SembMar - Triple Bearish Engulfing

Regional market indices (STI, HSI and Nikkei) have been showing bearish divergences after a strong run-up. The only exception is China, but even the SSEC is beginning to show some weaknesses of late. Of particular mention is the Dow Jones which has just cut back below its 200 days simple moving average. This signal is a widely followed indicator in which mostconventional fund managers and institutions use to determine the main trend, thus basing a major part of their trading decisions on it.

In line with general market weakness, SembMar created 3 bearish engulfing patterns in the month of June, the first of which happened on the SAME day UOB KH Research called for 'showtime'. This also coincides with its price topping out at $3.16 after a 3 months rally. Ever since 'showtime' began, SembMar has been in perpetual downtime mode, creating 2 more bearish engulfers in the process.

Baring the end of 'showtime', you may try shorting SembMar at $2.60+ using your SBL account with me. Downside target is identified at $2.45 and further towards $2.23 if the former does not hold up. Resistances are at $2.72 and $2.83, hence stop-loss can be placed at either prices.

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SembCorp Industries - Bullish harami pattern suggests more near term upside

- SembCorp Industries is likely to see more upside potential in the near term following the formation of a bullish harami pattern at its 2-month uptrend line.

- With the technical indicators (RSI, Stochastic and MACD) showing healthy uptrend momentum over the past few months and OBV indicator signaling a sharp bullish reversal recently, they suggest that SembCorp could continue to climb higher in the days ahead.

- We expect the recovery to find an initial resistance at $3.33 (2009 high), breaking which, we see the next resistance at $3.74 (minor peak in end Sep ‘08)

- Immediate support is pegged at $2.80 (resistance-turned-support level), ahead of $2.60 (resistance-turned-support level).

Semb Corp break out?

If breakout 2.54, it may move towards $2.86, 200DMA.

Sell Sunningdale Tech, Buy SembCorp Marine, Keppel Land

Sunningdale Tech (SUNN SP; S$0.035) – SELL

• A base building formation was seen on the daily chart. The stock may have bottomed temporary at its 52-week low of S$0.03, but until a breakout from its long term downtrend channel materialises, we are still bearish on the stock. There is still a risk for it to go below S$0.03.

• Although technical landscape has improved, gains would be capped at $0.045 and S$0.055 resistances.

• We advocate investors to take profit on rally, as the bears still have the upper hand over the bulls.

Sunningdale Tech Ltd manufactures and sells mould and plastic injection products. The Company also designs, manufactures, markets, and exports high precision steel moulds. Sunningdale Tech trades car audio equipment and provides product design consultancy, mold flow service, mold design, and project management.

SembCorp Marine (SMM SP; S$1.87) – BUY

• Tested its triangle resistance trend line yesterday. However, if it fails to hold above S$1.86, the stock may poise for a minor correction soon. Support is seen at S$1.67.

• Although MACD is still rising and has pierced into the positive territory, RSI is already overbought at 76.

• Investors should wait for share prices to come off before accumulating, preferable near its support. The overbought RSI would cap further gains for now. Resistance is at S$2.04.

SembCorp Marine Limited operates ship building, ship owning, ship repair and conversion. Through its subsidiaries, the Company provides equipment rental, cleaning and maintenance services, marine, general electronic, and electrical works. SembCorp Marine also trades copper slag, processes copper slag for grit blasting and building, as well as fabricates metal structures.

Keppel Land (KPLD SP; S$1.49) – BUY

• The stock has rebounded from its 52-week low to retest the triangle resistance. However, we would only turn bullish if prices break above S$1.51.

• Technical indicators have improved. MACD is positive but RSI is fast approaching the overbought zone.

• While daily chart still looks positive, investors should buy on weakness, possibly near its support at S$1.38. Cut losses if prices fall below its 30-day SMA at S$1.28.

Keppel Land Limited is the property arm of the Keppel Group. The Company's portfolio of properties includes office towers, residential properties, hotels, resorts, retail complexes, industrial buildings, and townships. The Company also provides management and consultancy services.

Sell Tehnically Hyflux, SembCorp, SGX

Hyflux (HYF SP; S$1.44) – SELL

• The stock broke below its consolidation triangle and continued to fall to recent lows. Yesterday’s sharp fall as formed a bearish engulfing candle on its daily chart. The downtrend would likely continue with a test of S$1.34 and S$1.21 support again before a bottom is formed.

