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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charts created using trading view

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.

read disclaimer, risk management

Exploring the Geographical Focus of Singapore's Major Banks: A Look at DBS, UOB, and OCBC

 DBS, UOB, and OCBC are major banks in Singapore that offer a range of financial services in various countries. Each bank has its unique strengths and areas of focus.

DBS is the largest bank in Singapore with a strong presence in Asia. It has operations in 18 countries and offers services in corporate and consumer banking, wealth management, and treasury and markets. DBS has a significant presence in Greater China, Southeast Asia, and South Asia. It has been expanding its presence in India and Indonesia in recent years.

UOB has a strong presence in Southeast Asia and China, with operations in 19 countries. It provides a range of financial services, including commercial and corporate banking, personal banking, wealth management, and insurance. UOB has a strong focus on serving small and medium-sized enterprises (SMEs) and has been expanding its operations in Vietnam, Thailand, and Indonesia. Recent business strategic moves suggest that UOB seems to be focusing more on the ASEAN region.

OCBC is a regional bank with a presence in 18 countries. It offers a range of financial services, including consumer banking, wealth management, and corporate banking. OCBC has a significant presence in Singapore, Malaysia, and Indonesia, and has been expanding its presence in China, Hong Kong, and Vietnam in recent years. OCBC Bank has a history of acquiring banks, and its acquisition of Chinese banks is part of its strategy to expand its presence in North Asia. To see OCBC recent OCBC FY2022 results. 

Despite their geographical focuses, all three banks have a significant presence in Singapore and the surrounding region. They are also involved in various initiatives, such as DBS's program for start-ups and OCBC Bank's acquisition strategy to expand its presence in North Asia.

SATS Rights Issue

Update 28th Mar 2023

Stan Weinstein
30-week Moving Average

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Update : 9th Mar 2023

Expected date of allotment. issuance and crediting of Rights Shares: Wednesday. 29 March 2023 

Expected date of commencement of trading of Rights Shares: Wednesday, 29 March 2023 

Expected date for refund of unsuccessful applications (if made through CDP): 29 March 2023 

Update : 7th Mar 2023

based on some ground work, the rights are supposed to be credited into CDP account already - since yesterday

while using ATM (see how to subscribe for rights step-by-step) is a common choice before for subcribing the shares, it appear that investors will receive a letter soon with a QR Code for rights subscription with PayNow as a payment option - see picture below:

Valuation (Target Price)

Based on CGS-CIMB analyst view, here, in summary:

The target price for SATS was previously set at S$3.21 (WACC: 7.7%) using DCF analysis, assuming a rights issuance of 314 million shares at a discounted price of S$2.55 per share, which was 15% lower than the market price of S$3.00 at that time. However, the recent increase in the number of shares issued and a lower subscription price of S$2.20 has led to a revision of the DCF-based target price for SATS, which is now S$3.10.

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Update 3rd Mar 2023:

SATS rights subscription schedule:

Trading of Rights : 7th March 2023 - 15th March 2023

Subscription of Rights Shares:  7th March 2023 - 21st Mar 2023 (via ATM - generally)

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SATS Ltd. has announced a renounceable, underwritten rights issue to raise gross proceeds of approximately S$798.8 million to partially fund the acquisition of Worldwide Flight Services (WFS). The rights issue will be priced at S$2.20 per share, and SATS will issue 363.1 million new shares via the rights issue. The record date for the rights issuance is March 2, 2023,.

SATS will trade ex-rights on March 1, 2023. To be eligible to subscribe to the rights issue, investors must hold SATS shares by the record date of March 2, 2023.

Based on general estimates - details of the rights trading period and subscription deadline have yet to be disclosed, _expect the rights trading period to be between the second and third week of Mar 2023_ given the expected acquisition completion date. 

Subsciption time period of main shares using the rights have yet to be determined / announced as of now.

Reference:

SATS rights issue to fund WFS purchase

Post on SATS on 22nd Feb

OCBC FY2022 Results

image source: wikipedia

OCBC (Oversea-Chinese Banking Corporation) Bank has released their latest financial results this morning (24th Oct 2023). For FY2022, Oversea-Chinese Banking Corporation (OCBC) has achieved record earnings of $5.75 billion, marking an impressive 18% increase from the previous year; and are generally in-line with market expectations. OCBC dividend history as follows:

Dividend	Ex Date	Record Date	Payment Date	Details
DIVIDEND	2023-05-08	2023-05-09	2023-05-19	SGD 0.40
DIVIDEND	2022-08-12	2022-08-15	2022-08-25	SGD 0.28
DIVIDEND	2022-05-06	2022-05-09	2022-05-20	SGD 0.28
DIVIDEND	2021-08-13	2021-08-16	2021-08-26	SGD 0.25
DIVIDEND	2021-05-12	2021-05-14	2021-06-29	SGD 0.159

One of the significant takeaways from the announcement is the increase in the final dividend to 40 cents per share (making it a total of 80 cents for the full year), which is a 40% increase from the previous year's dividend. With the increase in the final dividend, the bank's dividend policy has also been made public. that OCBC intends to pay out 50% of its earnings as dividends, which is in line with DBS and UOB. This is a positive development for investors who are looking for attractive investment opportunities within the sphere of blue chip companies.

The increase in the final dividend and the new dividend policy are important developments for investors looking for stable dividends. OCBC's management has also stated that they do not expect to cut the dividend for the full year of 2022, which provides investors with added assurance that the bank is committed to maintaining a stable dividend payout.

With a 6.4% yield based on the last traded price, OCBC appears to be the cheapest among the three banks in terms of dividend yield and PB ratio. Investors can expect a dividend of approximately 80 cents in 2023 (vs 28 + 28 totaling 56 cents in 2022), assuming that there are no externalities that could lead to the regulators to limit their dividends. 

OCBC has a return on equity (ROE) of approximately 11%, making it one of the more leveraged banks to the Hong Kong and China market. The reopening of Hong Kong and China's economies could benefit OCBC as the bank has Wing Hang Bank and a few acquisitions in China. While UOB is more focused on the ASEAN markets, OCBC is better positioned in the North Asian markets, specifically China and Hong Kong. To know more about Singapore Banks geographical focus, go here.

                 Chart 1: OCBC Price-to-Book ratio from 2013 to current (2023) - chart created using TradingView

In conclusion, OCBC's latest financial results and dividend policy are a positive development for investors who are looking for stable dividends (barring unforeseen circumstances). With a dividend yield of 6.4% on the last traded price (in contrast to both DBS and UOB dividend of about 4.5%) and PE ratio of 8x, Price to Book ratio of 1.1, OCBC appears to be the cheapest among the three banks at this

 OCBC's management has stated that they do not expect to reduce the dividend unless such externalities occur. As such, OCBC could be an attractive investment opportunity for investors who are looking for stable dividends and exposure to North Asian markets.

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Chart Update: 7th Mar 2023

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Both DBS and OCBC staged a possible reversal - as indicated by first Heiken Ashi Candlestick as of this morning 7th Mar 2023 (11:25 am)