Stock calls for 20 August 2019

Date	Analyst	Company	Last	Target	Call	Valuation
08/20/19	CIMB	Capitaland	3.46	4.15	Add	RNAV (35% discount)
08/20/19	DMG & Partners	GSS Energy	0.074	0.08	Neutral	DCF
08/20/19	Lim & Tan	HMI	0.720	0.73	Accept offer	offer at $0.73
08/20/19	DMG & Partners	Hyphens Pharma	0.2	0.25	Buy	DCF
08/20/19	Kim Eng	MM2 Asia	0.186	0.2	Hold	PEG
08/20/19	DMG & Partners	Moya Asia	0.068	0.083	Buy	DCF
08/20/19	DMG & Partners	OCBC	10.71	11.5	Neutral	GGM, PB1.07x FY20
08/20/19	CIMB	UOB	25.15	29.54	Add

Thank god! Singapore doesn't need to sell heavily subsidized treated water to JB soon.

https://sg.news.yahoo.com/malaysian-minister-says-johor-to-not-be-dependent-on-singapore-for-treated-water-by-2022-010113972.html

Yeah! SG doesn't need to sell heavily subsidized treated water to JB soon....in 2022!

Malaysia has been taking advantage of SG by buying back treated water cheaply for too long.

Just look at Malaysia's announcement without stating the local water treatment cost per 1000 gallons.  The Malaysian's government is trying to mislead the general public that SG is overcharging MY without stating the true water treatment cost.  The water treatment cost is way higher than $0.50 ringgit per 1000 gallons and it is estimated to be $2.40 ringgit per 1000 gallons (Singapore's treatment cost).

Malaysians should ask their government to come clean with the true water treatment cost but Mahathir won't reveal it.

Water is a strategic supply and should not be held hostage by a foreign country.  Even if the local water treatment cost is higher, the country should produce it locally.  SG is doing that and MY should follow too.  However, by accusing a foreign country of selling the overpriced treated water when instead it is buying the treated water at a heavily subsidized price is a thuggish behaviour.

Nonetheless, SG is happy that this unfair water trade will terminate soon. Cheers!

Cathy Pacific suspends ticket sales at HK airport.

https://news.cgtn.com/news/2019-08-19/Cathay-Pacific-suspends-tickets-sales-at-counters-at-HK-airport-JhI69AzAkg/index.html

It looks like China is coming down hard on Cathy Pacific.

Cathy Pacific Ceo has rushed to China to try to pacify CAAC so that it can resume its normal flight activities.

It was indeed a flight risk when Cathy Pacific supported its employees to join the HK protests because China couldn't guarantee that Cathy Pacific employees won't do foolish things when the airliner was flying in and out of China airspace since they were emotionally disturbed.

Innotek - Stock calls

Date	Analyst	Company	Last	Target	Call	Valuation
08/14/19	Lim & Tan	Innotek	0.5	0	Buy on weakness

Indofood Agri - Stock calls

Date	Analyst	Company	Last	Target	Call	Valuation
03/01/19	DBS Vickers	Indofood Agri	0.2	0.19	Hold	DCF
04/12/19	DBS Vickers	Indofood Agri	0.28	0.19	Accept offer	offer price $0.28
05/02/19	DBS Vickers	Indofood Agri	0.28	0.19	Accept offer	offer price $0.28
07/16/19	DBS Vickers	Indofood Agri	0.325	0.33	Hold
08/05/19	DBS Vickers	Indofood Agri	0.32	0.29	Hold	DCF

IHH Healthcare - Stock calls

Date	Analyst	Company	Last	Target	Call	Valuation
01/17/19	Kim Eng	IHH Healthcare	1.86	2.13	Buy	Sum of parts, Ringgit $6.45 target price
03/01/19	Kim Eng	IHH Healthcare	1.85	2.29	Buy	Sum of parts, Ringgit $6.90 target
05/31/19	UOB Kay Hian	IHH Healthcare	1.79	2.07	Buy	Ringgit $6.30 target price, PER32.8x FY2020
06/12/19	CIMB	IHH Healthcare	1.84	2.09	Add	Ringgit $6.37 target price
07/31/19	Kim Eng	IHH Healthcare	1.88	2.16	Buy	Sum of parts, Ringgit $6.50 target price