• Technical readings on its indicators are mild positive and losing momentum. The RSI is no longer oversold, suggesting that the stock could still fall from here.

• Any rebound should be seen as an opportunity to sell into strength. Resistance is at S$1.50 and S$1.64.

Hyflux is a water treatment specialist providing integrated treatment systems for advanced water treatment and membrane filtration. It also provides one-stop shop service for the design, fabrication, installation, commissioning and maintenance of treatment systems for water purification, wastewater treatment and water recycling.

SembCorp Industries (SCI SP; S$2.07) – SELL

• The stock appears to be well support above the S$2.00 support. It is now forming a descending triangle. A break below the S$2.00 support is bearish.

• Indicators are mixed at the moment but the sharp hook down on its RSI is slightly bearish for the stock.

• Falling below its 30-day SMA is also another bearish signal. Maintain a sell on strength strategy for now with the next support at S$1.70 if the S$2.00 support fails. Resistance is at S$2.25 and S$2.41.

SembCorp Industries’ principal activities are those of an investment holding company, as well as the corporate headquarters, which gives strategic direction and provides management services to its subsidiaries.

Singapore Exchange (SGX SP; S$4.70) – SELL

• The stock has rebounded from a low of S$4.00 to current levels. It tested its strong resistance at S$4.90-5.00 but failed to breakout. It is now sitting just above its 30-day SMA.

• MACD has stayed positive but the RSI is slowly turning down again. If the stock can hold above its 30-day SMA, then we could see a retest of its strong resistance at the S%5.00 levels.

• However, a break below the S$4.67 level could send the stock lower S$4.48 and S$4.30. Since the longer term trend is still down, we prefer to sell on strength for now.

SGX owns and operates the only integrated securities exchange and derivatives exchange in Singapore and their related clearing houses. The securities exchange was the first fully electronic and floorless exchange in Asia.

Buy Pacific Andes, SembCorp Ind, Taisan; SCI says no Right Issue

Pacific Andes (PAH SP; S$0.155)

• 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%.

Sell Singtel, SembCorp Marine, Oceanus Group

Singapore Telecom (ST SP; S$2.46) – SELL

• The stock is facing some tough resistance in a form of its long term trend channel resistance at S$2.65 and S$2.80.

• MACD is about to turn negative again but its RSI has already hooked down, suggesting that the upside is likely capped.

• A breakdown below the S$2.40 support would be bearish for the stock. The following support is at S$2.18 and S$2.00. Maintain sell on rebound for now. Only if the price breaches the S$2.80 resistance would a turnaround be confirmed.

Singapore Telecommunications Limited operates and provides telecommunications system and services. The Company provides postal services, directory advertising and publishing. Singapore Telecommunications sells and maintains telecommunications equipment and provides mobile phone and paging service, computer network, and Internet and information technology services.


Sembcorp Marine (SMM SP; S$1.40) – SELL

• The stock broke below its consolidation triangle support in January and it has been trading sideways since then. A breakdown below the S$1.36 support could signal that the downtrend is about to resume. The next support is at S$1.15, its October lows.

• Indicators are looking negative as both indicators have started to hook downwards. It is also below its 30-day SMA.

• It is crucial for the stock to stay above the S$1.36 support. We prefer to be on the selling side with resistance at S$1.53-1.55 and S$1.83.

SembCorp Marine Limited operates ship building, ship owning, ship repair and conversion. Through its subsidiaries, the Company provides equipment rental, cleaning and maintenance services, marine, general electronic, and electrical works. SembCorp Marine also trades copper slag, processes copper slag for grit blasting and building, as well as fabricates metal structures.


Oceanus Group (OCNUS SP; S$0.125) – SELL

• The stock tried to take out its 30-day SMA in January and February but failed. That prompted selling pressure to rise sending the stock lower to current levels. It is likely to test its October lows of S$0.115 soon. A break below could see the stock fall to S$0.095-0.10.

• Indicators stayed negative. Its RSI have yet to fall into the oversold region suggesting that there is still room on the downside.

• Maintain sell call for now until a bottom has been formed. Until then, avoid buying. Resistance is seen at S$0.15-0.155

Oceanus Group Ltd is a marine aquaculture specialist focusing on large-scale, land-based, industrialized production and sale of Japanese abalones.

Technically Sell OUE, SembCorp Industries, Keppel Corp

Overseas Union Enterprise (OUE SP; S$12.00) – SELL

• The stock tumbled to its strong support at S$8.00 before rebounding sharply to current levels. This rebound shows that the bulls are not ready to give up just yet.

