Otto Marine: No recovery in sight

Otto is struggling to stay afloat.All of its business segments have underperformed. While FY11 could have marked the bottom, we project it to remain in the red. Without a concrete business strategy to steer its way ahead, we advise investors to stay clear of the stock. 4Q core net loss was larger than expected (full-year at 286%).We now expect losses for FY12 and cut FY13 EPS by 40%. We also introduceFY14 numbers. We lower our target price, still at 0.6x CY12 P/BV (bottomend of its trading range). Maintain Underperform.
Source: CIMB 24 February 2012

A series of disappointed results from Otto Marine, make me agree to above mentioned report statement. Otto Marine is one of the must-avoid stocks now. 
Below Q&A get from Nextinsight about the CFO replied to the reporter. 

Q: What are you doing to increase your visibility in terms of order book?
We will continue to stay focused and put in all our effort to complete the work-in-progress of our existing newbuilds so that we can sell them or charter them out to generate cashflow.

"We are expecting better result contribution from Go Marine this year," said CFO Michael See.

Q: Mosvold vessels - Are you going to sell them?
We have received enquiries for these vessels. However, the current credit environment, particularly in Europe, has not been very helpful for the necessary vessel financing.

Q: Do you have plans for smaller vessels since this will not take up all your capacity?
We also tend to outsource construction of smaller and basic vessels to our strategic Chinese yards as it is more economical.

It is our strategy to build the more complex and sophisticated vessels at our Batam yard.

We intend to reserve certain of our yard space to accommodate potentially new and bigger ticket orders should the market pick up. Our yard is currently busy finishing the rest of the work-in-progress for newbuild vessels so that we can either sell them or charter them out.

Q: What kind of newbuilds are you targeting?
We have received enquiries on newbuilds and are working on the details.

Q: Is there a delivery schedule for your potential new orders?
Depending on the newbuild order, the larger vessels tend to take around 30 to 40 months to build.

Q: Is selling Reflect something you will consider?
We will be more conservative in future project bids and are committed in rebuilding the business at Reflect.

According to above Q&A, they do not have any firm newbuild order on hand. They keep their hope on chartering service which just a new borned baby to the industry. This sound to me like they are lost on their direction as their core business is not doing well so they tried to transform and adapt. Will their transformation and adaption work? They have no confident too. This look serious to me. Wish them all the best :(

Market Summary 2nd weeks of February 2012

Singapore shares closed lower for the second consecutive day on Friday as worries about sovereign debt troubles in Greece resurfaced and investors moved to lock in profits on property and commodity-linked shares. After a positive start, the 30-share Straits Times Index moved to close 0.7%, or 21.17 points, lower at 2,960.00 but off the intraday low of 2,954.56. Still, the benchmark index has gained 1.4% in the week.
Some analysts attributed the decline to a correction after recent market gains. "The markets are pausing for a breather," said Yeo Kee Yan, a market strategist at DBS Vickers. After the recent rally, "stocks are a bit overbought technically," he said, adding that investors are waiting for corporate earnings for fresh cues.
Losers outnumbered gainers 313 to 171. Trading volume was lower at 3.07 billion shares that changed hands, compared with 3.26 billion on Thursday.
Although Greece took steps Thursday to avoid a debt default, euro-zone finance ministers have withheld bailout approval, saying Greece's parliament must approve the new policies before the European Union can back the deal.
Shares of property developers and commodity suppliers, which were among the biggest gainers in recent sessions, closed lower on Friday. CapitaLand was the worst performer, losing 3.1% to close at S$2.86, while Global Logistic Properties shed 2.5% to end the day at S$1.95. CapitaMalls Asia was off 2%, closing at S$1.48, while City Developments was down 1.6% at S$10.74.
Olam International, which Thursday evening announced it purchased a Nigerian biscuit maker Titanium Holding Company SA for US$167 million, closed 2.9% lower at S$2.64 on weak market sentiment. Wilmar International was down 2.1% at S$5.58 while Golden-Agri Resources closed 1.3% lower at S$0.775 on profit-taking.
However, Noble Group gained 0.3% to close at S$1.475 as the commodities supplier likely continued to attract investor interest after naming a new chief executive this week.
DBS Group Holdings closed unchanged at S$13.55 after reporting a better-than-expected 8% on-year rise in net profit in the fourth quarter Friday, as many investors remained on the sidelines due to the lackluster outlook for the banking industry.
Singapore Telecommunications, which is considered to be a safer stock in times of market stress, added 0.3% to S$3.07.

