A war is brewing...(poll response needed)

One of the most exciting corporate battles is heating up in the history of Singapore. The crown jewel is obviously Asia Pacific Breweries. A listed company majority held by both Fraser and Neave ("FNN") and Heineken. Unfortunately, APB was also made famous by the fraud of one of its ex-employee, Chia Teck Leng.

It first got a bit complicated when Temasek sold its stake to Kirin from Japan. Kirin has been relatively quiet and in typical Japanese culture, non confrontational. While Heineken wasn't too happy, it was happy to let status quo reign.

The event that toppled this balance was when OCBC decided that it was time to "divest" it's non core stakes under the new CEO. Obviously for it to divest at a maximum price, it has to find a buyer that appreciates the value of both FNN and APB. Here comes Thai Beverage founder and owner of the Chang Beer. Now we have a spicy Thai flavor added to the brew! Thai Beverage bought FNN at $8.88 per share and a related party bought APB at $45 per share. Do note that Thai Beverage is paying a premium in terms of valuation vis-a-vis other listed peers including its own valuation.

Heineken then made an offer to FNN for its APB stake at $50 per share. The offer was supposed to expire last Friday but has since been extended for another week. I can imagine the FNN board must be very busy this period so that they can discharge their fiduciary duties in a proper manner.

Kirin bought its 15% stake in FNN at $6.50 per share. It will record a nice gain if based on the 22% stake of $8.88 paid by Thai Beverage. However, i don't think Kirin is after monetary gains. Thai Beverage continues to buy FNN from the open market and has now acquire 23.9% stake in the company based on the latest announcement to SGX. Kirin has yet to announce its intention. Kirin has hired Deutsche bank as its advisor has a few options. It can (1) Do nothing; (2) Make a general offer for FNN; (3) Sell its stake in FNN to interested parties.

What are the 3 possible outcomes for FNN.

FNN has engaged Goldman Sachs to advise them on the bid by Heineken. Based on the current projections, at $50 per share, it is valuing APB at 33x FY12PE. The offer is not an unfair one. FNN directors will be hard-pressed to explain to minority shareholders if they are going to reject the deal. Thus GS will also have to come up with a solid explanation as well as to why $50 is not an attractive proposition. After all, if FNN divest APB, it is like selling the goose that lays the golden egg and the attractiveness of FNN may decline. On the other hand, FNN and Heineken's relationship has been rocky in recent times and this may present the most face-saving way to part.

What do you think will likely happen in the next 5 days?

1. A new bidder appears

Either Kirin or Thai Beverage joins the fray and throw in a bid for APB at more than $50 per share. 

2. F&N accepts the $50 bid and put the transaction up for shareholder's approval.

If GS propose to sell APB and the board of FNN agrees to accept, then this transaction will be put up for shareholders' vote which will include Kirin and Thai Beverage combined stake of around 38.9%.

3. Reject the $50 bid on the basis the bid does not 'fully value' APB. 

Most likely FNN will use another valuation model, maybe DCF model, to justify why the bid is unattractive to FNN and request Heineken to either keep quiet or pay more for the stake.

I put up a few recent research reports for your reference to make a more informed poll. 

Nomura 25 Jul 12
DB 23 Jul 12
BNP 19 Jul 12

Please take a poll to indicate your views:

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Streamlining of Blogs

Dear readers, I am going to streamline my blogs so that it will be easier for everyone to follow. As such, with effect from today, the previous 2y capital fund will be redesignate as a Real Estate Fund where i will share my thoughts, views and experiences on real estate investments in Singapore.

Let me summarise the various blogs and its purposes:

Singapore IPOs blog - views on new listings in Singapore.

Starfish SRS Fund - views on long term investments to create a portfolio generating passive income for retirement.

Ninja Master Fund - views on the stock markets and on specific stocks and shares listed in Singapore and elsewhere. May also include views on forex, M&A and any other trivial matters. It's a catch all blog :-P

2Y Real Estate Fund - views on the real estate market market and how to generate passive income and pursue financial freedom from it. I will share some personal experiences here. :-)

SQ travelogue - snippets of the places which i have been

If any of the blogs interest you, please subscribe to the emails or feeds directly so that you are only informed of topics that interest you. Hope that by sharing my experiences, it will help both you and me in our pursuit of financial freedom.

Yours truly.

STI Update

The STI is pretty undecided as you can see by the long tail it formed today. I would have called this a potential shooting star in candlestick term if it had occurred at the top of the trend. The parabolic is still in the bearish mode and STI seemed to be waiting for something to happen?! Anyway, watch your stops while you trade. The market can get a little whippy from here, maybe affected by sentiments in the US reporting season although i have to admit that the undertone seemed to be firm.

