted a higher-than-expected 4Q05 net income of US$26.5 million on the back of US$367.2 million turnover, was the most actively traded counter. The stock was up six cents to $1.40 on some 74 million shares as analysts upgraded the company's full year earnings forecast.

Meanwhile, Utac, which surprised with 4Q05 net profit of US$20 million, was up 3.5 cents to 92.5 cents. Heart stent-maker Bionsensors hit a high at $1.09 before pulling back to close with a net two cent decline for the session at $1.05, amid speculation that it was a potential takeover target for global giant Johnson & Johnson, which lost its bid to buy Guidant Corporation to rival Boston Scientific.

One sector which seems to be particularly favoured, but did not feature much in the day's bullish session, was the anchor handling and tugs supply sector (AHTS).

In a report issued this week, BNP Paribas says the sector was a late beneficiary of the upturn in the offshore oil and gas industry. 'Lagging South-east Asian AHTS rates are now just starting to track North Sea rates up and Singapore-listed AHTS players look cheap on a global basis,' it notes. 'Our top picks are Ezra and Labroy, both offering 65 per cent upside.'

But the stock of shipbuilder and marine equipment repairer ASL Marine rose 5.5 cents to 70.5 cents after it reported a doubling of interim earnings to $12.3 million.

Market insiders see generally bullish undertones continuing to support the Singapore market during the next few months - barring unforeseen shocks of course.

I Like My Home during CNY - Clean & Span

Raffles Holdings should have ended the short-term downtrend

SG Technical Comments: Raffles Holdings (27 Jan 2006)
By Ken Tai
Fri, 27 Jan 2006, 09:10:32 SGT

Raffles Holdings - The short-term downtrend of Raffles Holdings should have ended after a series of higher highs. A breakout has occurred yesterday. The traded volume rose sharply and suggested that the breakout was valid, further upside can be anticipated. As Wave 2 never corrects below the low of Wave 1, we estimate that we are currently in the Wave 3 mode. As Wave 3 is never the shortest, an analytical target of $0.69 has emerged if Wave 3 equals to 1.618x of Wave 1 based on Fibonacci Ratio.

SG Technical Comments: STI (27 Jan 2006)

SG Technical Comments: STI (27 Jan 2006)
By Ken Tai
Fri, 27 Jan 2006, 09:10:32 SGT

Straits Times Index - The STI formed a triangle in the hourly chart, pending for a breakout within the next few days. As the closing price, STI has started to approach the top of the Bollinger Bands. This action increased the odds for the STI to break above the triangle in the near term. A break above the resistance of 2395 may send the STI to 2420 level. If such an event occurs, we suggest a sell into strength to pare down long positions. The Stochastic Oscillator remains mildly overbought despite the recent correction, a sell on strength approach is more applicable at this juncture

Singapore Press Holdings -BUY

Thursday, January 26, 2006
Advertising Revenue - Positive Trend in Page-Count Figures

Current Price : S$4.28
Target (12-mth) : S$5.00

Positive trend in page-count figures. In early-Dec 05, we highlighted a positive sign in November's advertising spending. Saturday issues of The Straits Times, the dominant newspaper in Singapore, were getting thicker with 250+ pages. This was a high page-count compared to the usual 220-230 pages. The high page-count has continued into December and January. If this trend continues, advertising revenue (AR) growth could be as high as 10% instead of the weak 2% reported in SPH's 1QFY06 or our forecast of 5% for FY06, FY07 and FY08. At this juncture, we are maintaining our earnings forecasts until we see a longer positive trend.

ACNielsen has under-estimated SPH's advertising revenue growth. Most analysts track ACNielsen data as a guide to SPH's AR growth. ACNielsen data has been understating SPH's growth. ACNielsen data had implied a contraction of 4.6% in 4QFY05 and 3.8% in 1QFY06. SPH's AR actually grew by 1.5% and 2.2% respectively. ACNielsen does not capture SPH's complete AR as certain ads are not included in its counts.

Growth momentum will be more obvious from 2QFY06 onwards. Apart from rising advertising spending, SPH's AR will be compared to a base without Streats (from Jan 05 onwards). Hence, actual AR growth will be higher. We believe newsflow on SPH will increasingly become more positive. Traditionally, SPH's share price has a strong relationship to its AR growth.
Current share price weakness presents a good buying opportunity, as it is at the bottom of its last one-year trading range of S$4.20-5.00 The stock also offers a high net dividend yield of 4.7% to 5.0%. Dividend yield in FY06 could be higher if SPH is successful in selling the Times Industrial Building which management said has received offers and are currently being evaluated. Maintain BUY

SINGAPORE (XFN-ASIA) - Global Voice Group Ltd

SINGAPORE (XFN-ASIA) - Global Voice Group Ltd, which owns and operates
a
fiber optic network in 14 European countries, was sharply higher in
the
afternoon session on an expected recovery in its fundamentals, an
analyst
said.

At 3.05 pm, Global Voice was up 0.015 sgd or 9.1 pct at 0.18 sgd,
its
highest level in a month.

"We believe Global Voice's fundamentals are recovering," Kelive
said
in a client note and gave a "buy" recommendation to the stock.

"Global Voice's revenue recovery will be underpinned by demand
growth
from bandwidth hogging services such as broadband adoption, corporate
VoIP, WIMAX, 3G applications and remote realtime data backup. Based on
the
company's internal projections, Global Voice aims to increase
bandwidth
utilization to 50 pct over the next 5 years."

With an average utilization rate of 5 pct currently, Kelive said
there is room for growth without need for additional capex
investments.

Business Times - Broker's Take - SPC

Singapore Petroleum Company
Jan 27 close: S$5.55
BNP PARIBAS EQUITIES, Jan 26
SINGAPORE Petroleum Co's (SPC) profit after tax and minority interest rose 60.1 per cent to $403.6 million in 2005, underpinned by a turnover increase of 51 per cent to S$7.5 billion. The record profit was driven by continuing tight global refining capacity and strong demand for refined products from China and India. It was aided further by the hurricanes that hit the US Gulf Coast in 2H05. The group was able to realise refining margins averaging more than US$4 per barrel for the year.

