Singapore Stock Market News

Compiled by DBS Vickers:

UOB’s 1Q08 results were in line with our expectations.

Annualised 1Q08 numbers were 6% lower than our full year estimates and 5% below consensus due to higher provisions set aside for its ABS CDOs. UOB further provided for another $43m against its profit and loss account.

Supporting the results were strong loan growth (18% y-o-y and 2% q-o-q) and higher NIMs of 2.20% (4Q07: 1.94%, 1Q07: 2.18%). Non-interest income was lower by 4% y-o-y and 22% q-o-q as expected due to mark-to-market losses coupled with lower fee income from fund management and investment-related activities, in line with the softer capital market conditions.

During 1Q08 UOB’s regional outfits performed well with the exception of Greater China due to a revaluation loss on the US$ capital injection. Excluding the revaluation loss, Greater China would have recorded a profit of S$26m rather than a loss of S$4m.

OCBC’s 1Q08 net profit came in at S$626m.

+12% y-o-y and 45% q-o-q. The disappointment is in GEH, which surprised on the downside with only a S$7m income contribution. Loan syndication fees were strong; no further provisions were made on CDOs. Maintain Buy, TP revised to S$9.80 (from S$9.00).

Net profit for StarHub came in below expectations.

Grew 15% y-o-y but fell 19% q-o-q to S$80.1m, mainly due to lower margins. Ahead of full mobile number portability, we do not expect competition to ease. Maintain Hold; target price of S$3.10. Management has guided for 10% revenue growth and 33% EBITDA margin in 2008.

1Q08 net profit for SembCorp Marine rose 24% to S$91.3m.

Turnover was down 4% yoy to S$916.1m. Sequential revenue and earnings should be higher in 2Q08 as we expect one semi-submersible and at least three jackups to hit the 20% milestone stage compared to only jackup in 1Q08. Maintain Buy with an unchanged TP of S$4.50.

Raffles Ed 3Q/9M results were in line with our expectations.

Revenue for 3Q grew 73% to S$49.2m, from S$28.4m arising from increased student enrollment, increased course fees and contributions from Zhongfa, Oriental University City (OUC) and Hefei Wanbo College (Wanbo). Contribution from OUC and Wanbo started in Jan 08.

Operating expenses grew 73%, which was in tandem with sales growth. This was due to staff costs and higher operating expenses as a result of its increased scale of operations. Gross margin for the quarter remained steady at 41.1%. Total student enrollment now stands at an estimated 26,900 students (excluding an estimated 23,000 students in Langfang Vocational Technical Institute and Langfang Health School).

1Q08 results for ARA were in line with our expectations.

Operational performance continued to grow strong from an increased AUM base. Gross revenues increasing 107% yoy to S$17.5m and net profit by 142% yoy to S$9.2m. We continue to like ARA for its asset light - fee income base model backed by stable real estate assets. Maintain Buy on ARA, TP S$1.13.

Compiled by OCBC Research:

DBS 1Q08 was ahead of market expectations.

DBS posted 1Q net earnings of S$603m, -2.3% YoY and +22.8% QoQ, and slightly ahead of market estimate of S$562m based on a Dow Jones Newswires poll. Interest Income rose 8.5% YoY (flat QoQ) to S$1,057m, while Non-interest Income fell 10.9% YoY (+6.8% QoQ) to S$506m, resulting in fairly flat total income of S$1,563m.

The gain in Interest Income came from the strong increase in loans growth, +5% QoQ and +21% YoY to S$114.2 billion (versus +19% YoY and +1.8% QoQ to S$94.4 billion for UOB). On the margin front, Net Interest Margin (NIM) slipped from 2.21% in 1Q07 and 2.11% in 4Q07 to 2.09% by 1Q08.

On the fee income side, the obvious declines came from stockbroking and wealth management. Net trading income sustained a net loss of S$161m, partly due to a charge of S$86m for Rosa. Costincome ratio improved slightly from 43% in 1Q07 to 42% in 1Q08. Nonperforming loan (NPL) rate also showed improvement from 1.5% to 1.0%. The group has declared a one-tier tax-exempt 1Q dividend of 20 cents per share.

