Singapore Technology

Source : JP Morgan

Singapore Technology

Takeaways from JPMorgan Technology Conference. Singapore Tech

We attended the 34th Annual JPMorgan Tech Conference in San Francisco. Our key takeaways and implication for stocks include • Tech companies continue to generate a lot of cash and are flush with cash pretty similar to companies like Venture, GES, MFS, Hi-P and Unisteel which also generate a lot of cash.

There was some acknowledgement of inventory in PC space but companies across the board allayed inventory fears and suggested that a) inventory situation is normal and b) situation this time is different from 2Q04 when lot of inventory was built in anticipation of a very strong 2H04. This year is about rational growth.

Motorola and Qualcomm gave pretty bullish presentations on the handset market and said that they had not seen any inventory build. Motorola expects to continue to gain market share in the next few quarters all the way till end of 2007 driven by RAZR, SLVR, Q and SCPL (to be launched in 2007).

Most US EMS are seeing strong top line growth with margin expansion and stretching of lead times. In contrast Venture is struggling to grow top line although margins are expanding which we think will become incrementally more difficult to expand.

HDD unit growth is expected to be strong in 2H06 driven by consumer applications. Seagate will terminate Maxtor’s 3.5” platform by end 2006 and transition customers to Seagate platform.

We are Overweight on Jurong Tech, Magnecomp, GES and STATSChipPAC is on the long side of our AP Tech trading Portfolio.

The 200 Day Moving Average


The 200 Day Moving Average is a long term moving average that helps determine overall health of a stock. It often works as a major support level in a bull market, however a break below it can lead to a large gap downward. In a bear market, it often works as a major resistance level, however a break above it can lead to a sharp rise.

It is not an inducement to buy or sell. This blog is not liable for any loss or damage arising from the use of its information.

Stock Talk - Biosensors

BIOSENSORS - Conversation with management

We had a discussion with management over the phone this afternoon. It appears that the stock has been the subject of the following rumours:-

1. The company did not get the CE mark - this is NOT TRUE as management are in constant contact with the CE authorities and there have not been any adverse comments. In the worse case, there could be some delay but they will still get the CE mark eventually based on their current understanding.

2. Company has been hit with a lawsuit - NOT TRUE as there has been no further progress on the appeal by BSX and Angiotech in the Netherland courts. Our view is that the appeal will not progress further.

3. Management is selling out - NOT TRUE as they are already so close to getting the CE mark and sales are gaining momentum. In fact, it should not be any surprise should management start buying the shares when they are able to from tomorrow onwards.

As it stands, the above rumours are unfounded. Also we have highlighted that the company should be posting a loss, which management has guided already since their IPO.

Despite the uncertainty in the stock market, we see current levels as very attractive.

For tomorrow, the company will release its FY2006 March results during market close at lunchtime (1230pm), followed by an analysts' briefing in the afternoon.
We will provide a further update when we are able to get further information.

Best regards
Lawrence Lye
UOB Kay Hian Research

25 May 2006

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Biosensors International Group
FY2006 Results Preview

Recommendation: BUY
Price: S$1.03
Target: S$1.61

Biosensors will be releasing its results for the full year to 31 March 2006 on Friday, 26 May 2006. We expect the company to post losses of US$11.1m, with consensus estimate of US$13.7m loss. This should be in line with earlier guidance and indications from the previous quarters of accelerating expenses in clinical trials for its drug-eluting stents (DES). In addition, investments into building up its marketing and distribution infrastructure in preparation for a strong sales push in Europe and Asia also contributed to higher sales and marketing expenses. However, the key metric to watch is the continued momentum of DES sales and the imminent CE mark award for its flagship BioMatrix DES product. Current share price levels are attractive and we maintain our BUY call.

DES revenues expected to continue momentum. Since the award of the CE mark for its Axxion DES in July 2005, DES sales have been gaining momentum. Starting from a base of US$1.9m in 2QFY06, this rose 79.2% to US$3.4m in 3QFY06, and we expect DES sales to hit US$6.4m in 4QFY06. This momentum will form a strong foundation for future sales of its BioMatrix DES when it receives its CE mark, which is expected soon.

Clinical trials to push up R&D expenses. As disclosed by management, Biosensors has embarked on a number of clinical trials, one of which has a large sample size of 1,700 patients. As a result, R&D expenses are expected to rise significantly. However, in the medical technology industry, the importance of good clinical trials cannot be ignored as these can translate to overwhelming market acceptance by clinicians and a potential market leadership position within a short period of time.

Imminent CE mark award for flagship BioMatrix product. The BioMatrix DES is expected to receive its CE mark by end June 2006. With the establishment of a marketing and distribution infrastructure from the Axxion product, we expect BioMatrix to quickly penetrate the market with few obstacles. We project BioMatrix to be the main revenue driver for Biosensors from FY07 onwards.

