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Take note of SGX... and see my last post on the tight bollinger bands. I believe the large price change has started to occur.
The price has cut below the lower bollinger band and the Acc/Dist and Chaikin are downtrending. All these are bearish signs.
sporegal, i personally think the risk/reward for SGX does not justify for me to plunge into it. first, it looked like double top formation soon, 2nd the upside to me is only $16 (60c gain from here) but the downside shld be ard $14.10 ($1.30 loss), then $13.60, then $12.90.
If I were to "tikam-tikam", I will put some money on SGX to go up next week...
but this is only purely tikam-tikam...
Merrill Lynch -
Reinstate coverage with a Sell; Fair value S$12/sh Singapore exchange-operator, SGX, has cleverly positioned itself at one of the cross-roads for Asian stock listings, paid out its excess capital and benefited from surging turnover. The stock, in turn, has reacted jubilantly, up 13-fold since its IPO in 2000. However, with the stock trading at a PER of 37x in 2008E and 31x in 2009E, we believe that valuations now fully reflect SGX?s rosy growth outlook. We reinstate coverage with a Sell and advise investors to wait for better entry levels. Our DDM-based fair-value is S$12/share, which assumes a 5-year EPS CAGR of 22%, a 90% payout ratio and terminal growth rate of 4%.
Stretch-assumptions still finds stock expensive
We recognize that having a negative call on a stock with such strong momentum (+160% YTD) is risky, especially with market turnover showing few signs of meanreverting. But, after stretching our earnings estimates, for example assuming stock-market turnover velocity rises to 80% by 2010 from 60% in 2006, we still find the stock expensive. Our numbers assume from now until 2010 that average turnover doubles to S$3.2bn per day, derivatives revenue rises at an average 16% pa and that SGX?s cost-income ratio falls to 30% (from 37% last year). Yet, despite this, our profit estimates are 19% below consensus for 2008 and 2009.
Corporate action could be wildcard
One common rationalization for SGX?s high valuation is that it warrants a takeover premium. Feverish M&A activity in global exchanges, as well as the Tokyo Stock Exchange taking a 4.99% stake in SGX in June this year, certainly adds fuel to the fire. But, we think it equally likely that exchanges in Asia that are granted effective monopoly status by their regulators may resist being controlled by a rival country?s exchange.
According to my understanding...SGX is the target of many shortists...
Moreover...if u had read the article on BT comparing UOB KH to SGX...
those holding SGX might be better off swapping to UOB KH....
...from 'value' point of view that is....
Just my 2 cents...
citigroup has been calling investor to get out of singapore market as a whole since few months back....May or so. Sie what happened since.?.. It maybe a powerhouse but looks like it is losing it. It has made many judgemental errors lately esp in many fronts abt singapore market. No wonder they need to issue profit warning.. Bad judgement in short... and then blamed it on "dislocations"
quote 1: IHT "
Citigroup issued a profit warning today, estimating a 60 percent drop in third-quarter earnings because of write-downs for securities backed by subprime mortgages and loans tied to corporate takeovers."
quote 2: financial guardian
Citigroup shocked investors today with a profits warning after losing billions of dollars in the recent global financial turmoil. Its grim warning came just hours after UBS announced its own substantial losses in the US sub-prime mortgage crisis.
The bank, which is one of the world's most prestigious financial institutions, revealed that net profits in the third quarter of 2007 have nose-dived by 60%.
It blamed "dislocations" in the mortgage-backed securities and credit markets, and also said that its losses from consumer credit have increased.
TA charts show that SGX may be topping out. Be cautious.
The price of sgx is high, but it's not good to base on only one analyse's remark. I remember that when Cosco was swinging between $2.70 -$2.90 for a few rounds, citigroup gave a negative report saying that the margin of the ships sold was narrower than other shipbuilders as it has to sell their ships to their HQ in China at a discount. I sold the shares and immediately after that it's price kept climbing up.
Hi Shplayer, if you read this posting, thanks for your previous explanation, know that it's a little overdue, Hope you don't mind.
I think citigroup TP of $11.5 is a fair value for SGX... This is a warning to those who made a late entry... this stock may fall anytime.... a highly overated stock.... read the early signs and come out....
Citigroup
Sell: Post 1QFY08 Food for Thought
TP: $11.22
Lunch with the SGX CFO ? At Citi Investment Research's "Food for Thought" lunch on Oct 12, Mr Seck Wai Kwong, CFO of SGX, reviewed the record 1QFY08 (Sept 2007) results. Discussions focused on managing cost, market growth and M&A. We have a Sell on SGX on valuation grounds, target S$11.22.
M&A ? SGX remains open to M&A, but within an Asian context believes that challenges remain. SGX has signed MOUs with a number of exchanges, and it is hoped that its 5% stake in Bombay could aid its India listings. We continue to view that the 23.5% stake in SGX held under the MAS would only be divested if it would help elevate Singapore as a premier Asian financial center.
A sincere thanks to all who had contributed to this thread and replying to my question, i am learning alot from you guys through your healthy debates, exchanges and invaluable comments.
I have yet to put my first dollar into this volatile and unpredictable market and hence am just reading through all postings right now to get a clearer picture and hope to have more useful guidances and advices from all fellow forummers in near future.
Happy trading and making.
For example...considering now that the average TPs for SGx is around 16-17...many of which were released recently...12 mth target means SGX shld reach 16-17 in 12 mths time...
That makes the Sgx counter rather unattractive from current price....
or u can interprete that current price it overvalued 'currently'....!?? Ha...
Anyways...looking at all these and adding a little TA to Sgx....
I feel its gonna have problems staying above $16+ for long...a slanting head and shoulder reversal appear to be forming and if things turn bad, say STI or Dow, it could really go down...to say $12-14
This seems a more realistic price if u consider those analysts TPs as 12 mth target...
But wait...Cimb is a credible analyst isnt it? And it says $14+..for 12 mths?!? haaa....") cheers