OSIM International (O23.SG)

Ticker = O23

Operation = Asia, America, Africa, Europe, Middle East

52Wk High = 1.080

52Wk Low = 0.370

ROA = 10.10% (2009)

ROE = 24.10% (2009)

EPS = 0.0589 (based on 2Q2010)

P/E = 16.64

Intrinsic Value

P/E Model = 0.884 SGD (Based on Fair P/E of 15)

DCF Model = 0.746 SGD

EPS Model = 0.478 SGD

OSIM business consist of retailing lifestyle and healthcare products. It outsourced its products, which could explains its lower profit margin of 4.89% (2009). OSIM focuses on the marketing aspect of its products, building up on its brand reputation and recognition. With currently 1024 outlets and increasing, the group plan to penetrate market such as China and aim to have its product easily available.

The company performance in terms of has been improving since 2008, producing relatively good operating cash flow with manageable debt level. However, as OSIM products could be considered as a luxury instead of need, its sale is dependent on the economy. Furthermore, with increasing similar featured products in the market, the price of its product has to be competitive. Brand name could be said to be its selling point. I would say that the room for growth for this type of products would reach its saturation point in near future.

With price of 0.980 SGD, I would say that it is currently overpriced with limited room for growth. Its dividend payout is relatively low, with interim dividend of 0.01 for 2Q2010.

C & O Pharmacy (E92.SG)

Symbol = E92

Operation = China

52Wk High = 0.475

52Wk Low = 0.175

ROA = 14.25% (2009)

ROE = 18.57% (2009)

EPS = 0.0348 (based on 3Q2010)

P/E = 13.51

Intrinsic Value

P/E Model = 0.522 SGD (Based on Fair P/E of 15)

DCF Model = N.A (Inconsistent Operating Cash Flow )

EPS Model = 0.463 SGD

Another interesting company that market capitalization almost tripled in a year. Recent 2010 remarkable performance has resulted in the company giving dividend for 2Q and 3Q of $0.0688SGD. The good performance is expected to apply to 4Q2010 too.

My prediction would be there would most likely be little to no dividend payout for 4Q. Reason being the dividend payout so far has been high enough to satisfy the shareholders and the payout exceed the net profit of the company. Hence, the shareholder's equity is actually decreasing due to the recent 2 interim dividend. Hence, I believe a sensible management would not give out so much dividend as the money could be re-invested to fuel for more growth. Further giving out of dividend would just drive the stock price higher, while making the book value lower, making the stock less desirable to potential buyer.

However, the company potential for growth is quite remarkable as shown by the growing sale in the company high margin product ( drugs under C&O own branding, exclusively distributed drugs, and amoxycillin ). With the growing emphasize put on healthcare in China, and company overseas cooperating in R&D, I believe that it is a stock worth buying.

Technical Analysis Baker Tech (568.SG)

Ichimoku Kinko Hyo

Price broke the upper limit of kumo cloud. Chikou span is around the price level of stock. Tenkan sen (pink) crosses over Kijun sen (cyan). All these are indication of possible bullish trend. Though, it is not a strong one as the next resistance level of 0.475 is not yet broken.

MACD

Start of weak upward momentum with MACD crosses above the signal line. Slightly bullish.

Bollinger Band

Contraction in the band followed by volume spike which drives price outside the upper band. Yet another weak bullish signal.

It is best to wait for the outcome of the court case with regard to the sale of PPL Shipyard. With the curret financial performance, it is doubtful that the upward trend would be a strong one.

Baker Technology Limited (568.SG)

Symbol = 568

Operation = Singapore, Middle East, Thailand, China, India

52Wk High = 0.574

52Wk Low = 0.270

ROA = 35% (2009)

ROE = 39% (2009)

EPS = 0.0381 (based on 1H2010)

P/E = 11.81

Intrinsic Value

P/E Model = 0.572 SGD (Based on Fair P/E of 15)

DCF Model = N.A (Inconsistent Operating Cash Flow )

EPS Model = 0.535 SGD

It seems that the company is experiencing slow growth with revenue from its Sea Deep Shipyard falling sharply due to the effect of 2009 crisis.

