AIO Finance Analysis

I often hear people asking “What is the best endowment plan?” in forums. In a short answer let me say there is no such thing as the best endowment plan. Endowment like any other kind of investment instruments does not guarantee its future performance. An endowment plan that yield good return in the past may not yield the same return in the future.

What is an endowment policy? It is basically a saving plan bundled with insurance protection. Before getting an endowment policy, ask yourself what is the purpose of getting one? If your objective is to save up a certain some of funds for usage after twenty years, then I recommend you to get a pure saving plan. If your objective is to have an insurance coverage, then get a pure insurance plan. Mixing your objectives with this kind of combo plan does not equate a good plan. Let me give a few disadvantages of owning an endowment policy.

1. You will incur high distribution costs which include commission fees to agent during first few years of policy
2. Since a major portion of your premium goes into saving and a small portion goes into insurance, your sum assured is always pathetically low
3. As endowment policy is a long term plan, early termination will result in losses. That means you may not get back all your premiums paid depending on the year of surrender. In other words, your savings is locked for a number of years
4. An endowment policy always projected a high return per annum which is not guaranteed. The actual return is most of the time less than projection

Now the question is, “Is there an alternative solution to an endowment plan?” The answer is definitely a YES. However this method involves a little bit of do-it-yourself approach. Let me discuss your saving and insurance portion separately.

Savings
The money paid for the saving portion of an endowment is actually invested in bonds and equities by the insurance company. That is how the insurance company is able to generate returns for your savings. There is no secret about that. So why not invest the money yourself into bonds and equities? Depending on your risk appetite and investment horizon, you can set up a diversified portfolio consisting of global equities and bonds fund. I shall not dwell into bonds and equities as it requires a separate topic.

However for the less savvy individuals, I would recommend setting up a regular savings plan with a balanced fund. Visit Fundsupermart Funds Selector and select Balanced under main categories, you will see a whole list of available funds. I would recommend any of the following balanced funds:
DWS Premier Select Trust
First Sate Bridge
UOB GrowthPath series

Insurance
As for your insurance portion, you might want to set aside a small sum of money into a term insurance. Depending on your age group and length of coverage, you can get a $100,000 insurance protection for less than $20. I would recommend you check out the following term insurance:
NTUC i-Term
Aviva SAF Group Term

Closing date of application: 15 April 2008
Commencement of trading: 17 April 2008

Established in 1998, China Eratat Sports is engaged in the design, manufacture, and sale of sports fashion footwear and apparel under their own Eratat brand.

Company background

• Their products are sold across 21 provinces / cities at 1,393 retail locations through their PRC distributors.
• They distinguish themselves from their competitors by developing their products based on the concept of "Life - Sports".
• International Artiste Wang Lee Hom has been their brand ambassador since 2002.

• They are well received and widely recognised in the PRC market since 1998, even having received the "2006 China Best Public Image Brand".
• They have strong product development capabilities, being able to generate approx. 3,000 and 1,000 design specification types for their footwear and apparel products range per annum respectively.
  
  
  

1. To increase their production lines in their new factory premises to achieve 11.5m pairs of footwear and 6.2m apparel units per annum.
2. To strengthen their brand image and recognition by advertising aggressively on TV and print, use of brand ambassadors, especially for the run-up and during the Beijing Olympics.

Gold is trading much weaker in New York Tuesday morning, as the precious metals complex is caught up in another major fund liquidation involving virtually all commodities.

Gold opened with major losses on the Comex, after plunging to $897/oz at the London AM Fix, and at 10:13 am the nearby June contract was trading at $892.20/oz, down $29.30 from Monday's settlement price. After opening at $903/oz, gold was quickly sold down to a low of $888.50/oz, but it has managed to recover.


Where is gold price heading to from here?
If you have gold futures position, you may be panic, and eager to sell off all your gold positions just in case gold price goes lower. But if you has done so, you might be selling at the low, and you will regret very soon.

As a trader, it is not rare for market to go against you, actually it happens me a lot of time, and I still exit from the trade with a profit. When market goes against you, don't panic, use all the brain power in your head to analyse the situation, and execute the next step (buy more, cut loss or do nothing).

