• Pacific Andes (PAH) announced that they have bought back US$4m worth of outstanding bonds. While the purchase price was not disclosed, Bloomberg’s latest price at 55cts, translates to a one-off profit of around S$2.7m or HK$14m.
• While the amount is quite insignificant compared to our FY09 profit forecast of HK$503.6m, we believe that the move is a positive one. At 55cts, the bonds are trading at a yield of 31%, making the bond buyback and cancellation a very profitable trade for the company, and an efficient use of cash. Also the bond buyback may allay market concerns regarding the company’s high gearing.
• Maintain Outperform with a target price of S$0.36.
SembCorp Industries (SCI SP; S$2.13)
• SembCorp Industries (SCI) sought a trading halt this morning in relation to Dow Jones reporting that the company is looking at a rights issue. SCI has since clarified in an announcement that this is not true. We have also personally reconfirmed with SCI that they are not looking at issuing any new shares or rights now. Its share price fell 4.9% this morning. The trading halt has been lifted.
• Maintain Outperform with a target price of S$2.46.
China Taisan (CTSAN SP; S$0.10)
• Technical BUY
• The stock is now forming a bullish wedge pattern. It is trading near the lower end of its bullish wedge pattern. Daily MACD has yet to turn bullish but is slowly improving. RSI is also slowly rising but there are no signs of conviction from the bulls yet.
• Aggressive investors should buy only on weakness, preferably near the support at S$0.085-0.09. Cut losses if the price falls below the S$0.08. Upside resistance at S$0.12-0.125 could be tested soon. A breakout above this resistance is bullish for the stock with the next resistances at S$0.15-0155.
• China Taisan trades at 0.55x historical P/BV with an 18.1% dividend yield. The share price is also backed by net cash of 64.2%.
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