Refining capacity expanded 50 per cent from the acquisition of additional capacity after SPC bought into BP's stake in Singapore Refining Co (SRC). Indeed, SPC went from producing 95,000 barrels a day in 1H04 to 142,500 barrels a day in 2005. The BP retail network acquisition was completed in 4Q04, and the network has since been expanded to cover 39 service stations from 30 previously. The group's liquefied petroleum gas (LPG) market share also benefited from its 50 per cent interest in the SPC-Wearnes LPG joint venture. Given the stronger earnings momentum, we have upgraded our estimates for 2006 by $56 million to $419 million.

SPC's upstream moves into production-sharing contracts will enable it to benefit from the current high oil price environment. SPC has a 40 per cent working interest in the Sampang production-sharing contract, located off the shores of East Java, and a 20 per cent participating interest in production sharing contracts for Blocks 102 and 106 in the Gulf of Tonkin, Vietnam.

The upbeat macro outlook continues to bode well for SPC. Following the Asian financial crisis, refining margins remained in the doldrums before a recovery in 2003 turned margins positive again. China's enormous appetite drove product demand, while capacity shutdowns of refineries in the Philippines, Japan and Australia in recent years have helped reduce the surplus. The next four to five years could prove challenging with more refining capacity expected to be added in China and India.

We expect SPC's earnings to be driven by its larger stake in SRC, sustained operating margins and contributions from its recent acquisition of the BP retail network.

The stock is trading at earnings multiples of 6.5 times for 2005 and 6.7 times for 2006. Against comparable peers trading at a sector average of 8.8 times 2006 PE, SPC's valuations do not look demanding. We believe a slight discount to the sector average is fair and that the stock warrants a rating of about 8.0 times 2006 PE, which translates into a target price of $6.50.
BUY


- Compiled by MATTHEW PHAN

Bleak forecasts from China- related stocks

Published January 28, 2006
Business Times

Bumper crop of profit warnings issued to SGX ahead of CNY holidays

CHINA-RELATED stocks are issuing a bumper crop of profit warnings - as seen by the number of statements issued to the Singapore Exchange (SGX) yesterday, just before the Chinese New Year holidays kick in.

China-based Zhongguo Jilong Ltd warned that its performance for the fourth quarter ended Dec 31, 2005 will decline vis-a-vis the third quarter ended Sept 30, 2005 and fourth quarter ended Dec 31, 2004. This is due to the underperformance of certain subsidiaries in China.

Similarly, China Food Industries placed investors on alert for 'substantially lower' earnings for the fiscal year 2005 compared with 2004. It attributes the weaker preformance to falling pig prices and import suspension imposed by the Agri-Food and Veterinary Authority of Singapore which affected its meat processing and food distribution segments.

Another company, New Lakeside Holdings Ltd, which has reported a loss of 66.17 million yuan (S$13.3 million) H1 2005, is now warning of further losses of about 10 million yuan in H2 2005 due to higher cost of production as a result of raw material shortage. The fall in apple supply due to poor weather conditions, it said, has seen annual total supply of apples in China fall by about 35 per cent.

Also sounding the alarm, Sinobest Technology Holdings Ltd said that its net profit for the year ended Dec 31, 2005 is expected to be lower than the previous year due to intense competition and slower progress made in some of its projects.

However, the group expects to remain profitable. The group intends to continue focusing on securing more software development and technical services projects to improve profit margin, to raise efficiency, and reduce cost.

Continuing in the same bleak tone, Fu Yu Corporation Ltd said its full-year results for 2005 are expected to be dented by provisions for obsolete stocks and doubtful debts of around $14 million. The provisions were made following a preliminary assessment of the financial results of its subsidiaries in China. However, the group expects to remain profitable for the full year.

Completing the downbeat note is Metal Component Engineering's profit warning on its H2 2005 results. Although the group's H2 2005 results turnover had improved over H1 2005, the company said its results before tax are expected to be a loss.

It attributes the weaker results to lower-than-forecast orders from major customers in China, initial investment and overhead cost incurred in the newly acquired plant in Thailand, and the setting-up of a new plant in Qingpu, China, and the loss from the disposal of its subsidiary, MCE Seimitsu Indonesia. The net loss from the disposal is about $0.3 million.

Business Times Extract - 28 Jan 2006

Mr Lee, giving his Chinese New Year message yesterday, said that the economy - despite a slow start - grew strongly in the second half of 2005.

'Businesses across the board have done well. Wages increased and many workers received larger bonuses. Most importantly, we created many new jobs and brought our unemployment rate down significantly,' Mr Lee said.

And the year of the dog looks just as promising. Mr Lee said: 'The global outlook is positive: the US, China, India and Japan are all doing well . The investments we have brought in will generate more new jobs. I expect our economy to continue prospering.'

The Prime Minister added that the general feeling in the market is that things are looking up. 'Hotels and restaurants were fully booked in the festive season ,' he said. 'Retail sales have picked up as Singaporeans are in a more confident mood, and spending more than last year.'

DBS View on STI 27 Jan 2006

ST Index (2,388.22) – The Straits Times Index gained 9.38 points with 1,12bn volume traded yesterday. Our fast Stochastic for the index has flipped and turned up indicating a likely change in its direction, therefore, we expect a gradual upward swing till the end of next week. In the meantime, our earlier anticipation of a weaker Index may still eventuate given that it penetrates below its current support level of 2,345, competing its 3rd and final corrective wave down.
However, looking at the current market sentiment, our Index might clear above its recent high of 2,395 and head towards our target of 2,450 over the next 3 weeks. This positive momentum is likely to be driven by a mixed of sectors from Technology, Telecommunication and Consumer. In the short-term, we would advise investors to buy into selective Technology, Telecommunication and Consumer stocks on weakness because there is still upside momentum in these stocks. Our year-end target for the Index stays at 2,560 levels.

