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Straits Asia

ahaha! no wonder....i thought generation gap. :P

yea. need a new handphone soon. not for 5 mths tho, waiting for my plan to run out. altho my current one is in quite bad shape from wear and tear. haha.

oh dun worry, i go for value: like why i use SJ since it's freeeee!!! (thank yoouuu keejang and fellow SJ creators!)   i basically don't believe in paying more for a thing than what its worth to me. of course, if i think it's worth to me, then i'll pay direct for it. aiyah, no need vertu and all that lah. i don't believe i'll pay past $100 for a hp. normally i do free exchange.

but of courseeee, if kind mister eastonbay will sponsor me only $100, i can get a better phone!

but hahaa. too early to say la. Deals must be proper and fair to all. lets see if your StraitsA pans out the way i said first. if not, no need anything in return.

we'll check back in 3 mths, deal?

muah ha.

oh, and i got my laptop already, a pretty little sony vaio.  so you can breathe a sigh of relief there. haha.

 

so, there was a bit of gei-kiang on my part abt HP, hp. Also admit to trying to be a AB (act blur, not BB) thinking that it was a HP.

 

ahhhh, handphone! I'm such a one-track-mind person. I actually thought it is hewlet packard HP laptop or PC. cheh... Perhaps becos I type on a HP laptop everyday, got brainwashed by HP already (power of branding). Besides you mentioned a few times need to let your sis use the computer at home. That's why. Handphone, quite ok lah. Can afford, but not Nokia 8800 ?(the one that's gold plated, latest), not Prada and not N93. Certainly not Vertu! No regrets asking you. My honour to give treat. Here comes more tech question!!!! and I imagine you doing this  (headache!)

 

eastonbay, cycles, no problem. that means i can get more goodies out of you. muahhahahaa!

hp = handphone lah.... a bit out of the loop eh, someone? :P no need so many lots. the gains from half a lot will do.

beginning to regret asking me to do techs for you, eh?

muah haha. :P

 

Elf, thank you thank you thankyou  . No problem, no problem, no problem about drinks and more drinks . (still owe you one sake from last time on Stamford land)

But I didn't get the hint about new hp (what's that huh?), lol. One thing though that I did get SA resources on the day of low 96.5c but not so lucky to get that low (cos when I decide to buyin, I don't bargain. I buy at market price). Also, I didn't buy much. So even if I sold  off my holdings at 1.8 (can only dream).. tsk buy you one hp (again, wat's that), I would have not much left. Then I will need more advice on other counters that you don't own, then it goes in a cycle again. LOL  Can show some mercy, pleeeeaase ?

 

k. Pls note i do not know the FA story, so i'm just deducing from the techs, as per eastonbay's request. As follows:

manipulated stock. The story is too neat to be otherwise.

note c/d and a/d not especially sensitive to this stock: further indication of rapid buying/selling. esp significant since if you track its vol, it shows a wide range from 42 mil (14th dec vol) to only 435k (30th apr). ie, likely BB control of counter.

Charts show clear evidence of sudden buying 19th-20th april when stock hit its bottom at 0.965 on the 19th:  vol rose suddenly from ~4.98mil to 6.1mil from the 18th to the 19th. Supported by williams sudden increase from -100 to -68 over just these two days. Accumulation consequently and consistently to 3rd may at close of 1.17.

This sudden breakout was partially predicted by the bollingers: narrowed from 23rd apr to 30th apr. Now i did not track this stock so i don't know the bu/sd data over the days, but from vol alone, very, very likely there was deliberate depression of the price from 25th apr to 30th apr to force out small fries (close of 1.05 cf 1.01; notably, vol dropped to its lowest ever of 435k on 30th apr--the day before the sudden spike.).

4th may spiked up 5c to close 1.22, but selling occuring: williams dropped from -4 to -26 (3rd-4th may). candlesticks show resistance of this uptrend to continue. bu/sd data supports this conclusion: weed out lots of 100 and above to see BB action: data reads 1741 lots buy up, 1278 sell down. ie, distribution of abt 500 lots by the BBs. retailers mostly buy up, however.  

