AIO Finance Analysis

Wilmar International the world's largest listed palm oil trader, reported a five-fold jump in fourth-quarter net profit as palm oil soared to record highs, and said it hopes to expand outside Asia.

Singapore's second-most valuable listed company said despite an expected moderation in global economic growth it was bullish on agricultural commodities, but its shares fell as much as 6.6 percent as traders cashed in on a strong rally this month.
Earnings were boosted by contributions from recent acquisitions and high palm oil prices KPOK8, which hit a record high on Monday having more than doubled since the start of 2007.

"We have consolidated our position in Asia, our home base, and are now planning to expand in similar businesses beyond Asia to countries like Russia, Commonwealth of Independent States and Africa," Chairman and Chief Executive Kuok Khoon Hong said on Thursday.

Palm oil prices have eased from their Monday peak but remain 27 percent up this year. Strong demand from India and China due to a possible supply squeeze in coming months would likely keep the market buoyant, oil traders said.

Wilmar trades at 24.7 times to its 2008 earnings, versus 20 and 25 times for its Malaysian rivals Sime and IOI Its Singapore competitor Golden Agri-Resources trades at 13 times.

Source: Reuters

Genting International’s (GIL) 4Q results were below expectations with annualised net loss of S$381m coming in 5% below our full-year estimate and 7% below consensus. Core net profits were a more drastic 44% lower than our numbers. Unsurprisingly, there were no dividends declared.

Hurt by UK slowdown. GIL chalked a 12% topline decline in 4Q largely due to the poorer showing at its UK gaming division, which continued to suffer from lower headcount and drop from the effects of the smoking ban as well as economic impact with the greater impact coming from its provincial casinos.

Profitability hit by higher cost. The gaming tax structure that came into effect in Apr-07 had a net effect P&L of over £6m in FY07. This impacted GIL’s margins on top of the additional costs relating to start-ups of two casinos and renovations for inclusion of smoking terraces.

Unexciting near term prospects. The Sentosa IR project remains on track to meet its soft opening in 1Q2010. We are positive on the project outlook although start up and grand opening costs including depreciation will more than likely bring about a loss in 2010.

Downgrading to NEUTRAL. Given the weaker UK outlook and higher interest expense, we slash forecasts substantially for FY08 (-95%) and now estimate a loss for FY09. We introduce our FY2010 forecasts, which include first-year losses for the Sentosa IR. As a result, our end-CY08 sum-of-parts RNAV target price is lowered to S$0.73 from S$0.86. There appears to be little near term catalysts for GIL and this underpins our recommendation downgrade from Outperform. The stock remains a solid play into Singapore’s future tourism and gaming potential.
Time to short?

Source: CIMP

Energy-related stocks such as rig-builder SembCorp Marine and palm oil firm Wilmar may be in focus on Tuesday as the price of oil closed in on $100 per barrel due to speculation that OPEC will cut supply at a meeting next week.

U.S. stocks rose more than 1 percent on Monday on signs that the two largest U.S. bond insurers would stabilise, bringing a wave of relief to a market dogged by concerns of further bank write-downs.

Stocks and factors to watch:
- Singapore Telecommunications said that it has entered an agreement with five international telecommunications carriers to build a ultra high-speed cable system worth $300 million.
- JPMorgan has upgraded Chartered Semiconductor to "neutral" from "underweight", citing its recent acquisition of Hitachi Semiconductor Singapore wafer plant as a good move for the firm to diversify its client base.
- Commodities trader Noble said the firm has bought a 19.6 percent stake in a unit of Macarthur Coal worth A$48.5 million ($45 million).
- Chinese shipbuilder Yangzijiang said its full-year net profit rose 91 percent for the year ended Dec 31, 2007.
- Cruise operator Star Cruises posted a loss of $123.5 million for the full-year 2007.
- Coal mining firm Straits Asia Resources said its full-year net profit fell by 40.7 percent for year ended Dec 31, 2007

Source: Reuters

It seems like Asian stock indexes will be unnerved by fresh signs that the US is tipping into a recession yet again.

Job growth is faltering, oil price raising, consumer confidence plunging. The fallout from the worst housing slump in a quarter-century grows. Wherever you look, the signs are unmistakable that the economy is in trouble. Because of all the bad news, more and more economists foresee the US falling into a recession.

Short term lookout for STI stands at 2780 points with a resistance at will be at 3160 points.