Macquarie on Local Market

SINGAPORE (XFN-ASIA) - Macquarie said it is rating the loca stockmarket as "slightly overweight" with the benchmark Straits Times index (STI) seen rising to around
the 2,600 points mark by end-2006, a 9 pct gain from
last year. Macquarie expects five major themes to dominate the market in 2006.
"The first is expectation of GDP upgrades for Singapore on the back of accelerating
global growth. Better-than-expected GDP growth has historically led to the STI
beating expectations. We advise investors to overweight
technology and offshore marine stocks in the first quarter of 2006," it
said. "Our second theme is dividend surprises and capital
restructuring. Whilst this is more of an ongoing theme, we
would look to position in Singapore REITs with high yields in the second quarter
ahead of the anticipated peaking of Fed tightening in May 2006," it said.
Besides Singapore REITs, companies with high free cashflow generation are likely
to consider special dividends or capital reductions. Within the telecom sector,
MobileOne has already announced a special dividend, and Macquarie expects that
StarHub will do the same. "We also anticipate more merger and acquisition activities.
Here, companies will use their balance sheets for expansion to fuel longer-term
growth. ST Engineering is the most likely candidate along with Parkway given its
regional healthcare ambitions," Macquarie said. "Reflation is our fourth theme.
This was our main theme in 2005 and it will spill over into 2006 given that residential
prices and office rents will continue their upward spiral," it said. "The expected
general election this year is our final theme. Usually elections are non events
but this is Prime Minister Lee Hsien Loong's first election campaign and we
expect (upbeat) market sentiment on the back of friendly policy announcements,"
it said. The first such policy announcement may be made
on Feb 17 when the government unveils its budget for the fiscal year
to March 2007, it added. The STI ended the morning session up 15.09 points or
0.64 pct at 2,383.41.

STATS ChipPAC returned to profit --in 4th Qtr

SINGAPORE (XFN-ASIA) - STATS ChipPAC returned to profit in the fourth
quarter to December, with a net profit of 16.88 mln usd, compared to a
469 mln usd net loss a year before, as margins improved on the back of
robust semiconductor demand.

The strong fourth-quarter performance helped to narrow its 2005
net loss to 26.31 mln usd from 467.72 mln usd a year before, which
included a 453 mln usd goodwill write-down related to the merger of STATS and ChipPAC.

STATS ChipPAC's fourth-quarter net profit beat the 8.77-10.50 mln
usd
range of estimates of net profit by analysts polled by XFN-Asia. The
full-year net loss was also narrower than the 32.69-34.42 range of
forecasts of net loss by the analysts.

"This was another record quarter for us. We achieved continued
strong
revenue growth that exceeded the high end of our guidance," said STATS
ChipPAC president and chief executive Tan Lay Koon.

"Our net profit came in above the high end of our prior guidance
due
to higher sales combined with a favorable product mix and increased
operating synergies resulting from our merger," he said.

"We expect that positive momentum in our business will continue
into
the first quarter and full year of 2006, with revenues improving
faster
than the semiconductor industry as a whole," he said.

STATS ChipPAC expects sales in the first quarter to be 3-8 pct
greater than in the fourth quarter.

Based on US generally accepted accounting principles (GAAP),
diluted
earnings are expected at 0.03-0.06 usd per American Depositary Share
(ADS). Based on non-US GAAP, earnings per ADS could reach 0.10-0.13
usd.

Singapore Today - NetResearch

In Singapore, rotational interest after recent price falls helped prop up selected stocks. The STI index closed 10.32 points higher at 2378.64 points but was off its 2387.78 points high due to profit taking. Investors were also more selective ahead of the abbreviated trading week ahead, due to the Chinese New Year holidays. Market breadth was good on 1.5 advances for every stock that fell while 660 issues were unchanged. Turnover was 1.3bil shares with a value of $1bil traded.

Interest and volume continued to be on the smaller cap penny stocks and selected China plays. Oil services stocks were in play with China Petro-tech adding 5 cents at 46 cents on 9.3mil shares. Advanced Holdings rose 3 cents at $1.08, helped by institutional buying while Tech Oil and Gas rose 7 cents at 45.5 cents on 18mil shares on hopes of further contract wins.

On the earnings front, Creative results announced this morning disappointed in that earnings were below what one would have expected from a seasonally peak quarter.
STATS results were better than the company’s guidance but
the company is still negative cash flow

STATS ChipPAC is expected to report tomorrow morning

SINGAPORE (XFN-ASIA) - Chip testing and packaging company STATS
ChipPAC is
expected to report tomorrow morning its first quarterly net profit in
six
quarters in the three months to December, as burgeoning demand for
consumer electronics products has helped boost orders for chips,
analysts
said.

STATS ChipPAC also likely benefited from improved margins given
tight
industry capacity, they added.

Analysts polled by XFN-Asia said STATS ChipPAC is likely to post
net
profit of 8.77-10.5 mln usd in the fourth quarter to December.

For the full year, the company will likely post a net loss of
between
32. 69-34.42 mln usd, compared to the net loss of 467.72 mln loss it
posted a year ago, which included a 453 mln usd goodwill writedown
related
to the merger of STATS and ChipPAC.

The company posted a net loss of 43.19 mln usd in the nine months
to
September.

In October, STATS ChipPAC said sales should improve by another
14-18
pct in the fourth quarter compared to the third, allowing the company
to
return to profit.

Kim Eng Securities analyst Dharmo Soejanto forecasts STATS
ChipPAC's
fourth-quarter net profit at 10.50 mln usd on sales of 356 mln, driven
by
strong demand for chips used in consumer electronics and communication
products.

"Capacity tightness in the outsourced test and assembly sector
has
likely provided a further lift," Soejanto said.

Merrill Lynch, which sees STATS ChipPAC's fourth quarter net
profit
at 8. 77 mln usd, said the firm's operating margin is likely to have
increased in the last quarter compared to Q3 as uitilization rates
improved.

"We estimate assembly (packaging) and test utilization rates
(percentage) will reach 82 pct and 75 pct, respectively, in the fourth
quarter 2005, from 79 pct and 66 pct in the third quarter of 2005,
respectively," Merrill Lynch said.

