M1, how low can it get?

Singapore telco M1 share price is plunging downwards. At $2.28, it is at 5 years low with dividend yield of 6.5%. Shareholders who buy M1 before 12 Apr 16 will be entitled to the payout of $0.083 per share.

5 Largest shareholding of M1

• Axiata 28.31%
• Keppel Corp 19.09%
• SPH 13.28%
• Colonial First State Asset Management (Australia) Limited 2.95%
• Macquarie Investment Management Limited 0.75%

Although there are talks of a 4th telco coming in, M1 had been in the telco business for a long time, and these telco assets were built up and maintained over the years.

M1 latest FY2015 showed a 1.5% growth, and despite that share price had been dropping continuously. 

M1 CEO Karen Kooi mentioned that with Netflix entering the Singapore market would provide a level playing field in the tv business. 

Although Singtel signed a strategic partnership with Netflix, it is still likely that M1 could be in talks with them to do some tie-up as well.

Source: http://www.channelnewsasia.com/news/singapore/singtel-netflix-sign/2425958.html

M1 does not own tv assets at the moment as compared to starhub and Singtel and if they are able to do tie up with Netflix, costs incurred would likely be lower than singtel and starhub.

Jardine Cycle and Carriage: Why did it dilute share value

Jardine raised a $772 million through a rights issue to fund its previous acquisition of Siam City Cement. Why dilute so much share value because of a cement company?

The group structure as a whole, a lot of subsidiaries residing within the Jardine Group have property development businesses and thus, it makes good sense to acquire stakes in Thai's second largest cement maker.

Jardine Cycle and Carriage also owns 50% of Astra International in Indonesia. Its diversity in core business services are a key to managing costs better than other firms.

The dilution of share value will enable the Jardine group to better manage costs in the construction sector throughout its property development subsidiaries.

This rights issue could be due to an anticipation of a possible Fed's interest rate hike later this year, However, it also allows Jardine Cycle and Carriage to reduce costs on funding.

Source: http://www.dealstreetasia.com/stories/jardine-cycle-carriage-to-raise-772m-via-rights-issue-8063/

Noble group, attractive vs not attractive

Noble group has been one of the very 'glamorous' favoured by retail investors. Its share price dropped to 6 year low on 3 Jun 15. Despite its accounting discrepancies, investors are still positive of a rebound.

Below is the summary of findings by Iceberg-Research

Summary of Findings:

Noble exploits the accounting treatment of its associates to avoid large impairments and fabricate profit.-

Yancoal is the most representative example, with a gap of $600m between the carrying and market values. However, the accounting technique has been used for other companies.-

Contrary to what Noble’s management claims, the misfortunes of these associates have a
substantial cash impact on Noble.-

The proclaimed recovery of the Agri business in 2014 was manufactured through the use ofquestionable methods such as subsidies from the group or depreciation cuts.-

We believe the final price for the new associate Agri will be much lower than the provisional $1.5b payment; and/or that Noble will have substantial remaining financial commitments to its new associate. Noble may once again use the accounting for associates to hide the impairment.-

Selling the palm oil business will be very difficult for Noble since the licence of one of its subsidiaries has been revoked by the local government.

Source: Iceberg-Research

The person behind Iceberg isn't someone normal but rather an account or an auditor. He or her understanding of financial statements have shown accounting background.  Carey Wong, an analyst in OCBC investment research in Singapore believes that the person who wrote Iceberg has an accounts background with good understanding of financial statements. Without the report, it is not easy for retail investors to learn about such information. The person could probably be a former employee in Noble in order to understand such detailed accounts engineering.

Even with share price uncertainty, it is not easy to know the actual valuation and how low it could get unless we get some perspective from somewhere. I happened to chance upon Iceberg's third report which gave a hint of how low Noble's price can go."After impairments and using a price-to-book valuation method, we find a valuation of S$0.1 per share." 

Attractive or not attractive?

Undervalued stock, Nam Cheong

Nam cheong seems to be one of the very undervalued stocks that is affected by the slump in oil price. Recently, it had sold 2 of its vessels for US $58m and its book orders stood healthily at $635 million ringgit.

Source: http://www.businesstimes.com.sg/companies-markets/nam-cheong-clinches-us58m-orders-for-two-vessels

It has a PE ratio of 5, with a 5% dividend growth rate and its price stood at 1 year low.

Source: http://www.bloomberg.com/quote/NCL:SP


Assessment

Since it sold 2 vessels in USD and its financial statements deal in ringgit, it is very likely that this deal will cause a spike in earnings.