Saturday, November 12, 2011

Noble Group

Published November 12, 2011
Noble Group founder buys shares, calms investors

NOBLE Group's founder Richard Elman stepped in yesterday to calm Noble Group investors, who suffered a US$2 billion hit on Thursday as the stock fell sharply on news of a quarterly loss and the resignation of its CEO.

Besides buying Noble shares on Thursday, Mr Elman told Reuters yesterday that the resignation of the CEO was not due to the quarterly loss.

The Singapore-listed commodities trader saw its share price plunge by more than a quarter on Thursday, hit by the surprise resignation of Ricardo Leiman and its first quarterly loss in more than a decade.

The shares recouped some of the losses in early trade yesterday, rising as much as 4 per cent, but ended unchanged at $1.18. Noble said late on Thursday that a vehicle linked to Mr Elman's family bought 10 million shares, raising its interest in the firm to 21.53 per cent from 21.37 per cent.

Mr Elman, who is now acting CEO and chairman, told Reuters in a phone interview yesterday that the company thought that it would be better to announce the departure of Mr Leiman before the planned listing of its agricultural unit.

'It was planned for some time, and we thought it would be better to get this out of the way since he will not be on the board of the new company (Noble Agri),' Mr Elman said, adding that 'it was coincidence of timing' that the announcement came a few hours after Noble reported its poor quarterly results.

Mr Elman, who is already in his 70s and has been cutting back on his role at the company over the past two years, did not elaborate on why the former CEO wanted to leave.

The company said late on Wednesday that Mr Leiman was leaving for personal reasons. Mr Leiman had been in the job for less than two years.

Mak Yuen Teen, a professor at the National University of Singapore's business school who specialises in corporate governance, said: 'If this was long planned and not connected to the results, the company should have disclosed the succession plan earlier rather than two hours after a negative results announcement. It would be difficult to convince the market that they are unconnected.'

Noble is the latest casualty among commodity traders caught up in the defaults in the cotton business.
It blamed part of its US$17.5 million quarterly loss on cotton as farmers defaulted on their contracts following a gyration in cotton prices, which forced it to cover physical deliveries to its customers by purchasing cotton in the spot market at elevated prices.

Investors are now turning their attention to another Singapore-listed rival, Olam International, which reports earnings on Monday.

Olam is among the world's top cotton traders, with a network of more than 100,000 farmers, ginners and suppliers, according to the company's website, said Reuters.

'Olam's industrial segment, which constitutes 23 per cent of 2011 financial year gross contribution, is largely driven by its cotton business,' Goldman said in a research note.

'We believe investors may have concerns regarding these (cotton counterparty) risks, and the stock price may see short-term weakness until there is more clarity provided by the company.'

Mr Elman tried to calm investor jitters over the volatile commodities market, which has forced global commodities giants from Cargill to Bunge to report steep decline in profits.

'Honestly, it was a minor loss, it's mark-to-market, and probably some of it or all of it can come back in the next quarter or at some point in the future,' Mr Elman said, referring to the possibility that the company can claw back the losses if commodity prices improved. 'It is not a major issue - markets made it a major issue. But that's fine, let the markets do what they want,' he added.

According to Reuters, Noble said that its processing margins in agriculture remained under pressure, while below-average crop yields in the sugar business in Brazil and continuing counterparty defaults in the cotton industry had undermined the operating environment.

Bloomberg said in a report yesterday that Mr Elman, a former scrap yard worker who created Asia's largest commodity supplier by sales, is looking for a successor for at least the second time in as many years.

As Noble transforms from a trader to a producer of food, metals and energy commodities, Mr Elman has to look for an executive skilled not only in trading, but also in industrial operations, said Bloomberg.


My Thots....

The big word used is SCM, Supply Chain Management, supplying the commodities, all the way from the farms gates to the factories floor.

Most have trading as their main activity, the risks associated, of which, they  are supposedly able to  hedge away due to their deep expert/intimate knowledge of the entire supply chain.
But, as an investor as opposed to trader, I have always wondered if the volatilities and uncertainties can truly be hedged away. Or to put it bluntly, if commodities is really a one way upward bet as some like Mr Bowtie (Jim Rogers) wants us to believe.

Of late, the greater danger is that these SCM purveyors are buying up & owning the 2 extreme ends of the supply chain, either the farms/mines or the factories, in an effort to realise better & better margins.
The risks rises and the biz model switches  from managing supply chains to owning & managing farms and factories with accompanying skillsets and asset ownership (high capex involved) risks.
I was particularly worried when Temasek got Goodyear as the CEO, in an effort to allocate more for commodities exposure. I hope with Goodyear gone,  Big T's exposure has lessened.