"Therefore the operating margin may improve slightly to 6.3 pct
in
the fourth quarter 2005 from 3.5 pct in third quarter of 2005," it
said.

Morgan Stanley, which pegs the firm's full-year loss at 33 mln
usd,
translating to a fourth-quarter net profit of 10.19 mln, said it
expects
STATS ChipPAC to enjoy strong sales growth ahead given its exposure to
the
"high-growth consumer and communications segment and potential
overflow
business due to extremely tight capacity utilization at its Taiwanese
peers".

Additionally, margins should also improve as it benefits from
"stable
to firm" average selling prices, Morgan Stanley said.

Credit Suisse First Boston analyst Lim Keng Hock forecasts STATS
ChipPAC fourth quarter net profit at 9.6 mln usd and a full-year net
loss
of 33.59 mln, while Daiwa Institute of Research analyst Pranab Sarmah
forecasts STATS ChipPAC fourth quarter net profit at 9.2 mln usd, with
a
full-year net loss seen at 34 mln.

While Kim Eng's Soejanto also sees further earnings growth for
STATS
ChipPAC this year, earnings in the current quarter to March are
expected
to slow due to fewer working days.

Merrill Lynch said it expects the company to guide a "mid
single-digit sales decline" in the first quarter.

"Our channel checks suggest 3G handset chips could remain strong
during the first quarterof 2006 while PC, wireline and consumer could
experience a seasonal correction," Merrill Lynch said.

Three brokerages forecasts STATS ChipPAC to report a net profit
of
between 38-71 mln usd this year.

Macquarie Securities bullish on UTAC

SINGAPORE (XFN-ASIA) - Macquarie Securities said it is initiating
coverage
of United Test and Assembly Center Ltd (UTAC) with a "buy" rating and
a
target price of 1.22 sgd on expectations of strong earnings growth
this
year.

In a note to clients, Macquarie said UTAC is one of its key picks
in
the semiconductor test and assembly field.

"UTAC's rising exposure to DDR2 DRAM via Nanya, Infineon and
Hynix,
and to flash memory testing for Sandisk, combined with strong industry
demand for mixed-signal chips, is driving revenue growth in 2006," the
brokerage said.

"While UTAC is already an efficient company, there is room for
its
asset turnover to improve, as we are still seeing better utilization
of
installed production assets."

Macquarie expects UTAC's net profit for last year to have to 36
mln
usd from 2004's 14 mln usd. It expects profits to further rise this
year
to 60 mln usd.

"In our view, UTAC is a well positioned and competitive
semiconductor
test and assembly firm, with a strong presence in all the key
semiconductor foundry markets across Asia, i.e., Taiwan, Singapore and
China. In addition, it has a unique composition in that it is fully
engaged in both the memory and the mixed signal/logic market," it
said.

At the end of morning trading, UTAC was up 0.02 sgd at 3.90, on
volume of 2.344 mln shares.

Hopes rise for SingTel payout

Business Time 25th JAn 2006

By SIOW LI SEN

THERE was barely a ripple from Singapore Telecommunications yesterday following the entry of parent Temasek as new controlling shareholder in Advanced Info Service (AIS) in Thailand's largest takeover. In fact, SingTel ended one cent down to $2.47, with one observer attributing the decline to disappointment over the Q3 result of its associate, Bharti Tele-Ventures. SingTel has weakened since it hit $2.83 last July, despite bullish outlooks from several analysts.


Bharti, India's largest mobile phone company, reported third-quarter profit was up 25 per cent year-on-year to 5.45 billion rupees (S$200 million), but missed analysts' estimates of 5.71 billion rupees. SingTel is Bharti's largest foreign shareholder, with a 31 per cent stake.

But back to the events in Thailand. For several months before Monday's announcement that a Temasek-led consortium had acquired a 49.6 per cent stake in Shin Corp from the family of Thai Prime Minister Thaksin Shinawatra - and along with it gained control of AIS, of which Shin owns 42.82 per cent - it had been speculated that SingTel was to be the buyer, to add to the 21 per cent of AIS it already held.

The earlier speculation tied into SingTel's oft-repeated stance - that it wants to increase its stake in existing associates, though not at any price. AIS was one such plum associate, eyed also by other international investors for its dominant market position in the Thai mobile phone sector (55 per cent market share), strong profit margins and high prospective dividend yield of 7 per cent for 2006.

That SingTel did not buy into Shin Corp is no surprise, given that it would have had to waste much resources stripping out the conglomerate's non-core assets.

Analysts say there is little impact on SingTel from Temasek's deal. Most see little synergy between Temasek Holdings and either Shin or AIS. Temasek has hardly any telco experience. Its area of expertise is 'international' - a strength that perhaps won't come into play much in the rough and tumble of the competitive Thai telco sector.

Temasek's other expertise is corporate governance advice, and one SingTel observer said that has meant getting compliance people from its different associates and subsidiaries together to share experiences.

But there is unlikely to be any significant increased synergies between SingTel and Shin and AIS because of Temasek's entry; after all, AIS has been a SingTel associate for six years, during which time any synergy should have materialised. SingTel, as the largest South-east Asian telecom company, has little to learn from AIS.

In November 2004, SingTel led in forming a regional mobile alliance called Bridge Mobile Alliance, which includes three of its four associates and leading operators in Hong Kong, Malaysia and Taiwan. AIS was the odd associate out, though SingTel has indicated that it is working on getting the Thai firm to join.

The idea of Bridge is to build a shared regional mobile infrastructure and common service platform, hopefully lowering procurement costs as it would have economies of scale, say, when negotiating with a mobile phone manufacturer.

So far, the benefits have been hard to quantify. The significance to SingTel of Temasek as Shin's newest investor perhaps lies elsewhere.

Investors have often complained that SingTel's balance sheet is not as effective as it could be. Put another way, it has too much cash, which it could return to shareholders.

SingTel is estimated to end the financial year in March with cash of between $3.5 billion and $4 billion. It reported a cash pile of $2 billion at end-September 2005.