Stock calls for 19 August 2019

Date	Analyst	Company	Last	Target	Call	Valuation
08/19/19	Phillip	APTV	0.17	0.165	Neutral	EV/Ebitda9.5x
08/19/19	Phillip	Capitaland	3.4	4.2	Buy	PB0.75x FY19
08/19/19	Lim & Tan	City Developments	9.16	0	Buy
08/19/19	phillip	CNMC	0.3	0.33	Accumulate	DCF
08/19/19	OCBC	Golden Agri	0.29	0.27	Sell
08/19/19	CIMB	Grand Venture	0.22	0.22	Hold
08/19/19	CIMB	ISDN	0.192	0.27	Add
08/19/19	Kim Eng	Manulife US Reit	0.89	1	Buy	DDM
08/19/19	UOB Kay Hian	Overseas Edu	0.285	0.46	Buy
08/19/19	phillip	Propnex	0.5	0.59	Buy
08/19/19	Amfrasers	Thai Beverage	0.885	0.8	Neutral

Omg! China has displaced Hong Kong with ShenZhen in the greater bay development.

https://www.businesstimes.com.sg/technology/china-to-boost-shenzhen%E2%80%99s-role-in-greater-bay-area-innovation

The HK protestors have just killed their own future and they must be celebrating their "success" now.

China has decided to displace HK with Shenzhen in the greater bay developments with many favourable economic and preferential policies.  HK will lose its importance over time and its economic developments will slow down over time too.

These Hongkongers will need to travel to Shenzhen to find work in the future because HK cannot generate enough job opportunities for these 1.7m protestors in the future with weak economic growth.  HK has fallen from its financial hub pedestal and will never rise back to its glorious heyday again.

RIP, HK!

Is HSBC on China's unreliable entity list?

https://www.businesstimes.com.sg/banking-finance/hsbc-gets-the-cold-shoulder-in-china

It looks like HSBC is veering towards China's unreliable entity list because it has been excluded from the new loan participation.

HSBC has to do a lot of crisis management and damage control now because China is its major market.  By setting up Huawei and letting HSBC account to be used to fund the HK protests, HSBC has proven itself to be anti-China and all these behaviours have to be corrected before China will trust HSBC again.

Trump: No trade deal before HK problems are solved.

https://sg.finance.yahoo.com/news/usd-flat-trump-wants-hong-004100531.html

Look like there is no need for the US and China to meet in September anymore.  It is impossible to solve the HK problems without China's interventions.  The HK chief executive is incapable to solve the HK problems on her own or with her current team.

Look like Trump is compelling Xi to intervene in HK issues or else there won't be any US-China trade deal.  Trump doesn't want China to honour the 1 country 2 systems structure but China wants to honour it by remaining on the sideline.  Therefore, Xi won't intervene unless there is a violent riot or terrorism action in HK.  This is not what Trump wants and Trump won't deal with China as stated.

A billion dollar question: Will the US enter a recession?

https://sg.finance.yahoo.com/news/economists-survey-34-expect-us-040446403.html

2% of economists expect a US recession in 2019.
38% of economists expect a US recession in 2020.
34% of economists expect a US recession in 2021.

Mohammad El Erian doesn't expect a US recession.
Janet Yellen doesn't expect a US recession.

https://www.cnbc.com/2019/08/15/mohamed-el-erian-inverted-yield-curve-recession-signal-distorted.html

https://www.cnbc.com/2019/08/14/janet-yellen-say-yield-curve-inversion-may-be-false-recession-signal-this-time.html

What's our stance?

https://sg-stock.blogspot.com/2019/08/does-us-2-10y-inverted-yield-curve.html

We also expect a US recession and is most probably happening after Q1 2020.

Let's see who will be right.

Is the seawall able to protect Singapore from getting submerged?

https://www.straitstimes.com/singapore/national-day-rally-2019-100-billion-needed-to-protect-singapore-against-rising-sea-levels

SG is setting aside $100B for some major anti-submersion construction.

Is the seawall capable to protect a region from getting submerged?

