Stock Picks for 2010

What about Second Chance for its high dividend yield policy?

My favourite is Rotary Engineering. Below is my view based on Warren Buffet\'s 12 points analysis: 1. Is the business simple and understandable? Rotary Engineering is one of the region leading EPCM (Engineering design, Procurement, Construction, and Maintenance) service providers for oil & gas and pharmaceutical companies. 2. Does the business have a consistent operating history? The company was established in 1972 and has been listed on SGX Mainboard since 1993. 3. Does the business have favourable long-term prospects? Besides South East Asia, Rotary has expanded to Middle East and recently won S$1b contract from Saudi national oil company. Middle East is building huge petrochemical complexes using cheap feedstock from their oil & gas resources, instead of simply exporting lower value added oil & gas. It is expected US$180b contracts to be tendered by end 2011. Rotary is tendering another US$1b tank farm contracts in Wasea and Yanbu, which the award expected to be announced in 1Q10 and 2Q10 respectively. Locally, EDB is still expecting more petrochemical complexes to be built in Jurong Island. There is also possibility of expansion for the $500m Universal Terminal built by Rotary previously. 4. Is Management rational? The management has been quite careful with their expansion plan. They started building their presence in Middle East after establishing firmly in South East Asia. They intend to expand to other regions such as Latin America, only after they set firm footing in Middle East. Rotary has solid balance sheet with cash of about S$170m and negligible borrowing. The Company has also attracted investment from Oman Investment Fund, which currently holds 21.4%. This may provide them connection and advantage for bidding project in Middle East in general and Oman in particular. 5. Is Management candid with its shareholders? I have not personally met the management team, but its CEO was awarded joint best CEO for 2008 in the $300m - $1b market capitalisation category. 6. Does Management resist the institutional imperative? Not much can be said about this, but the company has been staying on their core business through out these years. 7. Focus on return on equity (ROE), not earnings per share (EPS) Rotary’s ROE has been >20% for the past few years. 8. Calculate owner’s earnings (i.e. Free Cash Flows or FCF) The company has been consistently generating positive cash flow from operations for years. 9. Does the company have high profit margins? Their net profit margins are in the region of 10%, not really high but reasonable. There is the possibility of slight improvement in future as generally their overseas contracts have higher profit margin to compensate for potential higher risk. 10. For every dollar retained, has the company created a dollar of book value (and hence market value)? Its NAV has been consistently increasing to currently stand at about 40c/share. 11. What is the value of the business? The PER is expected to drop to single digit by next year, as their huge Middle East contract starts to contribute to the bottom line. 12. Can the business be purchased at a significant discount to its value? At its current price of about $1, it is not really a significant discount to its value. However, looking at other factors i.e. management, outlook, balance sheet, etc. Its current price seems to offer good value.

Rotary\'s net margins are around 7-8%. That\'s decent for an Engineering company. The strong point about the company is its Net Cash Position. Nothing further to add.

Hi members, For me I will hold tight to Sinotel. Because the company\'s news and story were always covered under NextInsight!:laugh:

I\'m accumulating Saizen REIT and its warrants. I use a mixture of FA and TA to determine that this is a worthy investment. FA for Saizen already shows that its business is sound. Saizen would have repaid 3 more loans by end January 2010. It would be, financially, in better shape. I am confident it would be able to restart distributions from middle of 2010. Charting shows a symmetrical triangle. It reminds me of the symmetrical triangle I saw in Hyflux Water Trust\'s chart many months ago. Apex of triangle is in late Feb 2010. Expecting price to breakout on the upside anytime before then. Strong support provided by the steadily rising 200dMA which coincides with the uptrendline of the symmetrical triangle. This is at 14c. Expect strong resistance to be provided by the rapidly descending 100wMA, currently at 22c. Limited downside compared to the potential upside. Good luck to us all in 2010.

For me. Fundamental- Metro, AscotREIT -Well run businesses which are expanding in China. Metro is especially cheap. Semi-Fundamental - Guocoleisure - Well run, cheaply priced, gd management with decent dividend policy. It seems able to repay its debt over time without the need for rights issue. Owned by a Msian billionaire. Semi-Fundamental/Speculative - Berlian laju - Cabotage laws will benefit it greatly. Soon to be the largest tanker shipping company in the world. Well run company despite the high gearing and attractively priced. Speculative - Saizen - Only holding the warrants. I doubt they will fall. Well run despite its problems.