Two commodities, sugar and cotton comes to mind, in  recent months.
The cotton mkts volatilities in recent mths has certainly exposed the flaw in the so called SCM model.
US cotton farmers faced with escalating cotton prices reneged and did not deliver on their forward contracts preferring to resell on the spot mkts where prices have doubled. With the doubling of prices within a  few short mths, the factories were priced out  and their demand plunged, so the SCM guys got squeezed from both ends, stuck with high priced cotton inventories when cotton prices plunged.

Apparently, all the SCMs;  Cargill, Glencore, Noble and Olam? are all hit......

Anyway, I have always never been smart enuff to figure out Noble's founder Richard Elman's financial statements, and find his SGX announcements too expressive and colorful and lacking in detail for my understanding.

Genting--Bad debt provisions in Q3

Is Genting being prudent (aka conservative)  or aggressive ?

The following article from BT  by Grace Leong on Nov22, quoting MacQuarie analysts, seems to suggest that Genting has been overly aggressive in credit extensions to VIPs.


Genting Singapore shares fell as much as 8.3 per cent in volatile trading yesterday, before closing at $1.595, down 5.34 per cent or nine cents.

In what Genting Singapore called a prudent move in the face of a slowing global economy and tightening credit conditions in China, the company raised its bad debt provisions to $56.9 million for the third quarter, up from $23.5 million a year ago.

That equates to 8.5 per cent of its gaming revenue, higher than the average of 3 per cent over the past six quarters, Citigroup said yesterday.

'However, this is in contrast to Marina Bay Sands, which has not shown higher provisioning, so we wonder if Genting Singapore's decision was driven by its aggressive credit extension that was seen in the first half of the year,' Macquarie Equities Research analysts Gary Pinge, Elaine Lai and Somesh Kumar Agarwal said in a report yesterday.

Also pressuring Genting Singapore's stock are concerns that its flagship casino, Resorts World Sentosa (RWS), continued to cede market share in both VIP and mass gaming segments to rival MBS.

'Genting Singapore lost significant gaming market share in 3Q11 and also did not see any ramp-up in non-gaming,' the Macquarie report said. 'We believe the VIP market share loss is more driven by lack of a competitive product relative to MBS.'

'We find it interesting that notwithstanding Genting Singapore adding more table game capacity, slots and electronic table games (ETGs) (quarter-on-quarter), mass market failed to ramp and showed 2 per cent QoQ growth. This essentially means that table, slot and ETG yields all declined QoQ - at a time when there was available hotel room capacity,' the Macquarie report said.

The scheduled opening of Bayfront MRT at MBS may also shift some mass-market players away from RWS, it said.

But it isn't all doom and gloom.

Some analysts say downside was capped by Genting Singapore's top management's renewed optimism on hopes that some of the junket licensing applications it endorsed may be approved in the next few months.

Also helping is the planned opening of the 200-luxury room Equarius hotel and 20-plus Beach Villas by year-end, which would triple RWS's VIP hotel offering to nearly 330 and help the casino claw back some VIP market share.

Morgan Stanley said RWS could see growth in its VIP roll as it ramps up the number of slot machines to 1,744 by year-end from its current 1,315.

With the resort's completion next year, RWS is expected to see a boost in operational performance in 2013.

'We believe Genting Singapore remains well-positioned to secure new gaming opportunities when they arise. Globally, governments are facing fiscal pressure and casinos remain an efficient policy tool for raising taxation revenues. We see Korea and Japan as key potential markets,' said HSBC analyst Sean Monaghan.

Aaron Fischer of CLSA Asia-Pacific Markets noted that Genting Singapore was 'especially optimistic on Japan and believes it could legalise gaming within the next 12 months'.
'This would be another major catalyst to the shares as we believe Genting Singapore, Las Vegas Sands and Wynn are the three front-runners for one of the two licences (which would probably be operated under a joint venture with a Japanese company,' he said.


My Thots....

Both GS and LVS, in Sg,  operates under the same regime i.e. w/o junkets to insure against the receivables risk and quite the same in terms of patronage profiles.
LVS in Macau & elsewhere do operate with the junket scheme.

Take note, the  analysts from MacQ are arguing that LVS is taking away VIP market share.
Now who do the junkets serve ------ VIPs,  right?
So if LVS has a higher share of the VIP mkt and w/o junkets to insure against bad debt collections  of receivables, then why are their provisioning lower?
So is LVS more aggressive or is GS more conservative?