Moreover, total vol on 5th may appears to be very high relative to other days (another sign of manipulation). From the other forumers posts below, the timing of the dividend payout and release of news, AND multiple brokerage coverage appears to be too neat and coincidental. Elf works by probability statistics: how likely is all this to be just a coincidence? the spin appear to be too neatly timed.

going by BB's mentality tho, i do not believe play on this counter is over. your lag MACD is showing it's at the beginning of another strong uptrend. hehe. (note following just rough nos as guidelines; counter does not respond totally to fibo): First wave was from 0.63 to high of 0.935. which gives this current upside tech target to ~1.24. Dovetails nicely with yest's closing.

looking forward, i'd expect a consolidation at abt 1.03-1.10, after which your upside possible is to 1.82. not likely for abt 3 mths at least tho. BBs need to sell off, do some depression, play waiting game, force out the current retailers, accumulate, then release news, coverage etc.

your comparative in terms of psych/techs is See hup seng. Orchestrated by merril lynch and a few others. pure BB control, from price, to news, to broker reports. For comparative techs now with straitsA as where it is today, SHS period of abt oct 18 to feb 28th. (ie, feb 28 to may 4 for SHS is where StraitsA can possibly go to looking forward.). Yea, 1.82 might not seem possible, sometimes i don't believe my own techs haha, but put it this way, if on oct 18 at 15c, i told you SHS can hit 80c in 6 mths, would you believe me?

eastonbay, could ride it out for fun. hehe. and ehhhh....make me do so much work, on a counter i'm not even holding. niama. ya know how much you have to pay for the above if you were to ask a real analyst to do it. you're so buying me a drink or something someday man....or hmm...wait.... elf needs a new hp....hmmmmm..... haha.

note: above all just my opinion. pls make own minds up. and note as well that techs hold true as long as the trend remains true. caveat emptor.

good luck!

your resident elf



 

 

Straits Asia Resources rose a record after the coal miner said it has secured a concession to mine for coking coal at a Central Kalimantan site in Indonesia.

"There are no details about the size of the deposit paid for the concession, but this is generally seen as positive," said a CIMB analyst.

"Coal prices remain high and people expect that if the firm can produce more coal, then it would boost its earnings," he said.

 

classic case of insider-information use by the BB. it's quite obvious that UBS knew about the grant of second coal-mine license to Straits Asia thats why the report before the annoucement .
the UBS analyst must be taking his wife out to special french restaurant for dinner.
i wonder what's the new yo-yo range for the BB's with this counter.
last range was 0.96 to 1.09 .
so contra-players enter in only if u have nerves of steel.

 

 

YongJiu, thanks for the report!  Agree with you abt fring action going on with the BBs.

 

Trymyluck, I was curious because there was a large increase in price yesterday, only to found out from ST this morning that USB initiated coverage on it. I got in at sub $1 level b4 the report. Thanks for the push by USB . Actually, i hate it sometimes when these houses cover the stock I'm holding because it causes wide swing in vol. and px (sometimes). Of course, sometimes it turns up well. I wanted the report to see at which angle are they coming from and possibly a chance to divest now that it has moved.

 

Hi EastonBay,

ya no need to get too excited with those news, basically StraitsAsia has sound fundamental.... personally I felt there should be some frying action is on going with the BB's
tread with care!

 

 

Summary and investment case

We initiate coverage of Straits Asia Resources (?Straits Asia?) with a Buy 2
rating. Our price target of S$1.33/share represents 32% upside potential.
Straits Asia has consistently produced high quality thermal coal with worldcompetitive
low production cost from its single mine, Sebuku, in Indonesia. Its
103mt of coal resources could translate to 17 years of operation. Benefiting from
the increasing output, high coal price and cost reduction efforts, we forecast
Straits Asia?s earnings to grow 27% and 40% in 2007 and 2008, respectively.


