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Pinnacle Master	20-Nov-2007 22:22        Pinnacle About Contact  Quote this Post!
x 0   x 0  Alert Admin	DMG Research - SembMarine pays US$115m to close out SocGen forex trades SembCorp Marine has agreed to part with US$115.45 million plus agreed interest to Societe Generale to close out foreign exchange trades that had led to huge losses. Despite the payment, SembMarine is sticking to its position that the trades were unauthorised and that it is not liable to pay for them. Societe Generale had demanded the money before it would close out its transactions with SembMarine's unit Jurong Shipyard. The payment to the French bank was accompanied by an agreement said to be unusual by one banker. 'Societe Generale accepts that such payment is without prejudice to Jurong Shipyard's position that the transactions are unauthorised and is subject to Jurong Shipyard's right to a refund of the monies from Societe Generale in the event that the dispute on the validity of the transactions is ultimately resolved in Jurong Shipyard's favour,' SembMarine said. It is pumping S$300 million into Jurong Shipyard, part of which will be used to pay the French bank for the trades that had led to losses totalling US$303 million at the world's second largest oil rig builder. SembMarine is 61.5 per cent owned by SembCorp Industries, a Temasek-linked company. Laurent Tison, Societe Generale corporate and investment bank spokesman did not returns calls asking for a comment. Judy Han, SembMarine spokeswoman, said that she had no further comments beyond what was in the press release. The amount paid to Societe Generale is part of the US$303 million loss that Jurong Shipyard announced on Nov 1 had resulted from unauthorised transactions in the US dollar and euro, which it maintains are not valid and binding. They were allegedly carried out by group finance director Wee Sing Guan. Investigations by lawyers Drew & Napier and accountants from PriceWaterhouseCoopers are ongoing. Jurong Shipyard had previously disclosed that 11 banks are involved in the allegedly unauthorised forex transactions and that US$83 million had already been paid to one bank before the transactions were discovered. SembMarine added yesterday that it is continuing discussions with the other banks involved in the forex transactions. The recapitalisation of Jurong Shipyard will be through a subscription of 300 million redeemable preference shares at S$1 a piece. SembMarine said that the exercise is not expected to have any material impact on its net tangible assets or earnings per share for the financial year ending December 31, 2007. Some market observers were surprised by the circumstances surrounding the payment to Societe Generale and put it down to SembMarine's Temasek parentage. One banker told BT that he had never heard of a bank accepting payment while agreeing to a refund in the future. 'It was a good deal for SG, they get the money first,' said the banker. CIMB-GK research head Song Seng Wun said that Societe Generale could have been trying to be fair in case it was proved subsequently that the bank had not highlighted all the risks involved in the deals.
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singaporegal Supreme	19-Nov-2007 22:08        singaporegal About Contact  Quote this Post! Style: Technical   Mood: Yells: "Female TA nut"
x 0   x 0  Alert Admin	TA charts have changed little since my last post in 5 November. Still bearish looking.
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Pinnacle Master	19-Nov-2007 15:53        Pinnacle About Contact  Quote this Post!
x 0   x 0  Alert Admin	SEMBCORP MARINE SUBSCRIBES 300 MILLION REDEEMABLE PREFERENCE SHARES IN THE CAPITAL OF JURONG SHIPYARD Singapore, November 19, 2007 : SembCorp Marine wishes to announce that it has increased its interests in the capital of its wholly owned subsidiary, Jurong Shipyard Pte Ltd (?JSPL?) by S$300 million through the subscription of 300 million redeemable preference shares at an issue price of S$1.00 each. Consequent to the subscription, SembCorp Marine will hold 50 million ordinary shares and 300 million redeemable preference shares in the capital of JSPL. The aforesaid subscription is not expected to have any material impact on the net tangible assets or earnings per share of SembCorp Marine for the current financial year ending 31 December 2007. Part of the funds from the recapitalization will be used by JSPL to make a conditional payment on 19 November 2007 to Societe Generale in the sum of US$115,450,000 together with agreed interest, which payment was a pre-condition set by Societe Generale for the closing out of its transactions with JSPL. Societe Generale accepts that such payment is without prejudice to JSPL?s position that the transactions are unauthorized and is subject to JSPL?s right to a refund of the monies from Societe Generale in the event that the dispute on the validity of the transactions is ultimately resolved in JSPL?s favour. This amount is part of the loss of US$303,000,000 announced on 1 November 2007 from the unauthorised transactions which JSPL maintains are not valid and binding. JSPL?s financial position at all material times remains strong and positive. JSPL is also currently engaged in on-going discussions with the other banks involved in the forex transactions.
