Wednesday, August 08, 2007

National day rally did happen! STI +111

What a wonderful STI national day rally!

I thought in the morning that it's all a fake rally, because it seems that the only stock rising are all those banking stocks that got whacked really hard during the market correction these weeks due to subprime exposure. But after they came clean with the exact amount of exposure (plus the fact that the risks are borne by global investors and not soley them), analyst came in force to recommend strong buys. So today, most of the property and banking stocks, in fact most of the other pennies as well, joined in the celebration.

Hmm, I didn't record down last year, did we have a national day rally too? I was too newbish to remember what is happening then. But yes, this year, we did have a national day rally. Conspiracy theory states that this rally is used by market manipulators to create a feeling of happiness in line with the celebration of the birthday of Singapore. Let this blog entry be a record in case next year or future years, I want to know what happens during national day, I can have something to look at.

STI rose 111.2 pts to close at 3413 with a volume of 2.4 billion (warning sign...too low volume? haha) with 751 gainers vs 157 losers. HSI close up 628 at 22,536, Nikkei close up 107 at 17,029, Shanghai up 11.9 at 4663.

I'm still in the view that we're not out of the woods, so even though my losses went back to below 10k, mustn't be too complacent and ya ya (arrogant) :P Was out at work for most of the day, so just came back and saw STI close with a loud bang :P haha!

GK goh released results today (I didn't even know beforehand!). Group's revenue rose 677% yoy, profit before taxes went up 2696%. Net profit from continuing operating activites went up 1678%. Why did the revenue went up so high? Their statements are not very clear, so have to search here and there for minute details. Revenue and net profit rose mainly due to gains on the Group's short term investment (includes 15.3 million realised and 4.8 milion marked to market portfolio value), as well as 7.7 million sales from long term investments. As these are one off events, if I subtract off these, the revenues is only 3829k this quarter compared to 4029k last quarter. So I wasn't too impressed.

Maybe its the nature of their business (investment company and stockbroking), so much of their income do not come from normal trading activites. I'm not sure about that, but I don't like it. Their 3rd quarter results might be affected because of volatility in the market (so they said under prospects of the company).

Happy to see that doubtful debts did not increase as much. Might not be suprising since their stockbroking business (revenue minus short term and long term = 3829 k compared to 4029k last quarter) did not change much. At least they don't have clients unable to pay up. Or maybe not yet since their quarterly results didn't include what is happening (due 30 June, before correction) for the last few weeks of correction.

Can also see their long term investment values increase substantially. But this is nothing, because when market crashes, all paper profit becomes a faint memory, unless they realise it by selling. Won't be too concerned about their long term investment assets increasing substantially. Cash flow deserve to take a second look because it dropped a lot. Too lazy to trace out one by one what is the cash sink, but from a brief look, it seems they spent quite a bit on long term investments. No problem with that, knowing their business is into investing other companies in the market.

Overall I feel GK Goh is okay, nothing to feel shout about and nothing to be alarmed in. If I'm still holding by next quarter, what I'll be looking at is whether their doubtful debts increased as a percentage of core business revenue. That should be an indication if the recent market crash affected their clients so much that they are unable to pay off their purchases (GK goh have to pay as a result, probably).

OK, that wasn't so bad right? Hahaha, finally can get to analyse their earnings report with more sense now! At least I didn't just look at revenue, profit after tax and dividend declared like what I did in the past, so that's an improvement :)

Ok lah, enough of now, too tired...tmr is another busy busy day for me. Since when did I work so hard? My goodness... Dow + 78, Europe all SUPER green! :P May Dow close nicely tmr night (not tonight), so that when STI opens on Fri, we can enjoy the post national day rally.

FYI, immediately after National day last year, STI close lower 0.8% and dropping the rest of the week to test ema50 days. Cross our fingers :)