Increased flexibility

One estimate is that it will have inflows of $500 million in dividends from associates and earnings before interest, tax, depreciation and amortisation of $2.3 billion in addition to the $2 billion cash. Outflows are estimated at $900 million for capital expenditure, resulting in cash of around $4 billion by end-March.

SingTel has said its strong operating cash flow gives it increased flexibility to consider new investments and acquisitions, and while these opportunities are being evaluated there may be short-term efficiencies in the capital structure.

Last year, SingTel failed in its bid to buy 26 per cent of PakistanTelecommunication. It also saw British telco Vodafone buy a 10 per cent stake in Bharti.

SingTel has indicated that it listens to shareholders' concern over its cash pile. Now that AIS has slipped out of SingTel's grasp, perhaps it can focus on returning cash to shareholders.

Company Results

Temasek has no plans to sell AIS to SingTel

Published January 24, 2006 Investments MD says GO waivers do not mean it's selling
Shin's other listed units By SIOW LI SEN (SINGAPORE) Temasek
has no intention of selling its newly acquired Thai telco unit Advanced Info Service
(AIS) to Singapore Telecommunications, and neither is it about to asset-strip
Shin Corp. 'We made this investment independent of SingTel . . . We have no plans as of now to sell to SingTel,' said S Iswaran, Temasek's managing director of investments, yesterday in a conference call with the Singapore press. He also said it would be a 'wrong conclusion' to make that Temasek would sell off Shin Corp's other associates, Shin Satellite, ITV and CS LoxInfo - all of which are listed on the Stock Exchange of Thailand - because Temasek has a waiver on making a general offer for the three associates. Shin's other assets include a half-share in Thai AirAsia, a joint venture with the Malaysian budget airline. There had been speculation that Temasek was keen only on AIS where Shin owns 42.82 per cent, the crown jewel among its varied assets - and that once the Singapore investment company bought the entire 49.25 per cent stake in Shin Corp from the family of Thai Prime Minister Thaksin Shinawatra, it would sell off the other assets. It was suggested also that as parent of SingTel, Temasek might move to consolidate the two companies given that SingTel has always stated its desire of increasing its stake in 21 per cent-owned AIS. Yesterday, a Temasek-led consortium paid 73.3 billion baht (S$3 billion) for the entire 49.25 per cent stake, representing 49.25 baht per share. Under Thai takeover rules, the consortium now has to make a general offer for the remaining Shin Corp shares at the same price, 49.25 baht. The financing for the acquisition will be a combination of equity and bank loans, said Mr Iswaran, adding that Temasek will take the most competitive financing
offer. In that, he was responding to talk that only Thai banks will participate
in the funding arrangements. Under Thai takeover rules, Temasek has to make an
offer for associates in which Shin owns more than 25 per cent, and the consortium
is offering 72.31 baht per share of AIS shares it does not already own. Asked
if SingTel would sell to Temasek, spokesman Peter Heng said: 'We would like to
increase our stake in the associates at the right price and terms, and we will
continue to explore all options.' Mr Iswaran, when told of SingTel's intention,
said the Singapore telco has to make the decision in the best interests of its
company and its shareholders. Whatever Temasek's intentions regarding AIS in the
future, the current offer it has made to all AIS shareholders of 72.31 baht per
share seems designed to fail. AIS ended yesterday unchanged at 104 baht and the
lowest it has traded at in the past 12 months is 90 baht. The Thai takeover panel
has said that Temasek is not required to make 'chain principle offers' in the
case of Shin Satellite, ITV and CS LoxInfo, which collectively account for not
more than 10 per cent of Shin Corp, said Mr Iswaran. It would be a 'wrong conclusion' to make from the waiver given on the chain principle offer, that Temasek intends to sell off the three companies, he said. 'In not making a chain principle offer does not mean we are not interested in them or that we would sell them,' he said. 'From a business point of view, we would explore all opportunities to grow these businesses and create value.' Mr Iswaran said Temasek and its co-investors will work closely with Shin Corp management to understand the business and how to help it grow. Temasek got into the investment purely on commercial terms and is a medium to long-term investor in Thailand, he said. As to how Temasek can add value, he said it is investing in a company that is 'already a strong player in the Thai
market with a strong management team'. The expertise resides in the company and
its management; Temasek's value through its three board members will be international experience and other expertise, he said. Analysts said Temasek represents a new wave of international investors in Thailand's telco sector, which is poised to upgrade to 3G mobile systems which need advanced technology requiring huge investments. Tucker Grinnan of HSBC Asia telco equity research said Thailand already has a fairly developed penetration rate for mobile phones at 45-46 per cent. 'In Thailand as elsewhere in Asia, the interest is in the 3G . . . you will see interest from a lot of international investors, be it Temasek, DoCoMo or Vodafone,' Mr Grinnan said. 'They are part of a broader wave of international investors. 3G is at an inflexion point - it forces out the weak players and encourages strong players to come in.' But some observers caution that Temasek could run into potential problems investing in a mass consumer utility in a developing country. 'For example, if Shin Corp wants to increase rates and the poor people are not happy or some business people are upset, they might point to its foreign investors and say they have no love for the country, or question its loyalty,' said Teng Ngiek Lian, founder of Target Asset, a fund manager. To this, Mr Iswaran said that Thailand's telco sector is very competitive, including its rates.

DBS View

ST Index (2,364.97) - Our Index will likely to trend lower till the end of this
week. Meanwhile, we expect the Index to move below its support level of 2,345,
competing its 3rd and final corrective wave down, before a likely bottom-up reversal.
However, if our Index decides to reverse out early, it should turn up without
breaching its second support level and head towards its target of 2,450 over the
next 2 weeks. The downside momentum is likely to be driven by a mixed of various
sectors, especially in the multi-industry and manufacturing, with the exception
of certain stocks from the Technology, Telecommunication and Consumer sectors.
In the short-term, we advise investors to stay out of the market till the general
down cycle reverses. However, for risktakers, we would advise
them to buy certain Technology, Telecommunication and Consumer stocks on weakness
for the upside potential remains on these selective stocks. Our year-end
target for the Index stays at 2,560 levels.

What's Ahead?