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mediacraze Member	07-Nov-2007 22:50        mediacraze About Contact  Quote this Post!
x 0   x 0  Alert Admin	Well, think many hit by this bad news. Was about to let go my balance holdings, but now got to hold abit longer, and will not cut on this counter as believe it will go back to strong point soon (est 3~5 mths time) Guess not many remember the previous big bobo Semb Mar had which involved paying over US$600 million regard the Conversion case. For those vested, we had to be patient and let the miracle happened again for this counter. What goes down, must come up.
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psycho Member	06-Nov-2007 19:12        psycho About Contact  Quote this Post!
x 0   x 0  Alert Admin	I personally do not think this is a mistake or an insider trading, i would rather call it "A Slap on the Face". In a public listed company or a huge company of such size, many a times, no one along the line dares question the doings of the department heads....VPs, EVPs, Snr Mgrs, HODs (who could also be directors) etc...reason being no one dares to offend them or not knowing what they are actually doing. Having worked in few listed companies before, i find these office politics in the senior management level very undesirable and often create problems for other departments and the HODs will usually paint or present a nice report during meetings so as to cover their backsides instead of being branded 'incompetent'. Fraud comes in when one tries to cover his/her short coming. I am sure many who sits on the board did not even know what's going on except seeing some financial figures. I can bet my last dollar that this is not the only company but they are more and worst ones in the closet yet to be uncovered.  What is transparency and corperate governance ? Who governs who ? Try asking your CFO tomorrow "How's the company doing this year ?"
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hawke009 Senior	06-Nov-2007 17:43        hawke009 About Contact  Quote this Post!
x 0   x 0  Alert Admin	Really disappointed with their mistake. If not, SM should perform as good as CoscoCorp.
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ygc91285 Member	06-Nov-2007 17:39        ygc91285 About Contact  Quote this Post!
x 0   x 0  Alert Admin	Yes.agreed. The stock is still pricey with alot of uncertainty.... Very likely that SM will have to absorb the FOREX losses which is almost its full year profit....what a disappointment.
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hawke009 Senior	06-Nov-2007 13:07        hawke009 About Contact  Quote this Post!
x 0   x 0  Alert Admin	Yes indeed, it is too risky to vest SM now. Caution!
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Bigman Member	05-Nov-2007 22:38        Bigman About Contact  Quote this Post!
x 0   x 0  Alert Admin	Well said! I agree with that too. Something fishy! Alot of information is still in dark. Beware!
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Farmer Master	05-Nov-2007 21:45        Farmer About Contact  Quote this Post! Style: Fundamental   Mood:
x 0   x 0  Alert Admin	Yes, this counter should have reasons to be bearish! Consider the huge amount of call wrts being issued so far under SM, there's every reason for the analyst to stay bullish and continue to recommend a buy/Op/Ow so that they can get out over time. Believe in their bull-shit and you'll be in deep shit! Current trading price I believe is still very much over value as it reflect all future earning right up to FY2010/11. After the huge fx lost, NAV will be way below $1, thus, for long term investor, pls kiv this counter for the time being until all loses being realised at its year end result. I will only consider it at $3 range.
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singaporegal Supreme	05-Nov-2007 20:51        singaporegal About Contact  Quote this Post! Style: Technical   Mood: Yells: "Female TA nut"
x 0   x 0  Alert Admin	TA charts show that the outlook for this counter is still bearish.
