Performance of Virtual Fund as at end April 2008
China Fish -S$4,400
Raffles Education -S$11,100
Sin0 Techfibre -S$19,100
STX Pan Ocean +S$1,210
Total unrealised loss = -S$33,390 = -6.68%
Sum invested = $545,390
Cash holding = $3,230
Realised profit = $48,620 = 9.72%
The total unrealised loss has narrowed significantly from $171,761 to $33,390 mainly due to strong recovery in prices of Sino Techfibre and STX Pan Ocean.
In April, I disposed of the entire holding of ChinaHongxin and resulted in realised loss of $62,721. I used the proceeds to buy more of Sinotech Fibre.
Wednesday, 30 April 2008
Lizhong Wheel Q1 Results
Lizhong Wheel 1Q2008 net profit jumps 42% to RMB 35.2 m
• New Tianjin plant up and running at the end of 1Q2008
• Continuing strong demand from both new customers and existing customers
Singapore, 30 April 2008 – Lizhong Wheel Group Ltd. (“The Group” or “立中车轮”), one of the largest PRC manufacturers of aluminum alloy wheels, recorded a 12% increase in revenue to RMB 236.1 million for 1Q2008 (3 months ended 31 March 2008).
With the new Tianjin plant only coming on stream at the end of 1Q2008, the Group was operating at similar production capacity levels versus a year ago. However, with a better customer and product mix, gross profit rose by 15.3% to RMB40.3 million, with a gross margin of 17.1% (1QFY2007: 16.6%).
Overall, net profit attributable to equity holders rose 42.3% to RMB35.2 million. Earnings per share also rose in tandem from RMB10.52 cents to RMB14.96 cents.“The first quarter of 2008 has been business as usual for us as we strive to meet the ever growing demand of our customers while putting the finishing touches to Phase 1 of our Tianjin plant. While aluminum prices had a brief spike in 1Q2008 due to the winter storms in southern China affecting major aluminum producers, we were able to maintain our margins with stringent cost control measures we have put in place. Overall, I am pleased to report a commendable set of results to start the year.”Mr. Zang Ligen (臧立根), Lizhong Wheel’s Executive Chairman
Distribution costs went up by RMB1.1 million to RMB4.5 million due mainly to increase in delivery costs arising from increased sales volume and accrued bonus for the Group’s sales personnel. Administrative expenses increased by RMB3.7 million to RMB11.9 million due mainly to increase in research and development expenses of RMB1.2 million, pre-operating expenses of RMB2.1 million incurred by the newly set up subsidiary, Tianjin Dicastal Wheel Manufacturing Co., Ltd, and other expenses in line with higher business volume.
Other operating income increased by RMB14.0 million largely due to RMB4.9 million of fair value gain on the Group’s convertible bond issue and RMB9.4 million of foreign exchange gains from the appreciation of RMB against the US dollar as a result of the Group’s US dollar denominated borrowings. The foreign exchange gain was largely due to revaluation of US dollar liabilities.Everything in PlaceChina's car market continues to grow by leaps and bounds.
According to the China Association of Automobile Manufacturers (CAAM), in the first three months of this year, 1.85 million passenger vehicles were sold in China, up 20.4% from last year. Passenger vehicle sales in March itself increased 23.6% versus a year earlier to 700,500 units, with March sales also being 43.3% higher than February's. To capitalize on this strong market demand, the Group is not only striving for more orders from existing customers, but also actively marketing tonew customers, which includes General Motors The Group also actively participates in various automotive trade fairs to raise its profile amongst its international and domestic customers. One recent event is the widely anticipated Beijing Auto 2008 where the world's top car-makers descended on China in force between 21st to 28th April.
The Group’s new Tianjin plant had completed trial production in March and commercial production has started in April. It is expected to reach full production capacity by June 2008. This has successfully raised the Group’s annual production capacity by 2 million wheels to 5.6 million wheels. Not resting on their laurels, construction of the facility and equipment procurement for Phase 2 is currently underway with Phase 2 scheduled to come on-stream by the first half of FY2009.
Barring unforeseen circumstances, the Group expects to achieve favourable performance in 2008 as a result of the expanded production capacity from the completion of the Tianjin facility’s Phase 1.
Tuesday, 29 April 2008
Swiber to construct S$7.8m SPM Buoy for NuCoastal
SINGAPORE – 29 April 2008 – Swiber Holdings Limited (“Swiber” or together with itssubsidiaries, the “Group”), a niche service provider to the offshore oil and gas industry, today announced that it has clinched a contract with NuCoastal (Thailand) Limited for the engineering, procurement, supply, and construction of a Single Point Mooring (SPM)calm buoy. The contract is valued at S$7,752,576. The buoy will be constructed at the yard of Swiber’s wholly-owned subsidiary, Kreuz Shipbuilding & Engineering Pte Ltd.
The buoy is targeted for delivery in 4th quarter of 2008. Upon completion, the buoy will be used by NuCoastal at its Songkhla field in Thailand as a permanent mooring system for a 30,000 dead weight tonne (DWT) Floating Storage and Offloading (FSO) vessel. NuCoastal, which is a wholly owned subsidiary of Coastal Energy Company, is an existing customer of Swiber. In November 2007, NuCoastal awarded Swiber a US$25million project to drill a series of offshore wells in Thailand.