This article was published in today's Straits Times:

Singapore will leapfrog Hong Kong to have the highest concentration of millionaires in the world in 10 years, a new Barclays Wealth report says.

A total of 40.7 per cent of all households (Note: This is the key word here, not INDIVIDUALS) in the Republic, or 436,000 households, are set to boast net wealth in excess of US$1 million (S$1.36 million) by 2017.

This means two out of every five households in Singapore are projected to be millionaires by then. The report looks at the combined wealth of household numbers.

The data used measures aggregate wealth, financial wealth such as currency, deposits, loans and insurance, as well as non-financial wealth such as property and land. Liabilities are subtracted from the total.

Last year, Singapore ranked second with 23.3 per cent, behind Hong Kong's 26.4 per cent. In 2017, Hong kong is expected to register 39.4 per cent, ahead of Switzerland, which maintains its current third ranking.

Barclays Wealth, the leading wealth manager in Britain, said Singapore's efforts to move away from manufacturing into higher value-added activities like technology and financial services had helped its rise.

Mr Didier von Daeniken, Asia-Pacific chief executive of Barclays Wealth, said at a press conference yesterday that the opening of previously protected sectors, such as financial services, and various free trade agreements had also helped Singapore's cause.

He added that Singapore's future millionaires would likely come from a growing number of rich entrepreneurs.

The report, by Barclays Wealth, and the Economist Intelligence Unit, said wealth held by high net worth Singapore households, defined as those with more than US$1 million, could hit US$1.6 trillion.

Mr von Daeniken said this presented great growth opportunities for private banks. "Asia now represents 25 per cent of high net worth individual wealth globally, 60% of the world's population, but only about 10 per cent of the income of the major private banks."

This article was written by Joe Magyer and Tim Hanson for The Motley Fool (see here):

Look at the headline for this article. Is there any more preposterous question a client or boss could ask an investing professional?

Now switch. Is there a scarier question for an investing professional to hear from a client or boss?

You can imagine our surprise/heart-stopping fear when our boss, Fool co-founder Tom Gardner, put us in a room and asked, point-blank: "Why aren't you earning 50% annual returns?"

50 what?

To put 50% annual returns in perspective, understand that no money manager, anywhere, has ever achieved that degree of success for any meaningful period of time. Perhaps the closest were Jim Simons of Renaissance Technologies and Joel Greenblatt of Gotham Capital. Their funds reportedly have long-term 40% annual returns.

So where did Tom get his outlandish number? From none other than Warren Buffett. Of course, Buffett also said he had too much money to manage to prove it could be done.

How convenient.

Nuts to that, Tom

But after a few weeks that would have made Elisabeth Kubler-Ross proud, we finally answered the question. And although the answers may not help us earn 50% annual returns (still an outlandish number), they can help us all make more money in the stock market.

Ready to learn?

Lesson 1: Sell your index fund

There is no surer way to not beat the index than by investing in the index itself. Not exactly a revelation, right? Investing in index funds leads to nearly certain long-run underperformance, because of transaction costs and management fees.

Given that scenario, what would possess a returns-hungry investor to go that route? Owning an index fund makes sense in many cases, but if you're serious about market-beating returns, selling your index fund is Step 1.

Lesson 2: Follow Buffett's rules

He has two. Rule No. 1: Don't lose money. Rule No. 2: Never forget Rule No. 1. We ribbed Buffett above, but we respect him a great deal, and we believe he's spot-on about losing money.

Losing principal soaks your long-run returns. Imagine you've lost 50% of your initial investment on your biggest holding. The next year, it bounces back with a 100% return. Guess what? You're still worse off than if you'd just left that money in a savings account.

Efficient-market believers argue that risk and reward go hand in hand. That's generally true. But there is one obvious alternative path.

Lesson 3: Look where no one else is looking

et us put this plainly: You can't achieve anything even remotely close to 50% annual long-term returns by investing in large-cap stocks. Period. Sure, you can best the market in the long run with that approach -- and doing so by just a couple of percentage points annually would be a notable triumph -- but you won't get to 50% annually.

If you want to work toward that mythical 50% mark, you'll need to consistently crush the market by finding the next home run stock and holding for five years or more. Your best chance is by going small.