In my view, the two main drivers for rising gold are Falling USD and Rising crude oil price

Click here for More
Source: Metal Trading

Home Sales News
New home sales slump to 9-month low in Feb. The number of new homes sold by developers dropped to just 170 units in February - the lowest since the Urban Redevelopment Authority (URA) began releasing monthly sales data in June 2007. And CB Richard Ellis executive director Li Hiaw Ho estimates that new home sales could be just 700-800 units for the first quarter of 2008 - even lower than the 894 units sold in the fourth quarter during the Asian financial crisis in 1997. In an analysis of the data released yesterday, Jones Lang LaSalle (JLL) said, however, that prices were comparatively stable. The firm's head of research (South-east Asia) Chua Yang Liang said that using the 'lowest median prices' category of the URA data, median prices declined 0.7% for units sold in the Core Central Region (CCR) and 5% in the Outside Central Region (OCR) on a month-on-month basis. For units sold in the Rest of Central Region (RCR), the lowest median price increased 14.2% from $765 psf in January to $874 psf in February.


Swiber
Swiber Holdings announced on Sunday night that it was awarded a LOI from CUEL Thailand for offshore installation work (platforms, jackets, topsides and pipelines) in the Gulf of Thai. The contract is tenable for five years and estimated to be worth US$50 p.a. The contract is scheduled to start in 1Q09.

Swiber has shown impressive YTD win of US$742m boosting order book to about US$1bn. This is the first long-term contract that Swiber wins after Brunei Shell project of about US$200m which will end in 2009. We believe more of such long-term contracts will provide a good mix for Swiber's order book and confidence in earnings visibility. Our FY08 revenue forecasts for FY08 is 90% backed by orders while FY09 is
already 45% secured.

Source: DBS Vickers

Investors should continue to stay defensive heading into 2Q. Our view that the STI has a downward bias to 2530-2650 remains intact. While minor oversold bounces do occur, it’s still a sell-into-strength market.

The clearest indication came last week when the FED’s USD200bil injection into credit markets triggered a 180pts gain from Tuesday’s low of 2794 to Wednesday’s high of 2976 that was all given back by Thursday.


Defensive plays such as telecom (SingTel, StarHub and M1) and consumer staples (SPH, SMRT, SingPost) should hold up well in coming weeks. Outside of these defensive stocks, other index heavyweights are likely to pull the STI lower towards 2530-2650.

The Singapore economy saw earnings rise but productivity dips for first time in six years. Labour productivity slipped 0.9% in 2007 while real earnings rose 4%. Jobless rate is down to a decade low of 1.6%.

Source: DBS Vickers
(Click here to Read More...)

Is the credit crunch over? News on Tuesday of the Federal Reserve pumping $200 billion of Treasurys into the market sent stocks soaring.

But several investing experts said that even if stocks rally again Wednesday, you shouldn't start popping champagne corks.

"There is the hope that the credit crunch is over but it's not founded in reality," said Haag Sherman, managing director with Salient Partners, a Houston-based investment firm and subsidiary of Sanders Morris Harris.


As stocks started moving higher Tuesday, Sherman said he thought many investors with bearish bets were forced to buy - or 'cover' their positions - so they could lock-in gains or minimize losses. But investors need to be selective.

Source: CNN

Closing date of application: 10 March 2008
Commencement of trading: 12 March 2008

Established in the 2003, Li Heng Chemical Fibre is principally engaged in the manufacture and sale of high-end nylon yarn products under their brand names "Liyuan" and "Liheng" in the PRC.

Their two production facilities in Changle City, Fujian Province, PRC, are strategically located amongst clusters of textile and garment manufacturing industries, which are their main customers, and related supporting service industries.Their revenue and profit have been registering 91.2% and 93.3% growth respectively over the past 3 years.


Financial figuresIntended IPO price: $0.80
No. of shares available for public offer: 10m
No. of shares available for placement offer: 390m
Total post invitation share capital: 1,700m
Dividend policy: No fixed policy.

