Thursday, April 19, 2012

Sembcorp Industries

The idea of this post is to outline a trading idea on Sembcorp for the coming twelve months.

This is a picture of Sembcorp's performance in the period from April 2011 to Nov 2011.




Sembcorp was at 5.4 in April 2011, it fell to below 3.5 to around 3.4 in October.

Okay, was this a one-off ?

In 2010, also, after April it sold off from around 4.4 to around 3.8.


Did this happen in 2009 ?



Yes, it did.

It fell from around 2.8 to 2.6 as you can see from the above chart.

Why does it fall in May ?

Short answer is that it goes ex-dividend in May.

The fall is always more exaggerated than just the dividend amount.

So, the trading idea is as follows :-

Assuming the world does not go to hell in a handbasket, buy Sembcorp anywhere from May till November.

The range of fall could be 5.06 or 4.66 or 3.66

My prediction for whatever it is worth, is that it would fall from around 5.4 as on date i.e. 20th April 2012 to around 4.35 by November 2012.

Ideally, buy at a price below 4.5 and sell it anywhere from November 2012 onwards till April 2013 when it hits 5.5.

The return on capital is around 22%, good enough for a year holding period.

Have fun.


Thursday, April 12, 2012

Datapulse

Datapulse is the stock i have looked at for this post.

Here is a link to the company page.

http://www.datapulse.com.sg

The last dividend they paid out was 1.8 cents for the year.

They have a reasonably long track record of paying out dividends, at least for the last ten years.

Year Dividend Growth(%)
2011 0.018 0%
2010 0.018 -28%
2009 0.025 25%
2008 0.02 0%
2007 0.02 0%
2006 0.02 -50%
2005 0.04 167%
2004 0.015

Broadly, if you are looking for a stock which pays out a dividend of 1.5 to 2 cents a year with a reasonable price between 18 to 22 cents, then Datapulse would fit the bill.

The share is priced at 19.3 cents as on date.

It tends to peak around November its ex dividend date.

Its trough is around Dec-July at around 18.7 cents.

One approach is to buy around July at around 19 cents and sell when it reaches 23 cents, ensuring a Return on Capital of 21%.

The other approach is to buy at 19 cents and hold for a dividend yield of around 6 to 10%.

I would personally want to buy around 19 cents.

Just a bit more to go in terms of its price to drop

Wednesday, April 11, 2012

Should I sell now or buy now ?

Whenever the markets pull back for a few days, fear sets in.

You are likely to see plenty of stories about how to protect your portfolio, what stocks will fare the best in a decline, and a parade of pundits explaining what is going wrong.

If you are in the market, what should you do? It depends.....

Are you a trader or an investor?

Investors should not try to "play the squiggles" based upon their preferred concept of long-term valuation.

This is because none of the pundits are good at market timing.

If you are a trader, sell in line with the market.

If you are an investor, buy, because this is a better price than yesterday.




Monday, April 9, 2012

Olam


Olam International is the selection of the day on Warrant Charter.

From a chartist view, the share price is pulling back to its support area around 2.25 (the previous low), and seems to have lost its downward momentum, as the daily RSI (14) is rebounding on its support, and should challenge its 50% area in sight.

To sum up, as long as 2.17 (the low boundary of a MT range pattern) is not broken, a technical rebound will probably occur to 2.51 and 2.62 in extension.

The advice is to initiate a long positions above 2.17 with targets @ 2.51 & 2.62 in extension.

If stock breaks below 2.17 look for further downside with 2.05 & 1.95 as targets.

The immediate trend remains down but the momentum is weak.

Full disclosure : I am long Olam.

Tuesday, April 3, 2012

Keppel Green Trust

Keppel Green Trust is an interesting looking dividend play.

On paper, there is nothing to dislike about the company or investment.

The price of a share is 99 cents as on date i.e. 4th April 2012.

The trailing twelve month dividend is 7.82 cents per share.

This gives a rough yield of 8% (7.9%) to be precise.

The growth in dividend from last year i.e. 2011 to 2012 is around 8.8%.

The objective of this post is to estimate the fair value of the unit.

Full disclaimer, I am long this trust.

However, if one looks carefully at this trust, it emerges that the fair value of the unit is actually around 72 cents.

The calculation is based on a twenty year time-frame with an estimated growth rate ranging from 0% to 8.8% for its distribution and a discounting factor of 8.76%.

The short version is that at current prices, it is overvalued and the appropriate price to buy is at 72 cents.

Here is a link to the trust