Why's that? First, small caps, because of their size, have more upside potential than large caps do. Second, because Wall Street players are typically constrained to looking only at large- and mid-cap companies, you can take advantage of pricing inefficiencies.

With small caps, you can get greater rewards -- and you don't have to outwit a horde of Ivy League CFA-types to buy the best ideas.

Note: One reader actually sneered at my stock holdings and questioned why I do not hold a single "classy blue chip". This is the reason why.

Ready for 50%?

Let us be clear: You can do just fine financially by saving and investing regularly in an index fund. But if you want to shoot for 50% annual returns, the strategies above are three ready-made ways to get started.

Yes, there will be volatility. Yes, they may not get you all the way to 50%. But if you employ the strategy faithfully, you should be able to seriously accelerate your portfolio's growth.

Reported by Charmain Kok in the Business Times today:

Investment bankers work long and irregular hours in a highly stressful environment.

When one thinks of investment banking, the first things that come to mind are the tales of seven-figure salaries and images of the high life that comes with wining and dining high-profile clients. It is no wonder then, that the industry has become the top career choice for many of the brightest fresh graduates around the world. But before jumping onto the bandwagon, here is a brief guide to what the job entails.

What do investment bankers do?

In short, investment bankers help companies to raise capital by issuing and selling securities in the capital markets. They also advise clients on mergers and acquisitions, placements, restructuring and listing on stock exchanges.

According to Jennifer Goh, a consultant in the front office banking division at recruitment consultancy Robert Walters Singapore, there are client coverage bankers as well as execution bankers. 'Client coverage bankers tend to be known as the bankers who wine and dine the clients, establish contacts and bring the deals through the doors; while execution carries out the deal to completion,' Ms Goh explained, adding: 'The Singapore market is fairly small, therefore most of the bankers here have a dual client and execution role.'

Fact or fiction?

Sometimes, it's hard to differentiate between truth and folklore from the investment banking world. Here are some things to take note of:

Exposure to high profile clients

Due to the nature of their jobs, investment bankers get to meet a lot of high-profile, dynamic and influential individuals. 'You get to rub shoulders with some of the who's who in the industry and senior management, as well as wine and dine with clients on the banks' accounts,' shared Ms Goh. However, be prepared to get a taste of this only when you become vice-president, which usually happens around the seventh year in investment banking. 'Otherwise, you will be stuck staring at your screen, crunching numbers,' she added.

Attractive remuneration, long working hours and health hazards

As most probably know, the salary compensation for investment bankers is potentially enormous. According to Ms Goh, fresh graduates can expect to receive around $90,000-$110,000 per year, excluding additional allowances and bonuses.

However, working hours for investment bankers are known to be long and irregular, with 100-hour work-weeks being very common. The constant long working hours and highly stressful environment might take a toll on one's health and personal or social life.

'The demands and nature of this industry will inevitably keep an investment banker's lifestyle very much skewed towards work,' warned Ms Goh. So be prepared to be very devoted, committed and passionate about one's job in investment banking.

Involvement in high-profile transactions

One of the best upsides of a career in this field is the chance to be involved with high-profile transactions, which make the news headlines.

For UBS investment banking analyst Calvin Li Xiangrun, who was a fresh graduate from Singapore Management University only a year ago, one of the main reasons for entering the industry was the wide exposure to different types of transactions and the vast learning opportunities available.

'Some of the key attractions to me was the wide variety of assignments across various industries. In UBS Singapore, we got numerous opportunities to execute transactions across Malaysia, Indonesia, Singapore, ranging from IPOs and debt offerings to mergers and acquisitions,' he said.

'I enjoy the ability to take on early responsibilities and getting to work closely with companies, even as a junior banker,' added Mr Li. 'In the execution of IPOs, you get to meet with the management and work closely with them under the mentorship of the senior bankers. Interacting with management, learning about the industry and the company was really insightful and an eye-opening experience for me.'

What do you need to get in?

Gary Lai, manager of Robert Walters' front office banking division in Singapore, admits that in hiring fresh graduates, investment banks place a strong emphasis on academic track record and the schools that students graduate from. However, aside from grades, an outstanding involvement in extra-curricular activities that exemplifies leadership qualities is just as important.