Take Ur pick.
U can read it as GS is conservative by making a larger provisioning
Do U say LVS is conservative and GS is aggressive in over providing credit, as MacQ is implying ?

A "spin" has been put on the conservative stance for provisioning, to make GS look aggressive!!

IMHO, it is more conservative to over provision and write-back, later, if the receivables are recovered eventually.


The Hour Glass


Good Pack


Friday, November 11, 2011

Tat Hong

Published November 10, 2011
Tat Hong's Q2 profit soars 78% to $12.6m
Revenue rises 26%; overall gross profit margin was 37.1%


ROBUST margins and a steady pick-up in business enabled crane specialist Tat Hong Holdings to boost its second-quarter bottom line by 78 per cent to $12.6 million, from $7.1 million a year earlier.

This came on the back of a 26 per cent rise in July-September 2011 revenue to $183.3 million.

The results translated into first-half earnings of $18.1 million, an improvement of 4 per cent over the previous interim earnings of $17.5 million at end-September 2010.

The company declared an interim dividend of one cent per ordinary share and convertible redeemable share.

Nevertheless, the quarterly results mark a steady sequential improvement in the bottom line of the company, from $3.8 million profit during the final quarter of last year, then $5.5 million during the April-June first quarter of the current year and now $12.6 million.

CEO Roland Ng attributed this to steady margin recovery since late last year.

'We have seen an upward trend in business, especially in our crawler crane division and distribution business,' he said. 'We have a sustainable business model which is firing on all cylinders. In fact, we expect things to get even better during the year ahead as our Australian tower crane business starts delivering results.'

Indeed, the company enjoyed growth across all its business divisions, while operating cost increase was kept modest.

Overall gross profit margin was 37.1 per cent.

The distribution business saw a revenue growth of 38 per cent to $89.1 million due to higher sales of excavators to the Indonesian logging industry and the Australian resources sector. Margin for this business was about 20 per cent.

The crane rental business brought in revenues of $53.5 million, but chalked up a gross margin of 58 per cent. The general equipment business had a 77 per cent revenue growth to $26 million, and a strong 56 per cent gross margin.

Mr Ng said that although the tower crane business only contributed some $14.8 million to revenue (a mere 7 per cent year-on-year rise), this was a business with a lot of potential.

'We are well positioned in Australia, where we see strong demand for our tower cranes next year and beyond,' he said.



My Thots...

Roland Ng expressing much more optimistic outlooks for GPM (Gross Margins)  and  the Tower Crane Biz, in this interview with the reporter than in the SGX announcement.

Wednesday, November 9, 2011

Starhub, HLF, Tat Hong, RE, Venture Corp, Yanlord



Tat Hong$file/Q2FY2012Presentation091111.pdf?openelement$file/TatHongSGXNETSEPTEMBER2011.pdf?openelement$file/2QFY2012PressRelease091111.pdf?openelement$file/2QFY2012Factsheet091111.pdf?openelement


Venture Corp$file/3Q2011Results9Nov2011.pdf?openelement$file/3Q2011PressRelease.pdf?openelement$file/3Q2011Financials.pdf?openelement


China's CPI Release

 China's Consumer Price Indices in October

Albeit, still high, the CPI is trending down for the past 3 mths.
At 5.5%, and with the Eurozone in crisis, the policymakers will likely take their foot off the brakes on Monetary policies tightening.

China's Producer Price Indices in October

Reading the PPI figures, in tandem with the CPI figures, confirms the downward trend in prices.
PPI is a strong predictor of CPI trends and the sharply falling growth trend in the PPI augurs a soft landing for the Chinese inflation picture.


My Thots.....

Many of the SMEs, especially local S-chips who are suffering from the recent credit squeeze caused by higher interest rates and higher RRRs, as well as a rising RMB, will be able to breathe better going forwards, as the Chinese policy makers adjust to a more pro-growth stance and ease the tighthening measures.

Asia Square Tower 1

Published November 9, 2011
Two-thirds of Asia Square Tower 1 taken up


TOWER 1 of Asia Square, the newest office building in the Marina Bay financial district, is about 68 per cent leased at rents between $12-16 per square foot per month, the project's head of leasing, Luke Moffat, said in an update.

Mr Moffat, who was speaking to reporters after the tower's grand opening last night, added that he expects Tower 1 to be fully let by the middle of 2012.

He also does not see rents being reduced in order to secure tenants. 'We don't see it as a period where we will have to drop rents, but things will be a bit slow.'