Outcome of the court case with regard to the sale of 15% stake in PPL Shipyard would be a crucial factor as if the sale to Yangzhijiang holdings limited is passed, Baker Tech would made made a revenue of 155 million USD as compared to SMC which only offers 60 million SGD.

It seems that Baker Tech need to take higher gearing ratio and make use of its good financial heatlh with almost no debt and high amount of cash to expand through acquisition of companies in the sector. Otherwise, it seems to me that Sea Deep, the main source of revenue for Baker Tech has lost its competitive advantage as the fall of revenue could not be explained due to 2009 crisis alone.

Technical Analysis Armstrong (A14.SG)

MACD

End of downward momentum marked by MACD crosses over the signal line. Bullish.

Ichimoku Kinko Hyo

Price broke the upper limit of kumo cloud. Chikou span is far above, and seems like it would remain so for quite a period. Tenkan sen (pink) crosses over Kijun sen (cyan). All these are indication of possible bullish trend. This trend is supported by volume spike on the previous 3 trading days.

Increase in price is expected to be caused by extraordinary well performance of company 1H2010 (125.9% increase in Net Profit!). Furthermore, interim dividend of $0.02SGD (4.4% yield) was declared, for shareholder registered on 14th September. It is expected that price would increase till then.

Yongnam Holdings Limited Y02.SG

Symbol = Y02

Operation = Singapore, Middle East, Thailand, China, India

52Wk High = 0.320

52Wk Low = 0.220

ROA = 7.78%

ROE = 21.37%

EPS = 0.0426 (based on 1H2010)

P/E = 5.39 (7.29 Historical high)

Intrinsic Value

P/E Model = 0.311 SGD (Based on Fair P/E of 7.29)

DCF Model = N.A (Inconsistent Operating Cash Flow and extreme CAPEX from 2007)

EPS Model = 0.453 SGD

Comment

Taking the more conservative P/E of 0.311, Yongnam is a good buy. Keeping in mind that it is one of the pioneer in modular strutting steel construction, which seems to be the one of the main reason for numerous contracts win in Singapore after the nicole highway accident. Furthermore, it also provides professional civil engineering services which includes sophisticated engineering designs.

Further supported by satisfactory 1Q2010 result, I believed that prospect of Yongnam would be good. Even if its penetration into foreign market fails, it still has long term contract such the MRT line construction.

I believe that this stock would raise to its fair price in 6months-1 year time.

Technical Analysis I5H.SG

ADX

-DI crosses above +DI, seller gaining dominance

However, due to low volume involved, it might not be a strong downward signal

MACD

-MACD cross below signal line (Bearish)

Further supported by the building up of a rather strong bearish signal. Again, volume seems to be rather low

COMMENT

Expect the trend to be sideway/ranging for few days. However, even if falls, expect the 0.250 SGD support to be a rather strong one, due to rather good recent 1H2010 quarter result as compared to competitor.

Entrance should be 0.250 SGD

Great Group Holdings Limited I5H.SG

Symbol = I5H.SG

Operation = China

52Wk High = 0.460 (During IPO)

52Wk Low = 0.235

ROA = 21.12%

ROE = 23.96%

EPS = 0.354 RMB = 0.071 SGD

P/E = 0.3516

Intrinsic Value

P/E Model = 0.426 SGD (Based on Fair P/E of 6)

DCF Model = Not aplicable due to fluctuating free cash flow and CAPEX

EPS Model = 0.842 SGD

Comment

A conservative intrinsic would be 0.426 SGD which falls within 52wk range. Fair P/E of 6 is reasonable within the industry (CHINA SPORTS and CHINA HONGXING), both of which delivers rather disappointing result in recent quarter.

With the doubling of Great Group Holdings production line and increasing home-brand recognition, market capitalization would increase measurably.

Overall it is a good stock for long term investment (1 year - 2 year)