Building a seawall is a double-edged sword.  If it can prevent the seawater from flowing inland in the worst-case weather scenario (severe storm), it is effective.  However, if the seawater cannot block out the seawater in the most severe storm, it will trap the seawater inland and the seawater cannot recede fast.

A seawall is not an unequivocal and panacea solution.  We should take a leaf out of Indonesia's book.  The Indonesian president has just announced he is shifting the Jakarta Capital to Kalimantan in the future despite having some major anti-submersion construction including the seawall.

https://www.channelnewsasia.com/news/asia/indonesia-jakarta-flooding-great-sea-wall-11662564

Why is the Jakarta capital moving despite the construction?  This shows that the seawall is not really effective as it proclaimed to be because it is a double-edged solution.

Bangkok is also in the same situation as Jakarta and the Thailand government is also planning to move its Bangkok capital to the north in the future.

Why do these capitals have to move at all if the seawall can block the seawater out?  The answer is crystal clear.

Many analysts don't understand economics at all. - Part 2

https://finance.yahoo.com/news/plunging-yields-insatiable-appetite-likely-to-deter-china-from-selling-treasuries-135134871.html

Many analysts are starting to back-peddle or retreat from their previous common analysis that China would unload its US treasuries to punish the US.

We had stated previously that China won't do that.  Please read our post below to understand the true rationale and logic behind the US treasuries selloff by China.

http://sg-stock.blogspot.com/2019/08/many-analysts-dont-understand-economics.html

Although the analysts had changed their common stance after they realized they were standing on shaky grounds, they had the rationale and logic wrong.

It is a shame that the universities are producing analysts that cannot analyze properly nowadays.  Many people don't truly understand what they're studying.......Sigh!

18 August will be the judgement day for Hong Kong.

The HK protestors will be rallying a mass protest on 18 August (Sunday) with a proclaimed 3-million turnout.

China has warned that if the protest deteriorates into a massive riot, China will intervene by sending its military police and anti-terrorism force into HK.  China basic law allows such intervention without HK approval for anti-terrorism action.

Good luck to HK tomorrow!

The Hong Kong protestors tried to create a bank run in HK but it would be a futile attempt.

https://www.scmp.com/business/banking-finance/article/3023065/hong-kongs-banks-say-they-have-adequate-cash-meet-demand

These HK protestors should go back to schools and study more about finance.  The HKMA has close to US$450b in reserves for any currency and financial war.  It is impossible to even ruffle any feather in the banking system at all.  Furthermore, HK has China as its backer to weather out any financial crisis.

https://www.hkma.gov.hk/eng/key-information/press-releases/2019/20190807-4.shtml

A bank run is impossible to happen but some inconvenience will be caused to the general public because the banks have to refill the ATM notes more frequently.  This will only incur the wrath of the general public and the protestors will suffer more backlashes from the public.

Baltic dry index - 2088

Today, Friday, August 16 2019, the Baltic Dry Index climbed by 41 points, reaching 2088 points.

Baltic Dry Index is compiled by the London-based Baltic Exchange and covers prices for transported cargo such as coal, grain and iron ore. The index is based on a daily survey of agents all over the world. Baltic Dry hit a temporary peak on May 20, 2008, when the index hit 11,793. The lowest level ever reached was on Wednesday the 10th of February 2016, when the index dropped to 290 points.

=========================

Related stock: Sembcorp Marine, Cosco & Pan ocean

US rig count - 935

Related stock: Keppel Corp, Sembcorp Marine & Cosco

IFS Capital - Stock calls

Date	Analyst	Company	Last	Target	Call	Valuation
01/15/19	Amfrasers	IFS Capital	0.225	0.29	Buy	PB0.7x FY18

Ifast Corp - Stock calls

Date	Analyst	Company	Last	Target	Call	Valuation
02/21/19	DBS Vickers	Ifast Corp	1.11	1.19	Hold	DDM
04/30/19	DBS Vickers	Ifast Corp	1.12	1.05	Hold	DDM
07/30/19	DBS Vickers	Ifast Corp	1.1	1.05	Hold	DDM