The 43-storey Asia Square Tower 1 has some 1.26 million square feet of office space. Around 32 per cent of the space has yet to be leased, though Mr Moffat's team is negotiating with a few tenants, he said.
One potential tenant in the financial sector could possibly take up a few high-rise floors, BT understands.

Companies that have already signed leases include Citibank (which will take up nine floors), Google (three-and-a-half floors) Bank Sarasin and White & Case.

The guest-of-honour at the opening ceremony, Emeritus Senior Minister Goh Chok Tong, said that Asia Square introduces the latest innovation in design, building technology and efficiency, which will advance Singapore's goal of building a world-class business district.

'Looking ahead, we must continue to upgrade Singapore's business infrastructure in order to meet the changing needs of global business and finance and to serve the financing and investment needs of a growing Asia.

'Our business spaces should be innovative and flexible, and our downtown should provide attractive lifestyle options for those who work, live and play here.'

Asia Square's Tower 2 will be ready in 2013. The building will be the first development in Singapore's new downtown to integrate a 305-room five-star Westin Hotel.

Asia Square is owned by MGPA, a private equity real estate investment advisory company which counts Australia's Macquarie group among its shareholders.



My Thots...

Prime Office still looks good, if this BT article is correct.


New Acquisitions in Peru

China Fishery’s fishing quota further increase to 6.21% in North Peru and 11.72% in South Peru.
Assets of the two Peruvian fishing companies include two fishing vessels and one fishmeal processing plant.


My Thots....

The key word here is ITQ, Individual Transferable Quotas.
Ownership of the ITQs provide exclusive rights to a portion of the TAC ( Total Allowable Catch) in the respective fishery, every year.
As prices of fish rise each year due to inflation and increasing demand from West Africa and aquaculture needs, the ITQs  are expected to rise in value.

For more on ITQs,

Technocrats to run national unity govts

Berlusconi humiliated in parliamentary vote

ROME | Tue Nov 8, 2011 10:46am EST

ROME (Reuters) - Italian Prime Minister Silvio Berlusconi suffered a huge humiliation in parliament on Tuesday in a vote that indicated he no longer had a majority and ratcheted up pressure for him to resign.Berlusconi's government won a key budget vote after the opposition abstained but obtained only 308 votes compared with an absolute majority in the lower house of 316 votes.

Opposition leader Pier Luigi Bersani immediately called on Berlusconi to resign, saying Italy ran a real risk of losing access to financial markets after yields on government bonds had approached the red line of 7 percent.

"I ask you, Mr Prime Minister, with all my strength, to finally take account of the situation ... and resign," Bersani said immediately after the vote.

Berlusconi has been on the ropes for weeks but Tuesday's events seem to be pushing him toward inevitable resignation.

Earlier Berlusconi's key coalition ally, Umberto Bossi, head of the devolutionist Northern League, told him to step down as the 75-year-old media magnate suffered a series of what could be mortal blows.

Bossi said Berlusconi should be replaced by Angelino Alfano, secretary of the premier's PDL party.
"We asked the prime minister to stand down," Bossi told reporters outside parliament.

Berlusconi had remained defiant ahead of Tuesday afternoon's vote on a public finance measure, rejecting calls from all sides to step down and desperately trying to win back a large group of rebels in the PDL. The vote showed that he had not been able to stem a major rebellion.

Bossi's action and the parliamentary vote could finally tip the balance against him as red lights flash on bond markets about Italy's instability.

The League, together with many members of the PDL, are believed to want Berlusconi to make way for a new center-right government capable of tackling a huge economic crisis and restoring the confidence of markets without handing power to a transitional administration.

Earlier five PDL rebels said they would not take part in the vote on public financing, sapping Berlusconi's support.

The center-left opposition said they abstained to lay bare the weakness of Berlusconi's support while allowing the passage of a bill that is vital for government funding.

While Berlusconi's demise has turned into what commentators are calling a "long agony," interest rates on Italy's debt have soared to levels that are causing deep concern about the survival of the euro zone if its third largest economy cannot service its debts.

Yields on Italy's 10-year benchmark bonds rose to 6.74 percent on Tuesday before dropping back. Analysts said Italy was reaching the point where Portugal, Greece and Ireland had been forced to seek a bailout.

Finnish Prime Minister Jyrki Katainen said Italy was just too big to bail out. "It is difficult to see that we in Europe would have resources to take a country of the size of Italy into the bailout program," he told parliament in Helsinki.

As the spread between Italian and German bonds -- a reflection of the extra risk of holding Italian bonds -- approached 5 percentage points, Italian employers' association leader Emma Marcegaglia said: "We can't go on like this for long."