Conclusion:
Based on its numbers, Li Heng is comparable to the leading SGX textile stocks such as Shina Sky, Fibrechem, and Sinotech Fibre, instead of the smaller companies such as C&G and Foreland.Li Heng should trade at a Fair Value of $1.30 or 12x PE only.

Probability of getting allotted for the IPO - FAIR
(Prospectus here...)
(Click here to Read More...)
Source: Extraordinary Profits

Closing date of application: 10 March 2008
Commencement of trading: 12 March 2008

Established in the 1967, Roxy-Pacific holdings is a Singapore-based specialty property and hospitality group.

Key Competitive Strengths:
They have been developing properties since 1967, and having experienced several cycles in the property market, have an established track record and reputation.
They are one of the more active developers in the Eastern area of Singapore, with an in-depth familiarity and a land bank of 30,422 sqm for 8 prospective developments there.

Key Risk Factor:
The risk of the Singapore Property Market bull run coming to a halt in the near term.

Financial figures
Intended IPO price: $0.30
No. of shares available for public offer: 7m
No. of shares available for placement offer: 126m
Total post invitation share capital: 636.56m
Dividend policy: No fixed policy.


Conclusion:
Based on its numbers, Roxy-Pacific is comparable smaller property developers which only focus on the Singapore property market such as Eastern Holdings, Sing Holdings, which typically trade at 10-12x PE. As such, Roxy-Pacific should trade at a Fair Value of $0.30 (IPO price) or 12x PE only.

Probability of getting allotted for the IPO - FAIR
(Prospectus here...)
(Click here to Read More...)
Source: Extraordinary Profits

Investors were spooked by a media report that a planned bailout of US bond insurer Ambac Financial was running into snags, dealers said. Ambac and other major bond insurers have been hard hit in the financial turmoil stemming from the US housing slump and related credit squeeze. "Investor fears of a US recession have strengthened. There is even a growing view that the US economy has already entered into a recession," said Ryohei Muramatsu of Commerzbank in Tokyo.

Markets expect the Fed to cut its federal funds rate at a March 18 meeting. The central bank has already slashed borrowing costs by 2.25 percentage points since September in a bid to shore up flagging economic growth.

Asian stocks plunged Monday with Tokyo ending down almost 4.5 percent, battered by a slumping dollar and fears that the US economy is slipping into recession, dealers said.

Investors dumped shares after heavy losses on stock markets in the United States and Europe last week following signs that the fallout from the US credit crisis was far from over.

Hong Kong was down 3.1 percent in late trade, Seoul gave up 2.3 percent as Singapore and Sydney both shed about 3.0 percent.

"Wall Street's plunge amid a raft of bad news hit sentiment in a big way... raising fears about the possibility of the market slipping into a downward spiral again," said Kim Min-Sung, analyst at Bookook Securities in Seoul. Tokyo was the hardest hit, with the Nikkei-225 tumbling 4.49 percent to end below the key 13,000 points level for the first time in over a month.

The results were "a reminder to investors that subprime woes have not gone away," CIMB-GK Research analyst Song Seng Wun wrote in a note to clients from Singapore. "The mortgage meltdown and credit crisis are likely to have a substantial negative impact on the US as well as global economic growth in the coming months," Song added.

Source: Yahoo! News

China's top energy firm PetroChina is considering building a multi-billion-dollar refinery in Singapore, a local newspaper reported, allowing it to escape Beijing's fuel price controls.

Building a new 400,000 to 500,000 barrel per day (bpd) plant could cost more than $10 billion, according to recent cost estimates for similar size projects, but would fit PetroChina's ambition to become a leading fuel trader in Asia.

"It is currently doing a feasibility study and doing due diligence on this...and so far the feedback has been positive," The Business Times quoted an unnamed source as saying. Two PetroChina officials reached by Reuters said they could not confirm the report, but downplayed its significance.

"The idea was to process PetroChina's equity oil overseas and supply refined fuels to China," said the official.

The Business Times cited another source who said the new refinery would be at least 400,000 to 500,000 barrels per day.