Hutchison Port - Stock calls

Date	Analyst	Company	Last	Target	Call	Valuation
02/13/19	OCBC	Hutchison Port	0.26	0.22	Sell
02/13/19	DBS Vickers	Hutchison Port	0.26	0.26	Hold	DCF
02/25/19	OCBC	Hutchison Port	0.235	0.22	Hold
04/30/19	OCBC	Hutchison Port	0.24	0.22	Hold
04/30/19	DBS Vickers	Hutchison Port	0.24	0.26	Hold
07/25/19	OCBC	Hutchison Port	0.225	0.22	Hold
07/26/19	DBS Vickers	Hutchison Port	0.225	0.23	Hold	DCF

Stock calls for 16 August 2019

Date	Analyst	Company	Last	Target	Call	Valuation
08/16/19	Amfrasers	Accordia Golf Trust	0.535	0.67	Buy	DDM
08/16/19	phillip	Banyan Tree	0.455	0.51	Accumulate	Sum of parts, PB0.6x FY19
08/16/19	phillip	China Everbright	0.315	0.5	Buy	PER9x
08/16/19	DMG & Partners	CSE Global	0.44	0.61	Buy	DCF
08/16/19	UOB Kay Hian	CSE Global	0.44	0.62	Buy
08/16/19	phillip	Dasin Retail	0.87	0.94	Accumulate	DDM, PB0.65x
08/16/19	DMG & Partners	Golden Agri	0.295	0.22	Sell	Sum of parts
08/16/19	UOB Kay Hian	Propnex	0.505	0.5	Hold
08/16/19	DBS Vickers	Sembcorp Industries	2.26	3.2	Buy	Sum of parts (10% discount), PER16x FY19, PB0.8x FY19
08/16/19	CIMB	ST Engineering	4.07	4.36	Add	Sum of parts
08/16/19	DBS Vickers	ST Engineering	4.07	4.64	Buy	Sum of parts
08/16/19	Lim & Tan	ST Engineering	4.07	0	Hold
08/16/19	UOB Kay Hian	Sunpower	0.44	0.83	Buy
08/16/19	CIMB	Thai Beverage	0.905	1	Add	Sum of parts
08/16/19	DMG & Partners	Thai Beverage	0.905	0.92	Take Profit	Sum of parts, PER19x FY20
08/16/19	DBS Vickers	UMS	0.585	0.49	Fully Valued	PER9x FY20
08/16/19	Kim Eng	Valuetronics	0.62	0.94	Buy	ROE-g/COE-g
08/16/19	DMG & Partners	Valuetronics	0.62	0.61	Neutral	DCF
08/16/19	UOB Kay Hian	Valuetronics	0.62	0.8	Buy
08/16/19	OCBC	Wilmar	3.78	4.26	Buy
08/16/19	DBS Vickers	Wilmar	3.78	4.25	Buy	Sum of parts, PER16.3x FY20

Cathy Pacific top honchos are forced to resign after HSBC.

https://sg.news.yahoo.com/rupert-hogg-resigns-ceo-cathay-090923588.html

This is a crystal clear message to conglomerates that anti-government supporters won't be allowed to operate in HK and they will be punished.

Cathy Pacific and HSBC have their roots traced back to the UK.  Therefore, the UK is also involved in HK protests.

Insofar, the USA, UK and Taiwan are reported to be involved in HK protests.

The Hong Kong protestors have lost the general public support.

https://www.straitstimes.com/asia/east-asia/angry-hong-kong-residents-press-anti-protest-demands-in-newspaper-ads

The HK protestors infuriated the general public that the public demanded harsher measures against the protestors in the press.

http://sg-stock.blogspot.com/2019/08/hong-kong-protestors-fabricated-fake.html

http://sg-stock.blogspot.com/2019/08/hong-kong-protestors-showed-their.html

http://sg-stock.blogspot.com/2019/08/the-hong-kong-police-are-incapable-to.html

http://sg-stock.blogspot.com/2019/08/hong-kong-protestors-are-back-at.html

The HK protestors overplayed their hands in the name of democracy and infuriated the general public.  We had stated previously that these protestors would be at the receiving end in the end.  This is actually happening sooner than we've expected.

http://sg-stock.blogspot.com/2019/08/anti-protestors-are-emerging-in-hong.html

Singapore Nodx fell 11.2% in July 2019.

https://sg.finance.yahoo.com/news/singapore-feb-exports-rebound-sharply-003106148.html