Analysts say current interest rates, if maintained for long, would cancel out the budget savings planned as part of a painful austerity program.


My Thots....

Papandreou gone, Berlusconi going...
Likely, Greece & Italy will be run by technocrats (NOT politicians), who are pushed forward by neccessity to lead the national unity governments  and who can have the credibility to negotiate with the troika and the capability to implement  the measures agreed upon.

Monday, November 7, 2011

Here comes the Sun

Op-Ed Columnist NYT
Here Comes the Sun

Published: November 6, 2011

For decades the story of technology has been dominated, in the popular mind and to a large extent in reality, by computing and the things you can do with it. Moore’s Law — in which the price of computing power falls roughly 50 percent every 18 months — has powered an ever-expanding range of applications, from faxes to Facebook.

Our mastery of the material world, on the other hand, has advanced much more slowly. The sources of energy, the way we move stuff around, are much the same as they were a generation ago.
But that may be about to change. We are, or at least we should be, on the cusp of an energy transformation, driven by the rapidly falling cost of solar power. That’s right, solar power.

If that surprises you, if you still think of solar power as some kind of hippie fantasy, blame our fossilized political system, in which fossil fuel producers have both powerful political allies and a powerful propaganda machine that denigrates alternatives.

Speaking of propaganda: Before I get to solar, let’s talk briefly about hydraulic fracturing, a k a fracking.

Fracking — injecting high-pressure fluid into rocks deep underground, inducing the release of fossil fuels — is an impressive technology. But it’s also a technology that imposes large costs on the public. We know that it produces toxic (and radioactive) wastewater that contaminates drinking water; there is reason to suspect, despite industry denials, that it also contaminates groundwater; and the heavy trucking required for fracking inflicts major damage on roads.

Economics 101 tells us that an industry imposing large costs on third parties should be required to “internalize” those costs — that is, to pay for the damage it inflicts, treating that damage as a cost of production. Fracking might still be worth doing given those costs. But no industry should be held harmless from its impacts on the environment and the nation’s infrastructure.

Yet what the industry and its defenders demand is, of course, precisely that it be let off the hook
for the damage it causes. Why? Because we need that energy! For example, the industry-backed organization declares that “there are only two sides in the debate: those who want our oil and natural resources developed in a safe and responsible way; and those who don’t want our oil and natural gas resources developed at all.”

So it’s worth pointing out that special treatment for fracking makes a mockery of free-market principles. Pro-fracking politicians claim to be against subsidies, yet letting an industry impose costs without paying compensation is in effect a huge subsidy. They say they oppose having the government “pick winners,” yet they demand special treatment for this industry precisely because they claim it will be a winner.

And now for something completely different: the success story you haven’t heard about.
These days, mention solar power and you’ll probably hear cries of “Solyndra!” Republicans have tried to make the failed solar panel company both a symbol of government waste — although claims of a major scandal are nonsense — and a stick with which to beat renewable energy.

But Solyndra’s failure was actually caused by technological success: the price of solar panels is dropping fast, and Solyndra couldn’t keep up with the competition. In fact, progress in solar panels has been so dramatic and sustained that, as a blog post at Scientific American put it, “there’s now frequent talk of a ‘Moore’s law’ in solar energy,” with prices adjusted for inflation falling around 7 percent a year.

This has already led to rapid growth in solar installations, but even more change may be just around the corner. If the downward trend continues — and if anything it seems to be accelerating — we’re just a few years from the point at which electricity from solar panels becomes cheaper than electricity generated by burning coal.

And if we priced coal-fired power right, taking into account the huge health and other costs it imposes, it’s likely that we would already have passed that tipping point.

But will our political system delay the energy transformation now within reach?
Let’s face it: a large part of our political class, including essentially the entire G.O.P., is deeply invested in an energy sector dominated by fossil fuels, and actively hostile to alternatives. This political class will do everything it can to ensure subsidies for the extraction and use of fossil fuels, directly with taxpayers’ money and indirectly by letting the industry off the hook for environmental costs, while ridiculing technologies like solar.

So what you need to know is that nothing you hear from these people is true. Fracking is not a dream come true; solar is now cost-effective. Here comes the sun, if we’re willing to let it in.



My Thots...

China's entry into the solar energy industry will quicken the lowering of the costs and hasten "Moore's law" in  the industry.

This is an Op Ed, but I would like to see more facts N figures subtantiating Krugman's claim that price of sloar energy has gone below that of coal (plus environmental costs).

"Wisdom is purified by virtue and virtue is purified by wisdom. Where one is, so is the other."