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Pinnacle Master	05-Nov-2007 13:15        Pinnacle About Contact  Quote this Post!
x 0   x 0  Alert Admin	ANALYSIS-S'pore rigbuilder FX losses put hedging in spotlight SINGAPORE, Nov 5 (Reuters) - Foreign exchange losses by rig builders SembCorp Marine and Labroy Marine have put the spotlight on hedging practices and raised questions as to whether Singapore companies are adequately protected against a falling U.S. dollar. SembMarine, the world's second-largest builder of offshore oil rigs, said last week $220 million had been lost due to alleged unauthorised trades by its former finance chief. It has denied liability for the losses. Labroy said its unrealised losses of S$209 million ($144 million) stemmed from contracts to sell euros and buy dollars after clinching a 284 million euro contract in March to build two vessels. Most firms in Singapore, whose trade is about four times gross domestic product, are vulnerable to the declining dollar, which has lost 5.5 percent against the Singapore currency this year and almost 15 percent in the past two years. The problem is particularly acute in the offshore marine industry due to the time lag of 3-4 years between the signing of contracts and receipt of dollar-denominated revenues. While there are firms with conventional hedging practices such as Keppel Corp -- which fixes an exchange rate for dollar receipts from newly won contracts without trying to time the market -- other companies give treasury staff more flexibility to deal with potential swings in exchange rates. "Very often, when these things happen, it's not due to hedging but to speculative positions taken with or without the implicit knowledge of senior management," said Ang Thiam Huat, honorary secretary of the Association of Corporate Treasurers (Singapore) (ACTS). SembMarine declined to disclose specific details of its transactions, citing possible litigation involving the 11 banks that were involved in the forex trades. BEARISH U.S. OUTLOOK Using forwards and swap agreements to convert dollars received in the future has become increasingly expensive due to the bearish outlook on the U.S. currency. "In our view, some of these losses are due to companies trying to avoid the higher premium costs of simple but sound and safe hedges," Deutsche Bank analysts Pyari Madhava Menon and Christyan Malek said in a note to clients. Based on Reuters data, companies that wish to convert dollars received one year from now by entering into forward contracts will get about S$1.42 for each dollar, compared with the spot rate of about S$1.45. Dollars received three years from now are worth S$1.37 , lower than the trough near S$1.38 reached during the Asian crisis in the late 1990s and compared with as high as S$1.85 in early 2002. "Few people do conventional hedges anymore," said a risk manager with a European bank. He cited pressure from management to lower the cost of hedging as well as aggressive selling of complex derivatives by bank salesmen. For example, although Labroy said its currency transactions were for hedging purposes, treasurers contacted by Reuters noted losses amounted to nearly 40 percent of the contract value. This could suggest the firm had gambled on forex movements instead of locking in an exchange rate to protect its margins, they said. Left unhedged, Labroy's losses from selling euros to buy dollars would have been a much smaller 8 percent, reflecting the greenback's fall against the euro since March. Labroy declined to comment on its forex trades. RISKY BUSINESS Treasurers said risky practices in Singapore include hedging currency exposure only if firms thought future movements would work against them; and selling options to offset the cost of hedging, resulting in the companies facing unlimited risk. For instance, a buyer of a put option to sell dollars for S$1.40 in three years' time pays an upfront fee for protection against the dollar falling below S$1.40 from a current S$1.45. Should the dollar stay above S$1.40, the buyer need not exercise the option, thus capping the potential loss. But should the same buyer decide to write (sell) a call option that will allow a third party to buy dollars at S$1.50 in a bid to cover the cost of the put option, the buyer may suffer a big loss if the dollar, contrary to market consensus, soars against the Singapore currency. Some of the embedded structured products offered by banks as a cheaper alternative to conventional hedges often did not match companies' hedging needs, or had 'get out' features for banks if currencies swung too far in one direction, executives said. ACTS' Ang, who is group treasurer of a resources-based multinational, said companies should regard hedging as part of the cost of doing business, much like insurance and storage. "The role of a hedger is to see that profits are protected, not to take positions," he said. "Financial products and derivatives have become more sophisticated and it's more difficult for market players to keep up, but the basic discipline of hedging has not changed." ($1=1.448 Singapore Dollar)
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1234567 Senior	02-Nov-2007 22:49        1234567 About Contact  Quote this Post!
x 0   x 0  Alert Admin	What's your TP for SM then?
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Pinnacle Master	02-Nov-2007 14:19        Pinnacle About Contact  Quote this Post!
x 0   x 0  Alert Admin	No. I had unloaded SM some time ago. Now awaiting for my tp to take new position.