I have decided to continue posting my views but probably not the trades as they are not timely and the timeframe is very different... and it may cause more harm than good and may act as an unnecessary inducement to trade even though i have a disclaimer on top.... but no worries, i will continue to share whenever the time permits. Happy trading.

Ninja Master Fund updates.

I closed off my short positions in Capitaland and Simsci this morning at a slight loss. The STI index seemed to be holding well and my July simsci contract is going to expire next Monday.

The market continue to hold well despite disappointing APPL results plus the fact that one of the most exciting corporate battle is going to happen to F&N and APB. We shall see the drama unfold in the coming weeks. Interesting to watch but not sure if the risk and reward of taking a position now is worth the effort. :)

Happy trading.

My thoughts on China Fishery Group

China Fishery Group has turned into a smelly salted fish. The chart broke the critical support level of 85 and is now at a new 52 week low. I hate making sweeping statements but once again, it has proven to me that we should be very very wary of Chinese companies. Just to name a few, China GaoXian, Sino Forest, China Hongxing, Hongwei Technologies are just one too many. Not to mention my previous article on China Taishan too (the share price is now 0.044 cents versus 0.10 when i last blog it)!  

Be careful of companies that have excellent 'financial results' but are always in need of cash for business expansion. They will forever be raising cash via placement issues or worse still, via high yield bonds and most importantly, they never pay dividends. 

Let me just share a few lessons which I have learnt the hard way in the past. If you can master the 3 things below, it will bode you well in your pursuit for financial freedom.

1.  Never trade on tips or insider news. 

2. Always know when and where to cut your losses (before you even enter a position).

3. Know yourself and do your homework.

 Blogging on the 3 lessons above will probably take me another few hours, unfortunately, i have many meetings tomorrow. Just spend some time to ponder on what i said and when i am free, i will elaborate on them in more details. 

Good night.

STI, CapMallAsia and Capitaland

Lets do a quick recap on my previous postings:

CapMallAsia hit my first target of 1.55 today. There is still some way for this correction to run and will probably head towards my second target.

STI - As mentioned in my update yesterday, i am bearish on the STI and has initiated a short position via July SIMSCI this morning. STI is probably heading towards 2950 followed by 2900.

Capitaland - Initiate a short position in Capitaland at 288. First target at 275 followed by 260. Cut loss just above recent high.  

Overall, i think the market sentiments is weak and many stocks look very weak to me. So do take precaution if you intend to take long positions.

STI update

My personal view on STI - Continue to tighten your stop  on STI as it looks weak and a short term correction is imminent in the coming days.  

Closing off remaining short positions in Ezion and Ezra

Hi all, 

I have closed off my remaining short positions in Ezra and Ezion at 104 and 94 respectively as i won't be able to monitor the market for the next few days.  Happy trading.

NJM

CapMallsAsia - Chart review

The CapMallsAsia chart looks interesting. It look likes correction is going to start and i quite like the set up for a "short" trade. First target is 1.55, followed by 1.45-1.50 range. The cut loss should be around the recent high.

Portfolio update - Ezra and Ezion

I am not taking on new positions as I am travelling for work this week. Still holding half of my positions in Ezra and my shorts in Ezion. It is interesting to note that Biosensors closed at 124 today after two big houses, Goldman Sachs and BoAML came up with buy recommendations and a target price of around $1.48 and $1.55 (if i remember correctly). I am moving my stop price for Ezra to $1.05. Happy trading.

OCBC Bank

The OCBC chart looks pretty impressive as it breaks the key $9 resistance today. A simple projection means a possible target price of $9.80 or better in the coming weeks/months.

Ninja Master Fund - Closing off Biosensors and cover half of Ezra shorts.

I have sold off my remaining  long positions in Biosensors around 1.21. With prices not moving despite STI rallying, it has been a disappointing ride. The earnings results will be announced for Biosensors on 27 May 2012, it may be time to say good bye and trade again later. Plus i am out of town for most of  next week and will be on flights.

I have also closed off half my short positions in Ezra at 1.06. I was 'lucky' that the market sold down despite the "good news" of earnings and contract wins.  That is why it never pay to chase and buy at the opening when company just released good news. Those in the 'know' would have bought prior to that and then dump it on the new set of buyers who jumped in at the news.

Happy trading and have a good weekend.

STI update

The STI recovered strongly today even though US markets were weak last night. The undertone is firm and underwriters would want the buoyant mood to continue so that they can launch the IPOs. Many companies are trying to catch this window and 2 business trusts have lodged their prospectus with SGX in recent days. STI continues to look healthy and may test the 3,000-3,300 range in the coming days. A convincing break above 3,300 will be bullish as it has failed to cross that in the previous few attempts. Having said that, the resistance is a strong one. Traders may want to tighten their stops as the STI runs up.