Greece sovereign debt and middle east unrest resurface, will last year trend return? Rally at first quarter and went down to 2600 at third quarter of the year. It is advisable to trade with extra cautious now, thinkig to sell rather then buy at current atmopshere. Try to lock in profit as you can but not force selling. USA economic indicators annouces at next week will give us some glues on shares movement. If delivers positive result, it should able to push the shares index higher; if it is a disappointing news, serious shares dumping will be expected.   

Market Summary Last Week

Singapore shares ended higher Friday, outperforming the region despite a tepid cue from U.S. markets, but closing out the week flat after a see-saw five sessions for the benchmark Straits Times Index.
"Shares are probably taking their cue from slightly better-than-expected U.S. jobless numbers even though it didn't really give much confidence to Wall Street," said Carey Wong, an analyst at OCBC. He added that traders were also taking the chance offered by Thursday's dip in prices to buy back some shares.
Elsewhere in Asia, markets were more subdued, as players took to the sidelines to await key U.S. employment data due later in the global day.
The 30-share STI closed 0.6%, or 16.91 points higher, at 2,917.95, after reaching an intraday high of 2,931.77. The index has now gained 10.2% so far this year, and analysts say this week's consolidation around the psychological 2900 level is a positive. Rieve Ko, a technical analyst at SIAS Research says by taking a breather following steep gains in 2012, the index is building a base for the next leg of the rally.
Volume was again very high, at 3.43 billion shares compared with 2.99 billion Thursday. The value of shares traded was S$1.655 billion, indicating smaller-cap stocks remain the market's main focus. Gainers outnumbered losers 275 to 142.
Among the small-cap stocks that were in play, MDR Ltd. was the most active, soaring 50% to S$0.009 with a huge 523 million shares traded. The company, which focuses on the distribution and retail of mobile handsets in Singapore, said in response to a query from the Singapore Exchange that it wasn't aware of any possible explanation for the trading activity.
Singapore Airlines Ltd. was the day's major underperformer among blue-chips, falling 3.6% to S$10.61 after posting lower-than-expected fiscal 3Q results. Singapore's flag carrier said late Thursday that net profit for the quarter ended Dec. 31 fell 53% on year to S$135.2 million, which fell short of the S$154 million profit forecast in a Dow Jones poll. The airline struggled with higher fuel prices and reduced demand due to the ongoing global economic downturn, and analysts said these two factors were unlikely to change soon. "We struggle to identify positive catalysts going forward. The outlook for the business does not look exciting to us. Stubbornly high fuel prices are a worry," said Deutsche Bank in a note.

What makes those small-cap stocks active? Retail investor or Big Player? If retail investor is the only one actively trading while big player stops their action... This can lead to another heavy dump of shares in coming few weeks. I prefer wait and evaluate it; assuming the stocks market regain its power is too optimistic now.  

Mapletree Logistics Trust: Strong execution

Mapletree Logistics Trust (MLT) delivered a 9.7% YoY growth in 4QFY12 DPU to 1.70 S cents, in line with both our and consensus expectations. Going forward, management guided that MLT’s organic growth is likely to slow as the portfolio is operating at near full capacity and as the economic climate remains murky in the near term. However, average occupancy rate is expected to remain stable. On the M&A front, MLT revealed that more investment opportunities have resurfaced. Above-than-industry-average leverage of 41.4% remains our key concern, but refinancing risk is a non-issue with MLT’s recent refinancing of its JPY9b loans. Maintain BUY with higher fair value of S$1.10 (S$1.07 previously) after rolling our RNAV valuation to 2012.

Consistent set of results. Mapletree Logistics Trust (MLT) reported its 4QFY12 results last evening. NPI increased by 14.4% YoY to S$61.6m due to contributions from its acquisitions and organic growth (better rental and occupancy rates) from its existing portfolio. Distributable amount similarly grew by 12.2% YoY to S$41.3m, though impacted slightly by higher borrowing costs and other expenses. For the quarter, DPU stood at 1.70 S cents, up 9.7% YoY. This brings the total YTD DPU to 6.54 S cents, representing a yield of 7.6%. The results were within both our and consensus expectations, with YTD DPU forming 103.4%/97.6% of our/consensus DPU estimates.