Recommendation. There continues to be optimism and broad acceptance by clinicians who have used and tested Biosensors' Axxion and BioMatrix DES on their patients. While some investors may be concerned about the loss in FY06, we emphasise that this is already fully anticipated by the market. Reiterate BUY with a target price of S$1.61.


Best regards
Lawrence Lye
UOB Kay Hian Research

25 May 2006

Chart Pick - China Sun

Someone asked me, how to measure the price target of a stock if it has broken the double top neckline. My answer is the distance from support break to peak can be subtracted from the support break for a price target. In this case, China Sun price target should be 63 cents. By the way, China Sun closed right at 50% downward fibonacci retracement yesterday. (66 cents) We might see a technical rebound from here if not the next support would be the 61.8% downward fibonacci retracement at 57 cents.

Previous Chart

It is not an inducement to buy or sell. This blog is not liable for any loss or damage arising from the use of its information.

Chart Pick - Sunshine

Some interesting observations on Sunshine, 1) it seems like building a base at the price of 17.5 cents, 2) there is a bullish divergence in oversold crossover and 3) a bullish engulfing candlestick at downtrend.

I see immediate resistance at the price of 21 cents. It need to break 27 cents in a convincing fashion for trend reversal.

It is not an inducement to buy or sell. This blog is not liable for any loss or damage arising from the use of its information.

Investment Summary

Source : Daiwa

Asian markets fall further, but no change to the long-term upward trend

Investment summary

At the beginning of this week, Asian stock markets, including that in Japan, suffered a further sharp fall, due mainly to: 1) the sudden drop in natural-resources prices, which continued from last week, leading to a view that the recent flow of speculative funds into developing country markets would reverse itself, 2) concerns that increasing inflationary worries might lead to further interest-rate hikes in the US, in turn leading to a cooling of the US and global economies, 3) concerns about the continued monetary tightening in China, and 4) a feeling that overseas investors would turn increasingly to profit-taking as Asian currencies fell back.

As we pointed out last week, we believe the fall in the Asian markets does not reflect any sudden weakening of the fundamentals, and is better seen as a technical correction. Since the previous flow of funds into Asia was so great, once resource prices fell back sharply, there was a major outflow of nervous investment capital, which turned into a flood.

We believe the sudden correction in Asian stock markets does not represent a change in direction to the medium to long-term uptrend. The main reasons for this are: 1) stocks do not look particularly overvalued, and we think the situation is a long way from being a speculative `bubble', 2) since inflation remains under control, there are few concerns about a sudden sharp increase in interest rates, 3) country risk in Asia is extremely low, and the region's resilience to changes to the external environment has increased considerably compared with the time of the Asian currency shock, and 4) economic growth in the Asian region remains higher than in most other developing economies, with the result that it should be relatively easy to attract both domestic and overseas capital.

A detailed note on Asian markets will be published later

Bearish Chart Pattern : Double Top

China Sun - immediate support is 100-day moving average, next support is around 66 cents. (50% downward retracement for the highest price and the lowest price)

Hongguo - immediate support is 53.5 cents (38.2% downward fibonacci retracement for the highest price and the lowest price), next support is 47 cents. (50% downward fibonacci retracement for the highest price and the lowest price)

AsiaPharm - immediate support is 76.5 cents (38.2% downward fibonacci retracement for the highest price and the lowest price) and 100-day moving average, next support is 68.5 cents. (50% downward fibonacci retracement for the highest price and the lowest price)

Broken support becomes potential resistance and there is sometimes a test of this newfound resistance level with a reaction rally. (Excerpt from "StockCharts.com")

It is not an inducement to buy or sell. This blog is not liable for any loss or damage arising from the use of its information.

Chart Pick - GlobalTest

The stock may have touched a near-term support at 32 cents* on 16 May 2006. There could be room for a 50% upward retracement to 35.5 cents. The stock should not close below 32 cents for the upward retracement level stated above to remain valid.

*32 cents is the 61.8% downward retracement for the high of 39 cents and the low of 27.5 cents. It is also the lower trendline support of the current uptrend.

It is not an inducement to buy or sell. This blog is not liable for any loss or damage arising from the use of its information.

Stock Market : Bull and Bear Markets

The true origin of the terms "bull market" and "bear market".

We do know that a bull market is when stock prices are climbing strongly and a bear market is when they are languishing.

One common myth is that the terms "bull market" and "bear market" are derived from the way those animals attack a foe, because bears attack by swiping their paws downward and bulls toss their horns upward.

This is a useful mnemonic, but is not the true origin of the terms.

Long ago, "bear skin jobbers" were known for selling bear skins that they did not own; i.e., the bears had not yet been caught. This was the original source of the term "bear". This term eventually was used to describe short sellers, speculators who sold shares that they did not own, bought after a price drop, and then delivered the shares.

Because bull and bear baiting were once popular sports, "bulls" was understood as the opposite of "bears". I.e., the bulls were those people who bought in the expectation that a stock price would rise, not fall.

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