A refinery in Singapore would also give PetroChina more flexibility and power to influence benchmark Asian oil prices, advancing its effort to become a top trader.
Several years ago PetroChina bought a 35 percent stake in Singapore's $500 million Universal Terminal, Asia's largest commercial oil storage terminal, which was completed last November.

"Given PetroChina's business profile, it makes sense for them to have an oil refinery in a global pricing hub like Singapore," the newspaper quoted the second source as saying.

Source: Reuters

Tha latest news in the almost never-ending series on "inflationary" price increases includes new adjusted pump prices from Caltex for all three classes of petrol. Regular 95 now costs S$2.046 per litre, Regular 98 at S$2.12 and Premium 98 at S$2.286 per litre. As Singaporeans may know by now, there is a worldwide commodities "boom" which had led to prices of everything from steel, oil, pork and flour rising quite a bit. This has inadvertently resulted in an inflation rate of 6.6% which was recently reported in the news. Yet, when I recently passed by a car road show at Suntec City atrium (open area near Carrefour), there were scores of people literally lining up to purchase cars !

Anyhow, let me break down the numbers according to BT and comment on them. According to the article, if you spend S$50K on a car with a 70% loan at 3% p.a interest for 7 years, then you will end up paying close to S$130K after 10 years. The breakdown is as follows:-

Cost of Car including COE - S$50K
Car Loan (70% of purchase price at 3% p.a. for 7 years) - S$7,350
Insurance (S$1,500 per year for 10 years) - S$15K
Road Tax (S$500 per yearfor 10 years) - S$5K
Parking Charges for Home and Office (S$250 per month x 12 x 10 years) - S$30K ERP Charges (S$3 per day x 240 working days x 10 years) - S$7.2K
Petrol Costs (S$200 per month x 12 x 10 years) - S$12K
Maintenance and Repairs (S$300 per annum x 10 years) - S$3K

The rest of the assumptions are for fines and accidents, which I assume one should and would not incur unless one was driving recklesly, or drink driving ! The BT article totals up the figures to give an approximate S$132,550, which boils down to about S$1,105 per month. If you take into account the "additional" potential extra costs, the cost per month is about S$1,360. Thus, for a person who takes home about S$3K (median income level per individual), this makes owning a car very challenging indeed !

To end off, all I can say is that if one forgoes a car, he can hope to achieve financial freedom sooner. But the material comforts and convenience of a car cannot be under-stated, and those who seek this or who require a car because of an infirmed member of the family or young children should ensure they work out the numbers as I had, to see if they have sufficient funds to sustain a car. As I always say, it's easy to own a car, but darn hard to maintain one !

Banks such as DBS Group, Oversea-Chinese Banking Corp and United Overseas Bank may be in focus after a record loss at insurer AIG exacerbated fears of more write-downs in the financial sector.

Stocks and factors to watch:

Goldman Sachs has cut the target price of conglomerate SembCorp Industries' shares to S$4.60 from S$5.70 but kept its "neutral" call, citing weak earnings in its utilities division and lack of positive catalysts.

SembCorp Industries posted a 42 percent rise in fourth-quarter profit on demand for utilities and rig building, and said it was eyeing acquisitions for growth.

Oversea-Chinese Banking said it has withdrawn its offer for commodities and property firm Straits Trading

MapleTree Logistics Trust said it has agreed to buy a warehouse for S$26.5 million ($19 million).

Swiber Holdings said its fourth-quarter net profit jumped more than five times to $20.2 million.

Source: Reuters

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.

DBS ($17.90) was $16.74 then and has also overshot our $18 sell target reaching $18.46. It should find support around $17.50 now and could test the latest highs soon.
UOB ($18.20) was $17.04 and rallied to $18.50 this week. Support is now around $17.70.
SGX ($9.08) remains a tricky stock as it held up well at $8.80-$9 that time but rebounded to only $9.50-65, indicating heightened market uncertainties. It should be a buy around $8.80-90.