■ Low cost coal producer with high coal quality. Straits Asia has a low cost
structure due to its open cut mine (low strip ratio) and good quality coal. Its
Sebuku coal contains low ash, low sulphur, relatively low moisture and high
energy content (6,350kcl/kg). The short distance (16km) from its mine to the
barging port allows it to have low transport cost. The company plans to
maintain cost competitiveness by adding a coal-fired power station to replace
its total dependence on diesel power for electricity, as well as an electric
conveyor belt, and barging capacity, which are expected to be completed in
2008. Straits Asia?s cost of coal production was US$21.4/tonne in 2006 and
it is one of the lowest coal producers among the global peers.


■ Solid customer relationship. In additional to consistently providing good
quality coal, we believe Straits Asia has maintained stable customer
relationship because: 1) Sebuku has location advantage over Australia coal
mines, 2) Sebuku?s own barging facility and port allows the company to
deliver the coal on a timely basis and easily to react to delivery schedule
change. Japan has been the largest customer for Straits Asia (35% of 2006
coal sales) and the company intends to maintain this. Straits Asia further
diversified its customer base by adding China and Italy in 2006.


■ Experienced controlling shareholder. Straits Resources (SRL.AX), Straits
Asia?s 60.4% shareholder, has a good track record in identifying
underperformed mining assets and applying its management and technical
expertise. Within its 15-year history, Straits Resources has turned-around
Sebuku coal mine and developed the Mt. Muro gold and Whim Creek copper
operations. We think Straits Resources is aiming to be a diversified resource
company and is aggressively expanding resources in Australia and Indonesia.
We believe the abundant management experience at Straits Resources could
be shared with and therefore benefit Straits Asia.


■ Strong earnings growth. We think Straits Asia?s small operation scale
creates strong earnings growth leverage compared to other large coal
producers. The company produced 3.5mt coal in 2006 and expects the output
to increase to 4mt in 2007 (14% YoY). The target of 6mt output in 2009
represents 20% CAGR of 2006-09. We forecast net profit to increase from
US$48m in 2006 to US$61m in 2007 (27% YoY) and US$85m in 2008
(40% YoY), on higher coal output and increasing coal price.

■ High dividend payout is sustainable. Straits Asia pays 60% of earnings as
dividend, which could translate to 5.9% yield in 2007 and 8.3% in 2008
based on our estimates. We believe that the company?s operating cash flow
of US$45-86m in 2006-08E is sufficient to support capex for growth and any
M&A opportunity. Straits Asia has been in net cash position and maintained
at low debt ratio (8% in 2006), allowing the company to remain healthy
balance sheet with increasing debt, if necessary. We believe the high
dividend payout ratio is sustainable.

■ DCF valuation represents 32% price upside. We use DCF method to
calculate Straits Asia?s fair value at S$1.33. This translates to 13.2x 2007E
PE, which we think is undemanding, as small coal producers tend to have
higher production/earnings growth than large producers. We use EV/reserve
to cross check and found that based on our price target, Straits Asia?s
EV/reserve at US$8.5/tonne is the highest among the Asian coal producers.
However, we stress that Straits Asia has the most upside potential for
increasing reserve/resource without external M&A. The company has strong
track record in growing reserve and resource (as shown in table below

 

Low-cost producer with strong growth potential [EXTRACT]

- Low reserve, but strong track record and low cost operation We initiate coverage of Straits Asia Resources (Straits Asia) with a Buy 2 rating and price target of S$1.33. We are positive on the company?s growth potential, inexpensive valuation, and sustainable growth drivers. As one of the lowest cost producers, Straits Asia should enjoy strong upside from the coal price given its high quality coal reserve.

- Proven ability to grow reserve The main risk on the company lies in its low reserve base of only seven years. Despite this, the company?s resource base still stands at 17 years, while the company?s ability to convert resource to reserve has been strongly proven over the past five years.

- Attractive earnings growth outlook We forecast the company?s earnings to grow by 27% in 2007 and by 40% in 2008, driven by strong growth in volume (14% and 25% in 2007-08), and upside in coal prices. Our expectation of superior earnings growth should reflect the company?s focused expansion and cost initiative plans.