Said Mr Raymond Goh, Swiber’s Executive Chairman and Chief Executive Officer,“NuCoastal has been a valued partner and customer of Swiber and we are pleased to seal our relationship with them with yet another project. I believe that this is a testament of Swiber’s skills and expertise in the offshore oil and gas domain.”
Thailand has been a steadily growing market for Swiber. In addition to the US$25 million drilling project secured in November last year, Swiber also recently inked anagreement with CUEL Limited for the installation engineering, transportation and installation of Jackets, Piles, Topsides and Pipelines for offshore facilities for CUEL’svarious clients in the Gulf of Thailand for a period of five years. The value of the services covered under this contract is estimated to be in the region of US$50 million per year. CUEL Limited is one of the region’s foremost offshore EPC fabrication contractors having executed full EPC and EPCIC contracts primarily for operations within Gulf of Thailand. “Thailand is developing at a healthy pace for Swiber. Given our fast expanding track record in the country, Swiber’s growth horizon is looking rosy,” said Mr Goh.
Wednesday, 23 April 2008
Transactions of Virtual Fund 23 April 2008
Wednesday, 16 April 2008
Transaction of My Own Portfolio
Transaction of Own Portfolio:
Sold Cosco at $3.05 this morning. Bought at $2.88 last week.
Sold Cosco at $3.05 this morning. Bought at $2.88 last week.
Monday, 14 April 2008
China Fishery acquires new fishmeal plant in Peru
CHINA FISHERY ACQUIRES NEW FISHMEAL PLANT IN CENTRAL-SOUTH PERU
•New plant in Pisco, south of Lima, will strategically enhance the geographical spread of China Fishery’s fishmeal plants in Peru
•Brings number of plants to eight, and total Peruvian Anchovy processing capacity to 655 tonnes per hour, an increase of 110 tonnes per hourSingapore,
14 April 2008 – Singapore Exchange Mainboard-listed industrial fishing company China Fishery Group Limited (“China Fishery” or the “Group”) (SGX: B0Z.SI) announced today that it has acquired its eighth fishmeal plant in Peru.For a purchase consideration of US$19.9 million (the “Consideration”), the Group will acquire the entire issued share capital of a Peruvian company Epesca Pisco S.A.C., which owns one fishmeal plant and three fishmeal depots built on land totalling 80,431 m2 in area (the “Acquisition”).
With a Peruvian Anchovy processing capacity of 110 tonnes per hour, the new plant is China Fishery’s single largest steam-dried processing facility in Peru. Steam-dried fishmeal is considered a product superior to standard flame-dried fishmeal, and commands a higher market price. With this Acquisition, the Group’s total Peruvian Anchovy processing capacity is increased to 655 tonnes per hour, further reinforcing its market position as one of the largest processors in Peru.
The plant is located in Pisco, approximately 231 kilometres south of Peru’s capital, Lima. With most of the Group’s existing plants concentrated in Central and Northern Peru, the new plant will strategically enhance the geographical spread of China Fishery’s fishmeal plants.
Under Peru’s current fishing system, increasing plant density along the coast is critical to improving operating efficiencies, as it allows fishing vessels harvesting in the nearby fishing ground to shorten transit and unloading times of raw material. Thus, the Group will be able to reduce turnaround time in its Peruvian Anchovy fishing operations, and also increase its sourcing capabilities from third parties. This, in turn, will optimise utilisation of the Group’s fishmeal processing capacities.
China Fishery, which enjoys a strong cash inflow from its operations, intends to fund the Acquisition from internal resources. The Group has reached an agreement with the seller for payment to be made in seven (7) quarterly instalments from June 2008 to December 2009.
Speaking on the Acquisition, Group Managing Director Mr Ng Joo Siang said, “Our latest acquisition has been instrumental in helping us fill a void in the geographical spread of our fishmeal plants. With that accomplished, we shall focus on improving operational efficiencies and realising the fishing and processing capacities that we have acquired. Given the right opportunities, we will still be keen to acquire more fishing vessels to further enhance our efficiencies.” This Acquisition is not expected to bring about any material impact to the Group’s performance in the financial year ending 31 December 2008.
Cosco replies to SGX queries
The following is reproduced from Cosco's annoncement in relation to SGX queries:
COSCO Corporation (Singapore) Limited (Company Registration No.: 196100159G) REPLY TO QUERIES FROM THE SINGAPORE EXCHANGE SECURITIES TRADING LIMITED
The Board of Directors of COSCO Corporation (Singapore) Limited (the “Company”) refers to the queries from the Singapore Exchange Securities Trading Limited (SGX-ST) dated 11 April 2008 and wishes to clarify as follows:
-1) Announcement : "To minimise currency risks, we will going forward, try to have our contracts quoted in Chinese-Yuan and Euro-Dollars in addition to US Dollars."
Question:
(i) Please elaborate how having the contracts quoted in these other currencies help to minimise currency risks.
