Monday, May 21, 2007

CSC won $240 million contracts for marina IR

Quite a lot of news reported today.

First and most importantly, CSC finally released reports of its wholly owned subsidiary, L&M foundation specialist Pte Ltd, won a 240 million contract for the marina IR. The work is scheduled to commence in June 2007 and to be completed by Feb 2008. This means that at least a part of the contract sum will be reflected in this year's FY :)

I liked the fact that foundational works are completed so soon. Fast in fast out system is very good for asset based construction firms and the quick entry and exit means they have better cashflow. Tmr should see a surge in the price, possibly opening at 0.40 cts (i'm just guessing here!).

Another news is of Yellow page. Yellow page declared trading halt today. Announcement made in SGX mentioned that there are some internal conflicts where 2 non-independent, non-executive directors of the company wants 5 members sitting on the board of directors to be removed. They are going to announce an extraordinary general meeting to make this happen. So happening, reminds me of robinson and isetan not so long ago. I'm not sure what to make of this, when it's so close to their earnings report (on 24 may before market opens). Yellow page went up to intraday high of 1.42 before closing +0.03 at 1.39. ONE of the highest price I've seen for a long time.

I guess no such thing as bad news in publicity.

Today I itchy hands go buy Lian beng, a construction firm, another major player in singapore. That brings my total portfolio of construction related stocks to 3 - Yongnam, CSC and LianBeng.

The analysis is done after I bought, to rationalise my buy, haha! I bought mainly because it broke out of resistance at 0.350 with high volume (2.5 times average 50 days volume). Went I left, it was still lingering at 0.360 and I didn't want to chase the stock so far from resistance turned support, so I queued 5 lots at 0.350, right at the support level. Who knows after a few min, I got the confirmation that I bought it.

Some idiot sell down at matching, otherwise lianbeng was well supported at 0.35 all the way till 5pm. Awaiting breakout with possible target price of at least 0.41. MACD histogram going to cross over too. Shouldn't be too bad a buy, based on technicals.

After the announcement of the first contract for Marina IR, I think that should open up the floodgates of contract to come for the next phase. Since geotechnical foundation works are completed by Feb next year, I believe the next phase should be either steel or concrete based superstructure contracts. Stocks that come in mind would be Lianbeng, yongnam and tiong woon. Tiong woon is not really those hard core construction company, it's more a supporting company that supplies the cranes for heavy lifting etc. I expect more contracts to come in the coming months, latest by Jan next year, more likely Oct period.

How do I arrive at this timeframe? June is the commencement of the foundation/geotech works, May is the announcement for the contracts. Feb next year shall see the completion of the foundation works, so latest by Jan, we should know who are the next contractor(s) for the next phase. I expect it to be even earlier because the scheduling of the works did not be sequential, but rather overlapping. Halving the time from June to Jan (8 mths) and adding onto June, I get Oct period. That means by oct, half of the Save foundation for the IR is finished, so we can start superstructural works on it without waiting for the other half to be completed.

That's my wild guess.

I don't know why straits asia made a sudden rally. Increased 0.060 to close at 1.13 today.

Dow is up 3.6 while europe is mostly green.

Oh, nearly forgot to mention this. Rate hike doesn't seem to do much to cool the heads of investor over at china. China went down a bit when it opens but recovered quickly to close 1.04% up. Seems well absorbed. STI and HSI too.