STI -Chart Jan 23 2006

Semiconductor players set to ride industry recovery

Surging demand for consumer electronics driving upswing: analysts


By ROLAND LIM


WITH the increased demand for consumer electronics widely expected to fuel the recovery in the semiconductor industry this year, listed semiconductor players here look all set to ride this wave in 2006.

Jonathan Koh, an analyst with UOB Kay Hian wrote recently in a report: 'Semiconductor content in consumer electronics is increasing with the trend to digitise music, photos, videos and TV broadcasting. Another key driver is the convergence of computing, communications, networking and entertainment to create new generations of hybrid devices.'

He also noted that the semiconductor industry had bottomed out in Q105, and that demand has recovered since H205. 'Growth momentum has spilled over into 1H06 with stronger-than-anticipated retail spending during the holiday season. We expect the recovery to extend into 2006,' he said.

Separately, a Nomura International report predicted: 'Asia's top four semiconductor foundries to post stronger-than-seasonal quarter-on-quarter revenue growth in 1Q06'.

The US-based Semiconductor Industry Association (SIA) has also forecast worldwide semiconductor sales to increase 7.9 per cent to US$245.5 billion in 2006 and grow to US$309.2 billion in 2008. SIA predicted that the Asia-Pacific region will be the fastest growing market, putting on 11.4 per cent in 2006 to reach US$115.1 billion and eventually, US$150.4 billion in 2008.


'Semiconductor content in consumer electronics is increasing with the trend to digitise music, photos, videos and TV broadcasting.'

- Jonathan Koh,
UOB Kay Hian analyst



One of the trends in the semiconductor industry is the increasing reliance on semiconductor foundries such as Taiwan Semiconductor Manufacturing Co (TSMC) and Chartered Semiconductor Manufacturing for production, especially with the move from using 8-inch wafers to 12-inch wafers.

While the larger wafers help to reduce manufacturing cost by up to 30 per cent, UOB Kay Hian's Mr Koh noted that a 12-inch wafer fab costs US$3 billion to build - twice the cost of an 8-inch wafer fab. 'Many companies simply cannot afford these expensive fabs ... and few companies have the scale to keep the fabs running profitably around the clock at utilisation of 70 to 80 per cent,' he said.

As a result, he sees the trend of smaller players not building new fabs, and instead relying on foundries for production.

Another trend in the industry is the lower capital spending levels, as the industry consolidates and improves its efficiency. Semiconductor research firm IC Insights predicted that capital spending as a percentage of semiconductor sales will fall to 15 per cent after 2010, as compared to the historical average of 22 per cent. However, with the overall growth in the industry, capital spending is still expected to grow some 5 per cent in 2006.

Fabless chip makers have also grown to account from 3.5 per cent of global semiconductor sales in 1994 to 15.6 per cent in 2004. Global fabless semiconductor players with operations in Singapore include Xilinx, Broadcom, Marvell Technology Group Ltd and MediaTek Inc.

Mr Koh noted that this trend is 'positive for companies offering foundry and assembly & test services as fabless IC suppliers outsource all manufacturing requirements, thus providing a stable source of orders.'

All this bodes well for Singapore, which has many players in the semiconductor sector. Listed companies here that offer semiconductor products and services here include Chartered, Venture Corporation, Stats ChipPac, United Test and Assembly Centre (Utac) and Global Testing. Additionally, Asti Holdings, Advanced Systems Automation, AEM-Evertech Holdings, Manufacturing Integration Technology and Ellipsiz sell equipment used by chipmakers.

According to the Economic Development Board, Singapore has 14 wafer fabrication plants, 19 chip test and assembly operations and about 40 chip design centres. The semiconductor industry here employs about 33,750 people, and accounts for about 30 per cent of the electronics and precision engineering sectors' annual output of $93 billion.

Translating his analysis into stock calls, Mr Koh issued 'buy' calls on Chartered, Utac and Global Testing, with target prices of $1.60, $0.94 and $0.40 respectively. Chartered shares have risen about 38 per cent since Oct 19 last year, and closed at $1.31 last Friday. Utac shares hit a 20-month high of 86.5 cents on Jan 11 and closed at 84 cents on Friday. In the past three months, Global Testing has risen some 63 per cent from a low of 20 cents to close at 32.5 cents on Friday.

Nomura, however, maintained a 'neutral' call on Chartered, and provided a fair value estimate of $1.20 for it, saying that 'price competition, CSM's relatively slow ramp of its 300mm (12-inch) fab and the constraints of its balance sheet pose a concern'.

In a separate report from Kim Eng Securities, analyst Dharmo Soejanto also issued a 'buy' call on Global Testing, with a target price of $0.43. 'We believe the stock offers the best exposure to the current upswing in the semiconductor cycle given its focus on test services, which offer high operating leverage,' he said in the report.

However, not all semiconductor counters are poised to ride this wave. Mr Koh issued a 'sell' call on Stats ChipPac with a fair value estimate of $0.92. Shares of Stats ChipPac closed Friday at $1.05.

Singapore Shares End Down On Oil Price Concerns

SINGAPORE (Dow Jones)--Singapore shares ended lower Monday on worries over rising oil prices which contributed to Wall Street's fall on Friday, traders said.

Rising oil prices affect companies' earnings by increasing the cost of transporting goods, traders explained, adding that the domestic stock market also reacts to Wall Street as the U.S. is a major trading partner for Singapore.

The ST Index ended down 23.94 points, or 1.0%, at 2365.0.

Decliners led advancers 414 to 160, while volume was down to 991.7 million shares from Friday's 1.1 billion shares.

"I think there was some bargain-hunting after the initial drop," said a trader, noting that the STI closed off its intraday low of 2353.69.

Looking ahead, another trader says the STI is unlikely to recover yet "as the local market's correction phase isn't over". The weak Wall Street showing also continues to damp sentiment, he added.

The sharp rise in oil prices caused a fall in SIA's share price, as fuel makes up a large amount of the airline's operational costs. Shares fell 0.7% to S$13.30.

Banks, which are widely viewed as proxies for the economy, also dropped. DBS fell 1.2% to S$16.10 while UOB lost 1.4% to S$14.50 and Oversea-Chinese Banking Corp. closed 1.5% lower at S$6.60.

