ST Engineering

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Chart 1: ST Engineering Daily Chart from Jun 2022 till date

ST Engineering Marine Ltd, a subsidiary of ST Engineering, has been awarded a contract by the Ministry of Defence to design and build six Multi-Role Combat Vessels (MRCVs) for the Republic of Singapore Navy. The vessels are designed to function as a mothership and can operate a range of manned and unmanned systems in a flexible, intuitive, and integrated manner, allowing them to support a wide spectrum of missions with maximum combat effectiveness. The contract is a testament to ST Engineering's capabilities in designing and building large and complex naval vessels, as well as its commitment to supporting MINDEF in various areas. 

The company has also won a S$430 million contract to lead systems integration and project management for the new Kaohsiung MRT Red Line South Extension in Taiwan. ST Engineering's Urban Solutions will begin working on the project in mid-2023 over a period of nine years. 

At $3.63, market cap of ST Engineering is S$11,307.1mln, FY23F P/E is 19.50, current P/B is 4.70, dividend yield is 4.4% and its net debt of S$5.93b1n (as of end-4022) equates to net gearing of 247%

Bloomberg consensus indicates that there are eleven buys, one hold and one sell recommendations on the stock while the target price on ST Engineering is S$4.12, representing a potential upside of 13.5%.

Lim and Tan research team has an “Accumulate" rating for the stock and are expecting FY23 net profit of ST Engineering to grow by 8.3% yoy to hit S$579.5m1n. 

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Update: ST Engineering : (S63) GlobalData estimated ST Engineering’s new contract for the Singapore Navy will bring in US$1.2 billion in revenue for the company. The data analytics and consulting company on Wednesday projected a value of US$200 million for each of the six vessels. Shares of ST Engineering closed at S$3.65 on Wednesday, up 0.8 per cent or S$0.03, after the report was released. (source: business times)

State of the Market 9th Mar 2023

13th Mar 2023 Update:

VIX spiking in past 2 trading sessions (chart created using trading view)

Fear and Greed - source cnn.com

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11 March 2023 update: US market corrected 500 over points last night, as investors are preparing for a critical payroll report that is set to be released on Friday, which could have an effect on the trajectory of interest rates:

Greed and Fear ratings (source : CNN):

As compared to two days ago, the needle on the Fear and Greed Index has shifted from neutral to the fear region.

Tradingview chart

Vix Spike from around 19 level to about 22.5

Reaction of STI ETF in response to US negative sentiment last night

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Chart 1 : STI ETF (Heiken Ashi)

STI ETF down about 6.3% in 19 trading sessions - downward movements slowed down from 2nd to 7th Mar - till Fed Chair Powell cautioned that interest rates are likely to head higher than central bank policymakers had expected on Tuesday, which did not sit well with the market.

Chart 2 : STI ETF (Candlestick)

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Chart 3 : MMFI 

MMFI: "Percent of Stocks Above 50-Day Average" - technical indicator used to track the percentage of stocks that are trading above their 50-day moving average. The very patience investor may choose for it to come between about 11 to 32 - if ever gets there, that is.

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current Greed and Fear ratings (source : CNN):

Interpretation: Usually, the market starts to present opportunities when the needle of the meter is pointing within the 'Fear' and 'Extreme Fear' regions, caveat being in prolonged negative market conditionsns. In such cases, one's risk management and trade plan come into play to control and mitigate risk.

Venture Corportion: A Closer Look at Venture Corporation's FY22 Performance and Future Prospects

Venture Corporation - with FY22 ended on a positive note

Venture Corporation Limited (SGX:V03) recently reported its FY22 results, with net profit of $369.6 million, which was in line with expectations and slightly beat consensus forecasts of $368 million. 

The growth in healthcare and wellness, high sciences, and test and measurement divisions, along with a healthy balance sheet, contributed to Venture Corporation's overall performance. Despite supply chain constraints and inflationary pressures, these divisions were significant contributors to the company's performance.

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Chart 1: Venture plotted against PE Ratio (Monthly)

Although the technology sector's outlook is not as bullish as it was early last year, Venture Corporation's fundamental recommendation is maintained. The company's valuation is twice market cap, with a dividend yield of 4.4% and a price-to-book of 1.8 times. Despite the forward PE ratio being below its five-year historical average of around 16 times, the company is expected to register modest growth in FY23.

In 4Q22, Venture Corporation's revenue growth was across all domains. According to some esitmates, the company's expansion in Penang is expected to be completed by the end of 2023, and it plans to tap into the new influx of companies setting up plants in Penang to gain more customers, especially those with factories near its plants. Venture Corporation aims to enhance its competitive edge in the market by developing more unique and specialized capabilities than its peers. By doing so, the company hopes to establish a long-term relationship with its customers and achieve greater control over specific product modules or sections that it manufactures.

Venture Corporation's declared a FY22 dividend of S$0.75, which aligned with the projected amount. Despite anticipating macroeconomic headwinds that may make FY23 a challenging year, the company's management remains optimistic about its long-term outlook.

In Conclusion

Despite the challenging supply chain and inflationary conditions, Venture Corporation Limited has maintained its excellent performance. The growth in the company's healthcare and wellness, high sciences, and test and measurement divisions, combined with its strong financial position, have played a crucial role in its overall success. Although the macroeconomic environment poses challenges, Venture Corporation's management is optimistic about the company's long-term future, and it is anticipated to experience moderate growth in FY23.

Note: Venture Corporation Limited, listed on the Singapore Stock Exchange, is a leading global provider of technology services, products, and solutions with established capabilities in design and development, supply chain management, and product engineering, and was IPO in 1992

Yang Zijiang Financial Holdings' Performance in 2022: What Does It Mean for Investors?

Analyzing Yang Zijiang Financial Holdings' Full-Year Results for 2022

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Chart 1: Yzjfin daily and weekly charts (since IPO late Apr 2022)

Singapore-listed company Yang Zijiang Financial Holdings recently released their full-year results for 2022, revealing a 20% drop in total income to $306 million and a 50% decline in net profit to $162 million. The decrease in net profit was due to higher-than-expected credit losses and allowances of $135 million, mainly from debt investments made in the real estate sector, which was hit hard by the worsening real estate industry in China. The real estate sector accounts for approximately 56% of total provisions.

Despite this, the company believes that the worst of the real estate challenges may be over, with China reopening and a new and reformed government in place. The Chinese authorities have relaxed COVID-19 management measures, which have improved economic sentiment, and have released measures to support the local real estate sector, including a liquidity package in November 2022.

However, one of the key considerations for the company's performance and profit in FY2023 will be whether there will be an increase in their non-performing loans and whether they can claw back these provisions will be a key consideration for the company's performance and profit in FY2023. Their non-performing loan ratio stood at 41% at the end of 2022, up significantly from 16% in 2021. Nonetheless, the company is conservative with its non-performing loan classification and believes that they can claw back some of these provisions.

In Conclusion

At a current price-to-book ratio of 0.36 times (at 38 cents), the recent performance may have been already priced-in. Despite the unfavorable full-year results, the dividend yield of 4.7% remained attractive to investors (Yzjfin proposes a 43% payout ratio that exceeds its previous guidance of a 40% payout ratio). While the company's full-year results for 2022 were not favorable, their cautious optimism towards the real estate market in China may present potential opportunities for investors should the economy (in particular the real estate sector) of China staged a successful turnaround.

note: Concensus price target at 64 cents representing about 68% above current price of 38 cents as of this writing.

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