Year on year changes (YOY):

July 2019: -11.2%

June 2019: -17.3%

May 2019: -15.9%

April 2019: -10%

March 2019: -11.7%

February 2019: 4.9%

January 2019: -10.1%

December 2018: -8.5%

November 2018: -2.6%

October 2018: 8.3%

September 2018: 8.3%

August 2018: 5%

July 2018: 11.8% (Corrected)

June 2018: 1.1%

May 2018: 15.5%

April 2018: 11.8%

March 2018: -2.7%

February 2018: -5.9%

January 2018: 13%

December 2017: 3.1%

November 2017: 9.1%

October 2017: 20.9%

September 2017: -1.1%

August 2017: 16.7%

July 2017: 8.5%

June 2017: 8.2%
May 2017: -1.2%
Apr 2017: -0.7%
Mar 2017: 16.5%
Feb 2017: 21.1%
Jan 2017: 8.6%

https://sg-stock.blogspot.com/2019/07/singapore-nodx-fell-173-in-june-2019.html

Does the US 2-10y inverted yield curve signify a looming recession?

The US 2-10y inverted yield curve is an accurate harbinger of a looming recession but it does not have a 100% probability.

Will the current 2-10y inverted yield curve be different this time?

Do not listen to any analyst's justification that it will be different this time and let the numbers speak for themselves.

I've learnt in life that relying on statistics is more accurate than listening to any analyst because the numbers don't lie but people will since they interpret the numbers differently.

The problem with the US economy is not the inverted yield curve.  The fundamental problem that everyone is not observing is that the US debt growth is so much faster than the GDP growth.

https://www.marketwatch.com/story/the-us-treasury-is-about-to-flood-the-market-with-debt-to-fund-a-1-trillion-deficit-heres-why-that-is-a-worry-2019-08-15?siteid=yhoof2&yptr=yahoo

The US has a budget shortfall of US$1T for the full year which is about 4.9% of its GDP but the US GDP growth is only at 2.1%.  We can see that the US debt growth is more than 2.3x its GDP growth and this is a recipe for a recession.

http://sg-stock.blogspot.com/2019/07/the-us-china-trade-war-impacts-on-both_27.html

Furthermore, the ISM PMI has been falling for 4 consecutive months.  This means that the US is still sliding down on the business cycle curve and has not reached its bottom.  Therefore, I see no recovery in sight yet.  Conversely, the PMI is showing that China has reached the bottom of its business cycle curve and is on a recovery path.

http://sg-stock.blogspot.com/2019/08/ism-pmi-analysis-for-us-economy-in-july.html

The US will need to issue more US treasuries to make up for the US$1T budget shortfall and this will definitely push up the short-term bond yields which will cause the inverted yield curve to worsen.

http://sg-stock.blogspot.com/2019/07/the-us-total-debt-is-at-us69t-now.html

The US total debt will hit US$70T with this bond issuance.

So tell me, will this 2-10y inverted yield curve be different this time? No!  This inverted yield curve is just reflecting the reality that the US is heading into a recession unless the US ends the trade war.

A new world, an unchartered territory – A negative yield environment

There are US$16T of negative yield bonds at this moment as we speak and we have never come across this before in our lifetime.  The world will be in big trouble when the largest economy (USA) is also in a negative yield environment.

The conventional mindset is positive yield whereby the borrower pays the lender an interest rate to secure a loan and not the other around.  Our current financial system and economic structure are not built for a negative yield environment.

If we want to accept and adopt a negative yield environment, we will need to change our mindsets but people are resistant to changes.  How many people can accept the reality that they are paying the bank an interest rate for their deposits instead of the bank paying them an interest rate?  How many creditors can accept it when they need to pay borrowers an interest rate?   Where will the banks get the money to lend out when people start to stash money at home?  Many elders in Japan started to buy safes to keep money at home when the banks started to charge deposit fees (interests).

https://www.scmp.com/news/asia/east-asia/article/2115888/cash-loving-japanese-savers-play-it-safe-hiding-money-their

In order to minimize the disruptions to the conventionalists, we will need to restructure our financial system and economic structure which will entail many uncertainties and risks because we have never done this before in our lifetime.  This will be a regime change and it is an arduous task.