• The RSI hook up from its oversold position prompted the strong rebound from its S$8.00 support. The MACD is however still negative.

• We continue to see weakness in the coming months. However, in the short term there could still be some upside. The gap resistance at S$12.10-12.30 would likely keep a lid on the upside for now. Buyers should only buy near the S$8.00-9.00 strong support. Otherwise, sell on rebound and stay sideline for now.

Overseas Union Enterprise Limited operates hotel and leases commercial offices and shopping centers in Singapore. Through its subsidiaries, the Company also manages and operates food and beverage outlet, advertising, printing, and commercial laundry.

SembCorp Industries (SCI SP; S$2.14) – SELL

• The stock appears to be well supported above the S$2.00 support. It is now forming a descending triangle. A break below the S$2.00 support is bearish.

• Indicators are still negative but improving slightly. The RSI is slowly rising but is still below the neutral mark.

• Again, there could be a minor rebound back up to retest its S$2.18-2.20 (its 30-day SMA). A breakout could see the stock climb to S$2.25 next. Since we do not foresee a strong rebound, maintain a sell on strength strategy for now.

SembCorp Industries Limited provides infrastructure services and integrated industrial site services such as power, gas, steam, water, and other site services. The Company's services include engineering and environment management, integrated logistics, and marine engineering services.

Keppel Corporation (KEP SP; S$4.30) – SELL

• It is now in a long term sideways trend. However, since it is trading above its 30-day SMA, there could be a tad more upside from here. However, we expect resistance to be tough at the S$4.90 and S$5.40 levels.

• Daily MACD is positive but RSI is flat, suggesting that buying momentum is not very strong.

• After this rebound, we expect the stock to retrace lower again. Support is now at S$4.00 and S$3.76.

Keppel Corporation Limited's core businesses are offshore and marine, infrastructure, property investment and development, telecommunications and transportation, energy, and engineering.

SCM ($1.53)

Support $1.47-50. Resistance $1.63-67

Today’s low is lowest since Dec 10 low of $1.48. Narrow movements since mid-Jan between $1.53-$1.67. Total fall so far is 9% from $1.67 on Jan 29. 10 days earlier it touched $1.71 and on Jan 7 reached a $2.04 high.

Based on this track record, stock should continue minor rallies and buy on weakness remains a safe option. Trading at base of trend channel as well as lower Bollinger band and RSI at 42 near lows of past month and unlikely to weaken much.

SCI ($2.17)

Support $2.12-15. Resistance $2.30-32

Total Loss of 11.1% from $2.43 to $2.16 low in 4 days, giving up most of the second half of January rebound from $2.10-$2.15.

Any minor weakness to this good support is a trading chance as stock should not undergo major selldown as it has been consolidating narrowly around $2.15-$2.30.

Near lower Bollinger band which has acted as support since last October. RSI at 43.4 also near recent support lows.

Chart for SembMar=1.56

Broke below Wedge Formation...Target $0.80

Petrobras cancels P-61 and P-63 tenders claiming bids were too high

Very negative for Kep Corp and Sembmarine.

Brazil's Petrobras has cancelled tenders for its P-61 and P-63 offshore oil production platforms after deciding that the prices bid on the Papa Terra project were outside its budget parameters.

In a written statement, Petrobras said it considered price proposals for supplying the TLWP P-61 to be too high "given current market conditions."

Petrobras added that alternative development solutions for developing the Papa Terra field will now be studied.

Petrobras and consortium partner Chevron have drawn up plans to develop the heavy oilfield in the Campos basin using a TLWP and an FPSO, handle up to 180,000 barrels per day of crude.
Sources involved in the bidding process related that a communication was received from Petrobras last week stating that bids received for the P-63 have also been disqualified as "too high".

Modec Int'l, Floatec and SBM Offshore had all submitted bids for platofrm P-62. Modec was the leading candidate to supply the TLWP P-61 after offering a price of more than $1.72 billion against FloaTec's second-placed offer of $1.96 billion.

Petrobras has also reacted to the cancellation of the semisubmersible construction contract between Keppel FELS and Scorpion Offshore. The now-canceled semisubmersible was expected to begin a six-year contract with Petrobras in June 2012.

Petrobras said that the cancellation has no bearing on its agreement with Scorpion. Petrobras has requested clarifications from Scorpion and will continue undertaking all of the actions it considers pertinent to have the rigs available to fulfill its business plan.