Taking over the Singapore Flyer – Good Decision? – 30 Aug 2014
What happens when a company’s decision does not go down well with its shareholders and analysts?
Shareholders dump the shares, causing the share price to come down.
This is exactly what happened to Straco Corp’s share price when it announced on 28th Aug 2014 that it had agreed to purchase the troubled Singapore flyer for $140 million in a 90:10 joint venture, with WTS Leisure Pte. Ltd’s taking the smaller stake.
Shareholders and analysts were not optimistic that Straco Corp could turn around the flagging business of the Singapore Flyer. They think that the cash that they would have to use for the purchase could be better used elsewhere to generate better returns. They think the price paid for the Singapore Flyer is too high. They don’t like the additional debt that Straco Corp would have to take to fund this purchase.
The next day, the share price of Straco Corp plunged more than 10% to $0.725 before recovering some lost ground to close at $0.785, 4.3% below its previous day closing price of $0.82.
Nothing in charting could have prepared you for the drop in Straco Corp’s share price. Just because you’re a fan of the Singapore Flyer does not mean the market will agree with you. But now you know the reason why Straco Corp’s share price dropped. Charts don’t explain the story. Fundamentally, events, sentiments and opinions drive how the charts move. The question now is, if you’re invested in Straco Corp, do you hang on, or offload?
Our Best, Always
Empower Advisory Team
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Get READY! SGX to cut lot size from 19 Jan – 26 Aug 2014
You no longer have to find yourself priced out of more expensive blue chip stocks like Keppel Corp, DBS and UOB.
No need to shell out $11,000 just to own a piece of Keppel Corp. You will soon be able to have a tiny-weeny piece of this marine, property and infrastructure company at $1,100.
From 19 Jan 15, the trading volume of blue chips will shoot up many, many folds, shaking the sleepiness from some of these blue chip stiocks. With more trading activity, the greater the opportunity of profiteering, but only if you know how. What would you do now?
If you’re not well-versed in stock investment yet, get up to speed and equip yourself with REAL investment kung fu. Empower Advisory’s bi-monthly intensive stock investment course specifically prepares you for it. Just 2 more dates for Sep and Nov 14.
No nonsense, no games, no time wasting, no rah-rah. Because at Empower Advisory we teach, not trick.
To check out SPECIAL pricing for our September course (7th intake), scroll all the way to the bottom at this link.
Our Best, Always
Empower Advisory Team
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Cheap can get cheaper (Case Study) – 5 Aug 2014
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I was driving today when I heard on the radio that Xpress Holdings Pte Ltd (“Xpress”) is in talks with UOB to avert a winding up application.
UOB is not the only one pressing Xpress for late payments. HSBC Institutional TrustServices (Singapore) and ASEAN Finance Corporation Ltd (AFC) are also in the fray. The sum owed is not a lot, just $2.4 million. That Xpress, a listed company on SGX Mainboard cannot pay up shows how weak the company is.
Isn’t it ironic that Xpress, a company that prints time-sensitive & quick turn around. publications such as stock market research reports , annual reports, IPO prospectuses, shareholder circulars and fund management reports cannot print its own report of stellar results?
An acquaintance called up. Let’s call him Cheapo since he has a clandestine affair with cheap penny stocks, despite having got burnt several times.
The conversation went something like this.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
“Douglas, you saved me some serious money.”
“I know. So when you buying me lunch?”
“How did you know it will get that bad? The charts don’t show it?
“The signs were there but the charts can’t tell you. You don’t bother going through the financial numbers and thinking about the business model.”
“Aiyah, I too busy, ah.”
“Busy with work or busy with losing money?”
“Don’t rub it in, leh.”
“The charts can only tell so much. You like to buy cheap stocks. But cheap can become cheaper until one day you don’t even have a currency to represent your stock price. How much was it when you yakked about Xpress last year?”
“About 3 cents.”
“Today?”
“1.6 cents.”
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The Takeway. Combine fundamentals with technical analysis in stock investment. That’s what we do at Empower Advisory. It will save you lots of tears. And it’s not rocket science. You can pick it up, just like all our course participants with or without financial background. Think about it. You can be either busy losing money and making excuses or busy making good investment decisions.
Douglas
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How New SGX Regulations Will Affect You – 4 Aug 2014
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We have distilled the latest SGX Regulations announced on 1 Aug 14 and highlight the salient ones that will affect you, the retail investor
Upcoming Changes in Singapore Stock Market Regulations that will affect you.
A minimum trading price of S$0.20 as a continuing listing requirement for company shares listed on the SGX Mainboard – While this tries to address risks of low-priced securities being susceptible to speculation and manipulation, it doesn’t mean that you can assume it will no longer happen. Most affected companies are likely to consolidate their shares so that their share price is well and above S$0.20 unless they can boost their share price organically through good financial performance. Expected date of implementation: Mar 2015. Companies will have up to 4 years from Mar 2015 to comply. Companies that don’t comply may be forced to delist.
1) Minimum price as a continuing listing requirement for company shares listed ONLY on the SGX Mainboard
2) More cash outlay required
Securities intermediaries like your brokerages houses will have to collect at least 5% of collateral from you for trading of listed company shares. Exempted from this rule are institutional investors (Big boys, not you and us), trades settled through delivery-versus-payment mode, and funds from the Central Provident Fund and Supplementary Retirement Schemes.
For those affected, you will have to keep cash collateral in trust accounts with licensed banks in Singapore at all times, except for cash collateral collected in relation to trades on overseas securities exchanges such as NASDAQ.
Expected date of implementation: Mid 2016
3) Expensive stocks become “cheaper” to buy
SGX will reduce the board lot size for securities listed on SGX from the existing 1,000 shares to 100 shares.
Expected date of implementation: Jan 2015. More details will be provided by end August 2014.
Our Best, Always!
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