Healthy portfolio performance. Portfolio operating performance continues to be healthy, in our view. Overall occupancy rate was maintained at a high level of 98.8% (99.0% in 3Q). In addition, positive rental reversions of 16% for renewal/replacement leases were still seen during the quarter (9% rental reversions if conversion of 7 Tai Seng Drive to multi-tenanted building was excluded). As at 31 Dec, the weighted average lease to expiry was steady at ~6 years, with only 12.8% of its leases by NLA due to expire in FY13.

Reiterate BUY. Going forward, management guided that MLT’s organic growth is likely to slow as the portfolio is operating at near full capacity and as the economic climate remains murky in the near term. We also note that there was a mild slowdown in the enquiry level, although average occupancy rate is expected to remain stable. On the M&A front, however, MLT revealed that more investment opportunities have resurfaced. Above-than-industry-average leverage of 41.4% remains our key concern, but refinancing risk is a non-issue with MLT’s recent refinancing of its JPY9b loans. Maintain BUY with higher fair value of S$1.10 (S$1.07 previously) after rolling our RNAV valuation to 2012.

A optimistic report toward MLT. It well defined MLT current condition but I am not agree to the buying call as current price is relatively higher. At volatile market, cash is king! This is a good shares to keep an eyes.

You can download the full report from here ==>

full report

Article about S-REITS

HONG KONG - Fitch Ratings says in a new report that Singapore Reits (S-Reits) have seen off the global financial crisis of 2008-2009, and have moved to restructure and position themselves to weather future credit and liquidity crises. However, their lack of committed liquidity remains a risk.

'S-Reits are better placed to weather future crises than they were previously, although they remain vulnerable due to a lack of committed facilities and low liquidity coverage, and are reliant on the Singapore banking sector remaining largely unaffected by any global economic fallout,' says Helen Wong, Director in Fitch's Structured Finance team.

'However, Fitch believes that S-Reits' low gearing and strong sponsors would help to mitigate some liquidity risk.'

S-Reits survived the global crisis, largely due to their distance from the epicenter of the crisis, availability of funding sources and strong sponsors. The report explains a few lessons S-reits have learnt from the global crisis, making them better placed to weather future crises. It notes that maintaining a low gearing has provided S-reits with financial flexibility in raising additional debt and allowed them to withstand falling asset prices.

Further, S-Reits' increasing focus on keeping a portion of assets unencumbered will allow them access to secured funding should unsecured funding become more expensive or even closed. In addition, diversifying banking relationships has meant that S-Reits are not dependent on the willingness or ability of a particular lender for capital. Some S-Reits have also been proactive in lease renewal and managing their lease maturity profile.

In particular, Fitch sees the retail and healthcare sectors of S-Reits as resilient and best- placed to weather further volatility should another global crisis occur. The industrial sector would be more vulnerable, while the office and hotel sectors would be most affected due to their dependency on the global economy. -- REUTERS

Source: Business Times Breaking News

Low gearing, Long maturity profile, good debt management, & more then 8% dividend yield are my criterias to select a good S-REITS. Of course it is tough to meet all criterias; hence a clear mind with a well-defined balance points are the key factors for a right investment selection.

My REITS/ Business Trust Portfolio return on 2011

If you keep an eyes on my blog, you will notice that i invested half of my fund at REITS / Business Trust. The first trust i bought is FSL Trust. I bought at a low price and average down further at August last year. It brings me a good dividend yield (11.28%). After second purchase at last quarter, i recorded an annual dividend yield of 8.07%.

This successful example delighted me on high dividend stock especially at high volatility market. I discovered REITS and invested certain REITS. I bought Mapletree Logistic Trust and Cambridge Industrial Trust at second quarter; hence i enjoy a 5.64% and 6.18% dividend yield respectively. If i invest it from first quarter, i can enjoy an annual dividend yield of 7.5% and 8.22% respectively. All those are attractive deal especially at a bearish and downturn market!

The only disappointed result i made on trust is the Hutchison Port Trust. I subscribed its IPO. Now i am suffering the meltdown price and its poor dividend yield. Anyway it is too early to declare this as an failure as it is a new IPO launched last year, hence its performance is under evaluation yet. Hope it wont disappointed me again.

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