Prior knowledge in finance or accounting is not required, as investment banks often hire employees with educational backgrounds as diverse as philosophy and engineering. Furthermore, banks often have structured training programmes which will ensure that its bankers have the necessary knowledge and technical skills to perform their jobs.

Aside from hard knowledge, communication and people skills are vital for investment bankers, as Mr Lai explained: 'Investment banking is after all, a sales role. Therefore, communication, presentation, selling and relationship management skills are critical. A fresh graduate who comes with these skills and is analytically and numerically inclined but does not come with a first class honours may come up tops against someone who only possess a first class honours.'

To Mr Li, traits like being highly motivated, a strong team player, having strong analytical skills and good time management skills are critical to being a good investment banker. Due to the high pressure environment and long working hours, time management and the ability to multi-task is key as well.

'This job is more suited for someone who is fresh out of school, self-driven, loves the fast-paced life and has little commitments,' commented Mr Lai.

For all investment banking hopefuls, Mr Lai's advice is to research, work on the resume and re-evaluate if one is really cut out for the job. 'Everyone wants to get into investment banking for the money and prestige, but these alone are not enough to carry anyone through years of late nights and burnt weekends. We would advise candidates to self-evaluate if they indeed have the qualities and aptitude to be an investment banker in the first place.'

This report was compiled by DBS Vickers this morning:

STI should grind higher towards the next near-term resistance at 3310, followed possibly by 3428 to 3470 subsequently. Short-term, buy near 3150; sell near 3310. Upside bias to the next resistance level at 3310 before a pullback to test the rising trend line and 15-day moving average support at 3150 to 3200.

The McClellan Oscillator should trend higher towards the overbought level near 50 as the STI heads for 3310 and ease back, in line with STI behaviour. If the STI rises above 3310 subsequently, the next level is 3428 to 3470.

DBS Research sees the USD strengthening from 1.36 currently to 1.39 during 2Q to 3Q. This is positive for shipping trusts Rickmers Maritime, Pacific Shipping Trust and First Ship Lease given their USD-based cashflows and attractive yield. DBS Research has Buy recommendations for Rickmers Maritime (S$1.07; TP: S$1.80; FY08 yield: 11.3%) and Pacific Shipping Trust (US$0.45; TP: US$0.52; FY08 yield: 10.5%). No rating for First Ship Lease (S$1.06; FY08 yield: 13.9%, based on consensus). From a technical prospective, we like Rickmers Maritime and see a trading objective of $1.24. Buy at $1.05 support or slightly above.

The Master Plan, to be exhibited in its draft form in late May this year as part of a review every 5 years, is the statutory land use plan aimed to assist in guiding the physical development of Singapore in the medium-term over the next 10 to 15 years.

We have identified the Property sector as a key and obvious beneficiary.

Stronger planning initiatives and an improved sense of fundamentals will bring foreign investment into Singapore, directly benefiting developers over time.

Our top picks in the sector are City Dev (BUY, TP S$12.81), CapitaLand (BUY, TP S$7.50), Fraser and Neave (BUY, TP S$5.85) and Allgreen (BUY, S$1.66). Among the S-Reits, we favour CMT (BUY, TP S$3.93) and Suntec REIT (BUY, TP S$1.98) for their exposure to the resilient retail sector.

We also continue to like CCT (BUY, TP S$2.93) for its strong organic growth with positive rental reversions likely up to 2010; and CDL HT (BUY, TP S$2.90) for its exposure to the booming hotel sector.

Apart from the Property sector, also standing to benefit from this strategic outline are the Hotel, Aerospace, Healthcare, Transport and Construction sectors. Within the construction sector, we prefer the building material suppliers like Hong Leong Asia (BUY, S$4.30) and Pan-United Corp (BUY, TP S$1.16). For the healthcare and transport sectors, likely long-term beneficiaries would include Raffles Medical (BUY, TP S$1.74), Parkway Life REIT (BUY, TP S$1.50), SMRT (BUY, TP S$2.00) and ComfortDelgro (BUY, TP S$2.15).