STI - Tighten your stops.

It might be a good idea to tighten the stops around your positions in STI. The parabolic is in danger of being triggered in the coming days.

Biosensors - Sold partially today

Biosensors - initiated long positions in June. Took some money off the table today at $1.22 and holding around 60% position left.  Uptrend remains intact and may re initiate long positions around $1.15-$1.18 depending on how the market behaves in the next few days.

Ezion - Short

Initiated another short position in Ezion at 94 today. First target 90 and second target around 85. Cut loss near recent high.

Ezra - Short

Ezra - Initiated a short position at $1.10 today. First target $1.05 and second target between $0.95 to $1.00. Cut loss should be near recent high.

Ninja Master Fund. Be warned.

It took my a long while to decide if it is worthwhile doing this. Trading / investing is a very personal thing and frankly is not suitable for everyone. You have to decide for yourself if trading is suitable for you. I have long aspire to be trading full time one day and this could well be my "retirement" job one day. I have been investing and trading for many years and believe me, I also am confused sometimes whether i should be a trader or an investor. Those who have seen it all would tell you that most profits are made by sitting on positions and doing nothing. I tend to agree to that because many a times, after we sold a position for a 10% gain, we missed out on the remaining 40% run. Nevertheless, there are others who tell u that "buy and hold" strategy is dead and trading in and out using a combination of technical indicators is the way to go. I am not going into a discussion as to what is the correct method cos there is NO correct method but I have intentionally split between a Ninja Master Fund and a Starfish SRS fund to distinguish 2 different strategies as they are so different with regards to the selection criteria. For example, volume, trading set up, time horizon, technical indicators would be more important for a trading portfolio while fundamentals, yields, longer time frame would take priority in a investment portfolio.

Ok the first posting of mine will be a warning. Be warned:

1. Only trade with your excess cash. If you don't have excess cash, do not trade. Only trade with what you can afford to lose.

2. Only trade if you know how to cut loss. If you do not know how to cut loss, do not trade. This is because many a times, you will be taking a leveraged positions and a costly mistake can wipe out your entire capital. If you take a long time to recover from the heart ache of cutting loss, trading is really not suitable either.

3. Preserving your capital is essential in trading. After all, the market is always there. If you miss this trade, there will be another one coming up shortly.

4. I firmly believe that investing in properties is the fastest way to make you rich and retire earlier (if you are not an entrepreneur). If you have not made your money from investing in property yet, please don't give up. Continue to save up and make your pot of gold there. Trading the stock market, in my view, will not make you rich unless you truly know what you are doing and take an usually large positions in certain specific counters. I have heard stories of individuals who made it rich trading insider news but that, in my view, is an unethical way of getting rich. Trading has less margin of error vis-a-vis an investment in property. I can start another blog on my good and bad experiences in property investments but another time perhaps.

5. Do not blindly follow tips and that includes whatever I post here. Do not follow them at all. There are for my references to look back at the silly trades made to remind myself not to commit the same mistakes again.

6. Trading is about probability. As such, many a times, I make losses. But as long as I have money management in place, and as long as the winnings outweigh the losses, i should come out "positive".

7. Whenever I enter a position, I have my target and cut loss points in place. In addition, I may add or reduce the positions depending on my exposure and views of the market and the positions. As such, by the time you see my postings, profits and losses could have become realised. As such, there is really no point for you to follow the trades posted here cos you will be disadvantaged. The reasons for posting the trades is that instead of keeping my trading journal private, I am sharing them with you. After all, I still need to keep my trading journals, I might as well share them with you so that you can benefit from my mistakes.

8. This is not a "live" blog. Postings can be delayed for many hours or even days due to work commitments. After all, the priority is still the "hands that feed me and my family". Blogging is not my source of income. As such, when I am busy with work or going for long breaks, I will not trade at all and this usually occurs during June and December. The good thing is that with the advancement of technology, I can probably key in my stop loss prices or monitor it via iPad or iPhone.

9. Ninja Master Fund takes both long and short positions. Long positions will be via normal share trading accounts and short positions via CFDs. Sometimes, it can also take positions in the futures market via SIMSCI. It can also take positions in foreign markets but ninja master only have one life and wants go sleep well during the US trading hours, as such even though he believes that US markets are probably easier to trade and has more instruments available such as "options", he is not going to shorten his life further by trading the us market actively. Perhaps US markets will be for me after retirement.

10. Last but not least, trading is a lifelong journey. It is not the end that is most important but the journey itself that matters. Enjoy the Journey.