Among gainers, Keppel Corp, which builds oil rigs, rose 1.5% to S$13.20, on hopes rising oil prices will fuel oil exploration activities and demand for its rigs.

Oil refiner and petrol station operator Singapore Petroleum Co. also rose. It closed up 2.7% to S$5.65.

CapitaLand was the most actively traded blue chip, with Citigroup saying the deal by its unit, Ascott REIT, or ART, is positive from a long-term view.

Ascott Friday announced plans to spin off a pan-Asian real-estate investment trust that will own serviced apartments across the region with an initial value of S$856 million.

"ART will be a more capital-efficient vehicle to hold Ascott's properties, and will also give Ascott and CapitaLand a growing stream of fee income," said the brokerage.

CapitaLand rose 1.6% to S$3.82 while Ascott rose 6.3% to 85 cents.

Business Times report on last week

Throughout the week, two themes stood out - China stocks and the oil/gas sector. Those who have followed the local market closely over the past few weeks would have recognised the names - for China stocks, popular plays were China Sun, Sky Petroleum, Celestial Nutrifood, Bio-Treat and Shanghai Turbo, while for oil and gas the field was perhaps a little narrower, with the likes of Federal International, KS Energy, Tat Hong and Ezra Holdings in play.

Most blue chips saw an unremarkable week. Banks were not in focus, while Singapore Telecom's performance was mixed. As for property, news that City Developments had withdrawn from the bidding for an integrated resort licence brought some pressure to bear on the stock, but simultaneously helped propel upwards the remaining local bidders, CapitaLand and Keppel Land.

"High blood pressure isn't something to be taken lightly

Lee Yuan-te said high blood pressure and related diseases make up half of the top 10 killers in Taiwan, and according to WHO statistics, one in every three deaths worldwide is related to strokes or heart disease.

Lee Chi-ming (李啟明), a doctor from the Department of Internal Medicine at National Taiwan University Hospital, said two of the most important symptoms associated with high blood pressure were being overweight and excessive salt intake, with the former being related to high blood pressure during middle age, and the latter being related to high blood pressure in older people.

Consequently, good nutrition and exercise are seen as
crucial factors in the prevention and control of high blood pressure. A dietitian from Taiwan Adventist Hospital, Lin Tze-you (林子又) advised people to eat lots of fruit and vegetables, nuts and whole meal foods, but to avoid processed foods, strongly flavored foods, and fried or oily foods.

USA Market Event

16:20 ET Dow -213.32 at 10667.39, Nasdaq -54.11 at 2247.70, S&P -23.55 at 1261.49: [BRIEFING.COM] Infected with wide-spread selling, Friday's stock market steadily slipped from bell to bell. A trio of disappointing fourth quarter earnings reports paired with the surging price of crude in pushing the indices to their worst performance in nearly a year and a half, and to losses that erased much of their average 3% year-to-date gain. Volume was higher than average, an indication of conviction behind the move.

Uncertainty over Iran helped send crude to a four-month high of $68.35 per barrel. Reports that the country is moving funds out of Europe to shield them in the event the U.N. imposes sanctions for its nuclear ambitions, and that it may cut its OPEC output and withhold oil from the market, rocked trade. At the same time, crude's rise did little good for the Energy sector (+0.2%), and even it couldn't escape the effects of broad-based selling. One of the market's sole bright spots lied there, though. Following a much better than expected earnings report from Schlumberger (SLB 122.21 +7.34), as well as its assertion that its top line growth during the current fiscal year should be similar to that of 2005's, the Oil Services Index rose about 1.8%.

With earnings season in the spotlight, lackluster results from General Electric (GE 33.37 -1.31) and a disappointing decline in profits from Citigroup (C 45.76 -2.18) tanked the Dow. As these reports come on the heels of similar upsets from high-profile names like Intel, Yahoo, and Apple, the market reacted aggressively. While only about 20% of the S&P 500 has thus reported Q4 results, today's batch nonetheless gave investors reason to maintain a defensive stance. Because of GE, Industrials fell 2.3%. Due to C, Financials dropped 2.1%. A yield curve that spent most of the session inverted added to the latter sector's woes and compounded Citigroup's effect upon banks. On the other side of the aisle, KeyCorp (KEY 34.16 +1.03) delivered strong Q4 results that left it as one of the sector's sole pockets of strength. As GE and C respectively represent the S&P's first and third most influential issues, the broader market faced significant pressure. Particularly, the Dow fully relinquished its year-to-date gain.

It was the Technology sector that levied the greatest loss. The aforementioned tech disappointments continued to plague the sector, and slightly lower than expected revenues and in-line Q1 guidance from Motorola (MOT 22.48 -1.87) sent the communication equipment industry reeling. As a side note, MOT is one of Briefing.com's recommended holdings for active investors; we view its report as solid and maintain our bullish view on the issue as well as on the industry. Due to some issuances of downside guidance and subsequent downgrades, semiconductors plunged over 4%; Google's (GOOG 399.41 -37.04) extended decline related to the Department of Justice's data request fostered further selling and roiled the Nasdaq.

Separately, the University of Michigan's preliminary read on January consumer sentiment was the only piece of economic data delivered today. Better than expected results demonstrate a strengthening trend, but the data does not directly correlate with consumer spending and thus was overlooked by the stock and bond markets alike. With an absence of data on today's economic front, the market had virtually no diversion from the negative earnings news and soaring price of crude. Nasdaq -54.11 at 2247.70... NYSE Adv/Dec 986/2292... Nasdaq Adv/Dec 833/2223.

Other View on STI

Singapore market- Two days ago we stated that the Singapore bourse was
oversold and that the ST Index could rebound from 2350 to 2553 towards
2390-2400. As it turned out the index bottomed out at 2352 and rallied
to a
high of 2395 today. This move represents an exact 50% retracement of
the
earlier decline from 2441. We think the rebound, which was seen as
counter
trend rebound has for the most part run it's course and that the next
move
could be to the downside.
Our estimated downside objective for the ST index is at 2320 and
possibly
towards 2290. At current levels, we would advice readers to pare long
positions and await better entry levels.

