Take a different view here where this bull is here for 6 to 12mths but I do subscribe that for this bull to sustainable that long, a major correction must happen.
In the92- 93 great bull, the blue chips had run up significantly and then pulled back in rotational play for liquidity to flow into the pennies. The bull for pennies lasted a long time, several months moving in between 10-20% corrections followed by 30-40% bursts. Huge fortunes could be made or lost then. It was purely a liquidity driven mega rally. The blues always came into the action whenever the pennies went into correction.
All the bear/mini rallies subsequently show the same blue chip move ups, then pennies, and then blues for a short time then market reversal then winter hibernation.
This 3-4 year bull is no different only then I'm hazarding a guess that this bull is driven largely by fundamentals (post 97 crisis & major restructuring country wide & India and China effect) and international liquidity from US and Europe. Again, the macro environment is extremely different from 93. I still expect loads of funds from US & Europe coming into Asia as long as the dollar slides gradually. Asian equity will be cheap and expose to the huge growth engines of China and India.
Back to Singapore. The top tens are trading stocks & questionable fundamentals and simply event driven like stories "the types that will excite the Aunties and Uncles"... the quality pennies will have sustainable moves when liquidity or smart money moves to look for value while dumb money drives the speculative. Those who made quality money from the value driven Blue chips will naturally start to for value driven pennies.
For the blue chips, smart money/institutional funds moves into the growth blue chips, when market reverses or stagnate like now, they start to move into the defensive blue stocks and quality mid caps. So my recommendation for lovers of pennies who want to sleep at night and can stomach necessary corrections is to ignore the hype of the top 10s and load up on pennies that meets Warren Buffet's value criteria, Discount to NTA, Double digit Return of Equity (ROE), Decent dividend yield and most importantly Very high & positive Free Operating Cash flow Little or no debt/gearing. There are such pennies that simply don't get onto the top tens but move up in submarine fashion.
If one can sleep at night playing the top tens, good luck but I sure can't.
Looking at the following now and some vested:
For now and during this bullish phase of 2007:
SMB United, 2nd chance, Norelco, TTL, Meiban, UOB Kay Hian, Kim Eng, Tai Sin, (now Seksun added), Vita
For defensive when the market corrects or market declines:
UOB Kay Hian/Kim Eng (tends to move at the tailend of any major rally), Singapore Ship Corporation (sitting on 32cents of pure cash), Popular holdings, (sitting on lots of cash & S44 credits) just very boring biz & a very old Chairman.
Guys, according to my property agent at HSR, Hiap Hoe has already sold more than 50% of the project.
The Hiap Hoe Angulia project is called "Cuscaden Royale" . It is 19 storeys and a total of 46 units are being sold. According to the floor plan in the brochure,
Currently, prices for low floor units are $2200 psf while those on high floor units are $2400 psf, and this is just the SOFT LAUNCH Price! With the public launch, prices likely to shoot to $2500 psf.
Overall, the average sale price is likely to be $2200 psf and therefore, with about 55,000 sqf for sale, their turnover from this project is in excess of SGD 100 million! If their break even cost is only $1,000 psf, then they would have earned about SGD 50 million from this project.
Not to mention that all the other projects in the pipeline. This is the darling property stock!
I expect post-consolidated price to start at 80cents (18cents) to 90cents (19cents).
By then, it would be too expensive for traders and retail to play this stock and serious institutional money has to come in to push. It'll stay quiet for a fine for it to find its pricing footing after conso. It's a pure fundamental play here when they start launching their 4-6 developments rapidly in the next 2-3mths esp after CHinese New Year.
Those who are still thinking of making money now till 22 Jan. Please re-consider unless you have the funds to hold this gem. This counter also due to his historical baggage, not marginable so have to pay cash which can be a turnoff. One of the key reasons why I took profit once my broker called me to inform me cannot margin. (quite pissed but hey, I'm sure the owners & insiders knew that and use that to their advantage).
No comments:
Post a Comment