Keppel ($10.44) dipped below our $9.80-$10 support to $9.76 and has moved back to old $10.70-$11 support. Buying on weakness towards $10.20 is called for as it could move back to $11.
City ($11.74) was picked at $11.26 and rallied to $12.38 with new higher support now at $11.50-60 and it should rally back to near $12.50 by the results release in a week’s time.
SIA ($15.56) was at $15.26 then, moving up to $16.18 and should continue to be well support at $15.-$15.20. Rebounds to above $16 call for profit-taking.
Source: AMFRASER

I came across this article from MyPaper reporting on Unit Trust. I thought why not share it on my blog. Similarly, DWS Global Agribusiness, unit trust from DBS caught my eye. The Fund invests in opportunities at various points along the “food chain” ranging from agricultural commodities to consumer products. Areas include land and plantation, seed and fertiliser, protecting and irrigation, food processing and manufacturing companies. With the exception of cotton, all other soft commodities went up again in November.Oil prices nearing USD 100 per barrel was one of the reasons for further food inflation. Other funds recommended by MyPaper includes
1. Legg Mason Singapore Bond Fund
2. Lion Capital Team Singapore Fixed Income Investment Class
3. A Henderson Global Bond Fund
4. ING Singapore DollarBond Fund
5. UOB Global Bond Fund


MyPaper Report
It was a less-than-positive start to the new year, with oil prices hitting US$100 per barrel and a weak job market outlook heightening the fears of a United States recession. A sell-off in equities and lower bond yields have caused bonds to outperform equities.

Singapore bond funds performed better because they were largely overweight on Government bonds which carried good credit ratings and were more focused compared to more diversified global bond funds. Would bonds continue to perform better than equities? It is still unclear as the outlook for equities is still uncertain in the near term.

For now, investment in bonds is still recommended for three reasons.
First, we are starting to see Main Street (the investing public) being affected by Wall Street. Weak job numbers and the fall in ISM (Institute for Supply Management) non-manufacturing data showed that the US economy had slowed down sharply from December to January, and it was clear that the financial market turmoil which
began in the housing market had affected the broader economy.

Second, it is not clear whether US housing market has bottomed out yet. Housing grew at about 1.006 million units per month in December, a new-low since late 2005 and the lowest in 17 years. Housing permits and existing home sales continued to form new lows in December 2007 since their descent in 2005. Sub-prime foreclosures as a ratio over total loans have also been increasing since 2005. These numbers suggest that the US housing industry is weak. Lastly, the effects of the US Economic Stimulus package will be felt only in the second half of this year. The package to stimulate the economy is great – consumer cash rebates, business incentives and easing on home loan limits – but the easing of loan limits will take effect next month and the cash rebates will be in the mail only by May. Until then, the economy might not feel the full impact of the economic stimulus.

For now, we favour bonds over equities as the outlook for the latter is still unclear. Investors with spare cash could consider high-quality fixed income securities such as European sovereigns as it is likely that the European Central Bank might reduce rates. Or they could wait until the market bottoms out before investing in equities. In the long term, the outlook for emerging markets is still promising, so don’t panic.

Source: MyPaper

Samko Timber IPO. (from Extraordinary Profits)
Closing date of application: 21 February 2008
Commencement of trading: 25 February 2008

Established in the 1978, Samko Timber is a leading Indonesian timber processing company and one of the top 5 tropical hardwood plywood producers globally.

They have approx. 450,000 ha of natural forest concessions and approx. 125,000 ha of industrial forest plantations.

Their production facilities include:
• 7 timber processing plants
• 1 fibreboard production plant
• 10 satellite veneer plants
• 1 power plant
• 2 chemical glue facilities
Their products include:
• Primary and secondary processed timber products
• Harvested logs
• Chemical glues of several types and grades
Financial figures

Intended IPO price: $0.55
No. of shares available for public offer: 3m
No. of shares available for placement offer: 180m
Total post invitation share capital: Approx. 684.6m

Conclusion:
Some investors have an aversion to Indonesian stocks because of the political and natural instability suffered by the country. Samko has a profit margin of only 3.1% - i.e. for every $100 of revenue they only earn $3.10 of profit. Considering those factors, I would prefer to avoid this IPO. Probability of getting allotted for the IPO - VERY LOW


Click here for prospectus
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Source: Extraordinary Profits