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1234567 Senior	02-Nov-2007 14:04        1234567 About Contact  Quote this Post!
x 0   x 0  Alert Admin	Pinnacle, are you holding on any SM shares ?
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hawke009 Senior	02-Nov-2007 13:09        hawke009 About Contact  Quote this Post!
x 0   x 0  Alert Admin	U are welcome. yes, your posted information. Is indeed useful as I need not have to search high and lo for related news. Thanks.
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Pinnacle Master	02-Nov-2007 11:52        Pinnacle About Contact  Quote this Post!
x 0   x 0  Alert Admin	Tks for the complement. Actually I posted this information, so that I can easily refer back to them anything. And also in the same time, I think its good to share these with many forumers as they may find it useful.
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Pinnacle Master	02-Nov-2007 11:08        Pinnacle About Contact  Quote this Post!
x 0   x 0  Alert Admin	CITI - Buy: Impact Contained and Non-Recurring; Operations Robust Buy/Low Risk 1L Price (01 Nov 07) S$4.58 Target price S$5.60 Expected share price return 22.3% Expected dividend yield 3.0% Expected total return 25.3% Market Cap S$9,479M US$6,544M  Modifications ? We have made the following changes: (1) factored in S$230m gain from the sale of Cosco Corp, (2) incorporated our latest earnings upgrade for COS, (3) lowered our target FY08E PER multiple for SMM from 20x to 18x, shaving off S$631m (this is in excess of the potential S$440m impact), and (4) raised our FY08E to 09E recurring EPS by between 2% and 7%.  Unauthorized trading ? SMM indicated that the outstanding positions have fully closed and the potential final impact is S$440m. A special committee will look into implementing steps to prevent such an occurrence again. We believe this is an isolated incident and due to the severity of it, parent SCI and major shareholder Temasek will likely take further steps to strengthen controls.  Share price plunge ? In total, S$2.1bn has been wiped out of SMM's market cap for a potential S$440m impact. While credibility has been damaged, some can argue that the plunge may be overdone. This incident being nonrecurring, the next logical step is to look into its operations, which we believe remain robust based on its order book and strong operating environment.  Don't forget Cosco ? The implied value of SMM's 30% stake in Cosco Shipyard has increased significantly, and we estimate that stripping out its stakes in the shipyard and COS, SMM's core operations are trading at an attractive implied PER of 11.3x (FY08E) and 10.3x (FY09E). Not forgetting credibility impact, we feel the bulk of the negatives have been discounted. Accordingly, we are maintaining our Buy (1L) recommendation and target price of S$5.60.
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hawke009 Senior	02-Nov-2007 10:55        hawke009 About Contact  Quote this Post!
x 0   x 0  Alert Admin	It is so cool to have Master Pinnacle around. All informations can be easily available at a glance. :-)
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Pinnacle Master	02-Nov-2007 10:43        Pinnacle About Contact  Quote this Post!
x 0   x 0  Alert Admin	DBS Vickers - Crystallised forex loss unlikely to be recognized in 4Q HOLD; S$4.58; Price Target : 12-month S$ 5.15 (Prev S$ 5.50) Story: Together with its 3Q results presentation, SembCorp Marine announced that all outstanding unauthorised forex tansactions have been closed. Headline numbers for 3Q07 net profit were within expectations. Point: The loss from the Unauthorised Transactions is US$220m, higher than US$165m that was announced on 22 Oct. Taking into account US$83m which SMM paid to the banks before these transactions were discovered, the loss will amount to US$303m (S$442m or 21.6Scts per SMM share). Looking at the results, we are disappointed with EBIT margins which have been trending down sequentially from 7.8% in 1Q07 to 7% in 2Q07 and 6.3% in 3Q07. Relevance: SMM is unlikely to recognise the loss in 4Q as its position is that these Unauthorised Tansactions are not valid and binding and it is taking legal steps to recover these amounts. We think that this will continue to cause uncertainty going forward in terms of quantum and timing of losses recognised. We have adjusted our forecast downwards to take into account lower than expected margins offset by higher earnings from Cosco Shipyard Group, which is making up a higher proportion of SMMs earnings from 11% in 1Q07 to 39% in FY09. Maintain Hold with a reduced TP of S$5.15.
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