Conversely, if we reject the negative yield environment and maintain our conventional thinking, we will need to enforce positive yield on the current situation and cause a great recession or depression to happen.

We are stuck between a rock and a hard place now.  Even the economists are at their wit ends now because they’ve never studied the negative yield environment before in their lifetime.

Hong Kong protestors fabricated fake news to defame HK police.

https://www.straitstimes.com/asia/east-asia/young-woman-allegedly-shot-in-the-eye-during-hong-kong-protests

The woman who injured her eye in the protest was actually shot by another protestor who did it with a catapult.  She was not shot by the beanbag round used by the police because a beanbag round couldn't cause the injury she sustained.  She also didn't lodge an official police report against the police because she knew her injury was not caused by the police.

The video below showed that there was no police near her when she was "shot".

The HK protestors fabricated the news to defame the HK police and used the fake news to orchestrate a violent riot against the HK government and police.  This is not a protest but a real riot. The HK police must take a tougher stance against these rioters.

Hong Kong protestors showed their incompetencies and lack of understanding in their cause.

HK protestors don't even know what they're protesting for.  They don't know because they're being paid to do a brainless job.

An Australian knows more about China and HK than the HK protestors.  Hahaha!

HK has no more future when the next generation is like that.

China warns the US if it implements the September 1 tariffs.

https://www.channelnewsasia.com/news/business/asia-stocks-slump-on-recession-fears-11810102

The US has only delayed tariffs against 60% of China goods to December but will still impose tariffs against 40% of China goods on 1 September.

The US is at the receiving end now and the Chinese won't back down because Trump has made it more difficult to reach a trade deal by adding the HK issue to the trade talk list.  Trump wants Xi to settle the HK issue humanely first before he is willing to have a trade talk with Xi.

HRnetGroup - Stock calls

Date	Analyst	Company	Last	Target	Call	Valuation
01/02/19	DMG & Partners	HRnetGroup	0.8	1.18	Buy	DCF
02/25/19	DMG & Partners	HRnetGroup	0.795	1.06	Buy	DCF
02/26/19	DBS Vickers	HRnetGroup	0.8	1.05	Buy	PER15x FY19, ex-cash
03/13/19	DMG & Partners	HRnetGroup	0.79	1.06	Buy
03/26/19	CIMB	HRnetGroup	0.765	1.03	Add
05/07/19	DMG & Partners	HRnetGroup	0.77	1.06	Buy	DCF
05/13/19	DMG & Partners	HRnetGroup	0.77	0.94	Buy	DCF
05/14/19	DBS Vickers	HRnetGroup	0.76	0.85	Hold	PER16x FY19, ex-cash
06/06/19	DMG & Partners	HRnetGroup	0.71	0.94	Buy
06/13/19	CIMB	HRnetGroup	0.72	1.01	Add	PER18x CY20
08/14/19	DMG & Partners	HRnetGroup	0.66	0.94	Buy	DCF

Hotel Properties (HPL) - Stock calls

Date	Analyst	Company	Last	Target	Call	Valuation
02/27/19	Lim & Tan	Hotel Properties	3.76	0	Hold
04/17/19	OCBC	Hotel Properties	3.88	4.74	Buy
07/15/19	OCBC	Hotel Properties	3.69	4.74	Buy

Hongkong Land - Stock calls

Date	Analyst	Company	Last	Target	Call	Valuation
01/17/19	DBS Vickers	Hongkong Land	6.92	7.86	Buy
01/17/19	Citibank	Hongkong Land	6.92	5.9	Sell
03/01/19	DBS Vickers	Hongkong Land	6.77	8.02	Buy	RNAV (40% discount)
03/01/19	Citibank	Hongkong Land	6.77	6.45	Sell
05/10/19	DBS Vickers	Hongkong Land	6.97	8.02	Buy	RNAV (40% discount)
08/02/19	DBS Vickers	Hongkong Land	6.09	7.93	Buy
08/05/19	DBS Vickers	Hongkong Land	6.02	7.7	Buy	RNAV (40% discount)
08/06/19	CIMB	Hongkong Land	5.74	7.4	Add
08/06/19	Citibank	Hongkong Land	5.74	5.85	Sell