Morgan Stanley Report on Semi Conductors

Summary & Conclusions
We believe that, for all three Singapore semiconductor stocks,
the upside risks outweigh the downside risk. We expect each
of the companies to gain market share in FY06 and hence
grow their revenue at a pace faster than the industry. The
market share gains should be driven by new customers and
potential overflow business. High revenue growth, combined
with operating leverage from stable to improving pricing,
should result in extremely strong earnings growth in FY06E
from depressed levels in FY05. Finally, all the stocks are
trading at reasonable valuations that are close to mid-cycle
levels, on our estimates. We expect the stocks to deliver 18-
27% returns over the coming year.
Of the three stocks, we prefer STATS over UTAC and
Chartered. We think STATS offers the greatest stock price
upside potential near term. On the back of a significant
improvement in earnings, we expect the stock to trade up to
15x P/E and 1.3x P/BV, implying 27% upside potential to
S$1.35 per share over the coming year.
In our view, there are three likely catalysts for STATS’ stock
price.
1. Strong revenue growth. We forecast strong revenue
growth, given STATS’ exposure to the high-growth
consumer and communications segments and potential
overflow business due to extremely tight capacity
utilization at its Taiwanese peers.
2. Improving margin. Stable to firm pricing should provide
operating leverage.
3. Recent underperformance. While the stock prices for
all its peers in Singapore and regional markets have risen
significantly, STATS is still trading at close to trough value.
Hence, it offers most compelling valuation, in our view.
Comparative Analysis
We rate Singapore semiconductor stocks on various criteria
as highlighted in Exhibit 1. We prefer stocks that can deliver
upside surprise and enjoy earnings momentum, and where
the consensus is lagging fundamentals and the stock
performance has lagged. Based on these criteria, we rate
STATS as our top pick, followed by UTAC and Chartered.

Other View on SingTel

SingTel ($2.49)-likely to recover to $2.60 area than test support at $2.38- $2.32

Having exceeded the 61.8% recovery mark ($2.64) of its August to October correction from $2.84 to $2.32, down 18.3%, its sharpest pullback since bottoming out at $1.20 three years ago, SingTel has moved down below the 38.2% mark of $2.52.

This should not be seen as a bearish signal that the stock is headed back to last year’s $2.32 low which has become a new multi year support topped up by the 2004 close of $2.38. The counter is now finding support around the 2004 high of $2.49 backed by the 1998 finish of $2.52.

Interestingly its high of $2.68 so far this year is a historic resistance being exactly the 1994 low and 2000 close ($2.69), although it has exceeded this mark by climbing to $2.84 in 2005, in between 2 major multi year hurdles - $2.78 (1994 high) and $2.95 (2001 high).

The broad long term recovery that began at end-2002 and January 2003 is far from over and the current 7.5% pullback from $2.68 to $2.48 offers good buying opportunities.

In fact the strong support emerging at this month’s $2.48 low (last year it ended at $2.61 thus under-performing the STI which is still above last year’s 2347 finish) suggests that SingTel is keeping close to the 38.2% mark ($2.52) of its recent recovery after the fall from $2.84 to $2.32.

It is unlikely to fall to the 2004 multi year support of $2.38 as there are many multi quarter support levels between $2.44 to $2.48. Any slight move below $2.48 is expected to attract strong buying interest.

SingTel should move up to $2.52 and the half way and 61.8% mark between $2.84 and $2.32 ie $2.58 and $2.64 by the time its q3 results are expected out on Feb 2.

When its full results are out in early May with bumper dividends likely to be handed out, SingTel should be above $2.70 and even test its 2005 high of $2.84.

What Others Say

What Others Say: Benefited Financially, Good Work, Quite Efficient Indeed, Excellent Chart and Analysis, Interesting and Useful, Well Done, Impressed, Great Blog, Very Good Comments, Professional of all Professional, Making TAs like an art and etc.

Don't be itchy Front Side

The Moral of the Story in Trading perspective : is it's better to sit tight sometime; rather than the taking too much risk by going in and out too frequently!

Don't repeat mistake again and again

Don't Repeat Mistake Again and Again


Must use: Plan for trading.Meaning enter at 3A instead of 2A and Don't get panicky when 3B occurred. Do not enter without checking Trade Summary (TS) of Buy and sell quenes. Do not sell the same day.
The oppostite is true. Meaning don't check TS when sell intrayday wise after immediate purchase

Example of Good Entry Point
You may have interest in Detail of Plan

Jurong Tech (J09)

Beauty China (B15) - Good example

Calibrating ST Eng (S63)

Donkey In the Well

One day a farmer's donkey fell down into a well. The animal cried piteously for hours as the farmer tried to figure out what to do.

Finally, he decided the animal was old, and the well needed to be covered up anyway; it just wasn't worth it to retrieve the donkey.

He invited all his neighbors to come over and help him. They all grabbed a shovel and began to shovel dirt into the well.

At first, the donkey realized what was happening and cried horribly. Then, to everyone's amazement he quieted down.

A few shovel loads later, the farmer finally looked down the well. He was astonished at what he saw. With each shovel of dirt that hit his back, the donkey was doing something amazing. He would shake it off and take a step up.

As the farmer's neighbors continued to shovel dirt on top of the animal, he would shake it off and take a step up. Pretty soon, everyone was amazed as the donkey stepped up over the edge of the well and happily trotted off!

Life is going to shovel dirt on you, all kinds of dirt. The trick to getting out of the well is to shake it off and take a step up. Each of our troubles is a steppingstone. We can get out of the deepest wells just by not stopping, never giving up! Shake it off and take a step up.

NOW --------

Enough of that crap . . .

The donkey later came back and bit the shit out of the farmer who had tried to bury him. The gash from the bite got infected, and the farmer eventually died in agony from septic shock.

MORAL FROM TODAY'S LESSON:
When you do something wrong and try to cover your ass, it always comes back to bite you.
Cut and Paste from Yogi Berra

Good Example 2