- Valuation: DCF-based PT of $1.33 We use a DCF method to calculate Straits Asia?s price target of S$1.33, or 32% upside potential from the current level. At current prices, the stock is trading at an undemanding 10.1x 2007E PE, or 9% and 21% discount to the Indonesian and global peers, which think is unwarranted.

 

no need to be curious why UBS or any other brokerage would give a Buy rating on this stock.
if Midas and Noble can trade at 1.5 above , no reason why Straits Asia shouldnt reach there also.
remember Straits Asia isnt only a coal commodity. it does do trading of gold , copper etc
which are mined by its counter part company in Australia exchange.


a word of caution on this stock, the BB's can take u for a wild swing on this one.
not for the faint-hearted or the contra-players.
current support price would be 1.04

 

 

could anyone who has analyst reports issued by UBS yesterday on StraitsAsia resources post a copy here? Or forward a copy to easton_bay@yahoo.com. I will then post it here for everyone to share. I'm curious why UBS initiated their coverage on this counter.

 

It is benefitting from coal prices and higher reserves. CGK has a tp of $1.37.

CGK recently increased their benchmark FY07-09 coal price assumptions to US$47.50/tonne (from US$45.00/tonne).

At the time of its Nov 06 IPO, Straits Asia had 28.3m tonnes of coal reserves and 45.0m tonnes of resources in its Sebuku island concession area of 5,871 ha (giving a total of 73.3m tonnes). In Dec 06, it was awarded another concession area of 6,500ha adjacent to its existing area. Under Joint Ore Reserve Committee reporting standards, Straits Asia immediately claimed an additional 31.5m tonnes of resources.

The company is now exploring the new concession area, which extends to nearby Pulau Laut. If contiguous deposits extend to Pulau Laut, resource levels could increase by a further 100m tonnes. CGK believe resource levels will be proved up, with Kaltim Prima Coal already proving coal deposits on the northern part of Pulua Laut. However, with uncertainty still surrounding the extent of the reserves and timing of any reserve upgrade, they have maintained a Trading Buy recommendation. Official certification of reserve levels may not come until 4Q07.

 

Rose on vibrant talks of China seeking for coal assets worldwide.

 

Straits Asia Resources - A successful breakout

Straits Asia Resources recent high was $0.935. Today it traded at $0.985 with 16300 lots.

This volume is as high as yesterday volume. What are the likely levels that the stock might face a resistance and potential support points where it will be a good entry?

  Read this real time published article on straits asia here

 

Friday had a high at 0.86 and a low at 0.77 before it closes at 0.845....any predictions guys?

 

It would spend US$20-US$30 million this year to boost production at its Indonesian mines by 14 percent to 4 million tonnes, from 3.5 million tonnes in 2006.



Part of the planned capital expenditure is earmarked for the construction of a new coal-processing plant at Straits Asia's Sebuku coal mine, Martin Purvis, director for marketing and business development, told reporters in Singapore.



A coal-fired power plant will also be installed at the Mount Muro gold and silver mines owned by its parent, Straits Resources, he said.



The capital expenditure requires shareholder approval.



Purvis said coal production at the Sebuku mine topped 1 million tonnes for the first time in the last quarter.



"The high production in the last quarter shows that we are already on our way to achieve our target of 4 million tonnes in 2007," he said. 

Purvis said the company plans to boost production to 6 million tonnes in the next few years, and in order to achieve this target, it is looking for coal mines across Southeast Asia.



Shares in Straits Asia are up some 40% from the IPO of $0.60.

 

My suspicion once again is contra players. They immediately buy in large quantity of lots at seller price. Then wait for other ppl to come in. Since they buy in alot a slight increase in 1-2 cents they let go all out to earn the difference.

I believe in this forum there is one forumer who buy day 1 sell day 2 but get badly burned by BioTreat. So those day traders I wonder at the end of the month overall they win or lose?

josephinelim make monies at CitySpring but stuck with losses at OuHua so overall still losing leh. I am keen to know more stories on these day traders experience :)