(ii) Please disclose whether the Group engages in forex hedging activities. If so, (a) who monitors the hedging activities; and (b) does the Audit Committee review the hedging activities and policy? If so, how often?
Answer:
(i) The Euro has appreciated against the US Dollar and Chinese Yuan. Hence, having some contracts quoted in Chinese Yuan and Euro-Dollars in addition to US Dollars will mitigate the risks of currency fluctuations by diversifying such risks. Additionally, as some costs are denominated in Chinese Yuan and Euro-Dollars, the Group will be better able to minimise currency risks with its ability to receive payment in Chinese Yuan and Euro-Dollars rather than only in US Dollars.
(ii) The Group engages in hedging activities to manage its foreign exchange exposure. (ii) (a) Hedging activities are monitored by the Chief Financial Officer who comes under the oversight of the President. (ii) (b) The Audit Committee reviews the Group’s hedging activities and policy from time to time but no less than once every quarter.
2) BT 11 Apr 2008: "According to Mr Ji, the order cancellation was mainly due to a change of requirements from the client, which wanted the builder to do a turnkey project including a drilling package which it doesnot currently have the capability to undertake." The Announcement states however that the cancellation was "because one of the conditions of the contract requiring deposits from the customer before work would commence has not been fulfilled."
Question: Is the reason underlined above an additional reason for the cancellation? Please clarify.
Answer: The basis for the cancellation of the contract was the non-payment of the deposit. The customer had asked for a change in requirements. Such requirements were not contemplated in the contract and the Group could not agree to the same. Accordingly, no deposit was paid. The contract was cancelled because no deposit was paid.
3) BT 11 Apr 2008: "The report cautioned 'Cosco has not received downpayments for roughly 20 per cent of its existing shipbuilding contracts'...Deposits and progress payments for other offshore projects have also been received ... Cosco has yet to receive initial payment for seven vessels valued at about US$280 million and the company is examining details of orders won by its Cosco Shipyard Group."
Question:
(i) We note that the above statements have not been included in the Announcement. Please clarify if these statements are accurate.
(ii) Does Cosco require a downpayment for all of its offshore andshipbuilding contracts? If so, please elaborate on the usual downpayment terms. If not, how does Cosco decide which contracts require downpayments?
(iii) Would the non-receipt of the downpayments for the 20% of existing shipbuilding contracts and initial payment of US$280 million for theseven vessels mentioned above have any impact, such as cancellation, on the contracts?
(iv) Does Cosco have any recourse or receive any compensation in the event a signed contract is cancelled as a result of a breach of contract terms by the customer?
Answer:
(i) Cosco Shipyard Group has yet to receive initial payment for seven vessels valued at about US$280 million. These seven contracts account for approximately 4% of the value of all the shipbuilding contracts awarded to the Group.
(ii) The Group will normally require a downpayment from customers for its offshore and shipbuilding contracts. Such downpayment is usually calculated based on a certain percentage of the total contract value and is to be paid at or prior to the commencement of work. However, the terms and amount of such downpayment are subject to negotiation between each customer and the Group and will accordingly vary from case to case.
Cacola Furniture Opens Mega Store
The Board of Directors of Cacola Furniture International Limited (家居樂傢俬國際有限公司) (‘the Company’) refers to the section headed “Our Business Strategies and Future Plans” in its IPO Prospectus dated 29 October 2007 which stated that the Company intends to expand the sales and distribution network through increasing the retail mega stores in major cities within PRC, including Beijing and Chengdu.The Board of Directors would like to announce that after extensive research and to take advantage of the favourable business condition in Chongqing City, it would be appropriate for the Company to set up the retail mega store in Chongqing City instead of Chengdu.
By Order of the Board
Cacola Furniture International Limited
Thursday, 10 April 2008
Bought few lots of Cosco Corp at $2.88 today. Share price of Cosco has been battered due to disclosure lapses and potential orders cancellation. I see this as a good opportunity to pick up some for short term gain. Investors who do not have holding power should not touch this volatile counter at the moment as more margin calls may set in to drive the price down further.
The following news brief is extracted from Kim Eng Bulletin 10/04/2008:
Cosco Corp (Singapore) – Its 51%-owned Cosco Shipyard Group (CSG) unit has secured about US$292.3m worth of offshore and tanker building deals. But it also announced the cancellation of a project worth over US$200m. CSG is building the hull of a semi-submersible production unit for an American owner for RMB923m (about US$131.8m). A deposit of US$3m has been received and the unit is scheduled for completion in 2010. Although the job is priced in yuan, the contract provides that payment be made in US dollars at the prevailing exchange rate on the payment date, Cosco Corp said. The second contract secured is to build two 59,000 dwt shuttle tankers for a Danish owner valued at 101.2m euros ($220m). The client has agreed to pay 65% of the contract value as the first instalment and the two vessels are scheduled for delivery around June and December 2011. The group also announced yesterday that it will not be proceeding with a US$202m project to build a GM5000 semi-submersible rig hull for Norwegian owner Red Flag AS as announced last May. One of the contract conditions requiring deposits from the customer before work would commence has not been fulfilled.
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