Li Heng

UOB KayHian starts Li Heng Chemical Fibre Technologies at Buy with $0.845 target, implying 5.6X FY08 P/E, 5.2X FY09 P/E. Notes, maker of high-end nylon fibre products emerged as one of biggest players of its kind in China, with annual production capacity of 92,400 tons in '07, earnings CAGR of 107.6% over FY04-07. Expects company to benefit from sound domestic presence, strong brand image, economies of scale, high bargaining power. But forecasts lower earnings CAGR of 21.3% over '07-'10, based on assumption gross margin will gradually weaken due to rising raw material costs, more intense competition.

First Resources

The palm oil maker has a US$500m investment plan to raise production and buy plantation land amid an ongoing palm oil boom. The company has about 180,000 hectares (ha) of plantations concentrated in Indonesia's Riau province, and is looking to purchase at least 50,000 ha within the next 18 months in Kalimantan or Irian Jaya.

First Resources CEO Ciliandra Fangiono said the company expects world consumption of palm oil to grow by 5% next year and that palm crude oil prices would stay firm at above US$1,000 per tonne. The firm is planting on 87,500 ha of its existing land, and wants to add 10,000 ha of planted land every year, Mr Fangiono said.

But land acquisitions will likely come outside its base in Riau. The company aims to buy plots of at least 50,000 ha in size to justify building facilities such as mills and cut transportation costs.

Mr Fangiono said First Resources, whose key crude palm oil customers include Wilmar International, will fund its expansion mainly through existing cash, at US$185m as of end-Mar, and excess cash flow from sales.

Albedo

Albedo has proposed a Reverse Takeover (RTO) by HealthTrends Medical Investments Pte Ltd (HTMI). According to Wikipedia, a RTO occurs when a publicly-traded smaller company acquires ownership of a larger company. It typically requires reorganization of capitalization of the acquiring company. In the event the larger company is not publicly traded, the RTO results in a privately held company becoming a publicly held company by circumventing the traditional process of filing a prospectus and undertaking an IPO. It is accomplished by the shareholders of the private company selling their shares in the private company to the public company in exchange for shares of the public company.

The entire purchase consideration for the Proposed Acquisition is up to a maximum of $400m, to be satisfied by the issue of new shares at an issue price of $0.25 per Share will be payable in two tranches. The first tranche of the purchase consideration amounting $280m (Initial Purchase Consideration) will be payable on Completion. The second tranche of the purchase consideration amounting to not more than $120 m will be dependent on the net profit after tax attributable to shareholders of the Pro forma HTMI Group for FY ending 31/12/08.

The HTMI Group is a regional healthcare enterprise providing integrative medical, aesthetics and wellness care services. To date, it has an extensive network of over 100 owned and affiliated medical clinics, aesthetics, specialists, wellness centres, and operations across Asia, i.e. Singapore, Malaysia, Hong Kong, Beijing, Bangkok and Jakarta.

The core segments of HTMI's healthcare expertise, services and products include:

• Primary Medical Care, with emphasis on the prevention and treatment of chronic and degenerative diseases;
• Specialist Medical Care, which focuses on day surgery, oncology, orthopaedics, eye, spine care, physiotherapy and pain management;
• Aesthetics and Lifestyle, with special focus on beauty and skin care, body contouring, clinical grade cosmetics, weight management as well as medical spa treatment and services; and
• Medical Wellness Care, for the provision of scientifically accredited wellness care products and diagnostics with particular focus on health screening and clinical nutrition.

FTSE ST China Top Index

A new FTSE ST China Top Index tracking the 20 largest China stocks listed on SGX has been launched. To be eligible for inclusion in the new index, companies must have either at least 30% ownership by the Chinese government, companies or nationals; or derive at least 50% of revenues from China.

The existing FTSE ST China Index, with its larger basket of 50 component stocks, will continue to act as a general market barometer of the state of China companies listed here.

Both the FTSE ST China Index and the FTSE ST China Top Index will offer opportunities for the creation of and investment into China index-linked products, including exchange traded funds (ETFs), structured products and other derivatives.

The list of stocks is below:
BIO-TREAT TECHNOLOGY
CAPITARETAIL CHINA TRUST*
CHINA AVIATION OIL (S) CORPORATION
CHINA ENERGY
CHINA HONGXING SPORTS
CHINA SKY CHEMICAL FIBRE
CHINA XLX FERTILISER
COSCO CORPORATION (S)
DELONG HOLDINGS
EPURE INTERNATIONAL
FERROCHINA*
FIBRECHEM TECHNOLOGIES
HONG LEONG ASIA*
HSU FU CHI INTERNATIONAL*
MIDAS HOLDINGS*
PACIFIC ANDES*
PEOPLE'S FOOD HOLDINGS*
SYNEAR FOOD HOLDINGS
YANGZIJIANG SHIPBUILDING HOLDINGS
YANLORD LAND GROUP*

* Stocks not included in the FTSE ST China Index

Stock Challenge

I read about the Stock Challenge on Next Insight. The gains the participants made are no big deal. Some use margin, some not. Those who trade on margin are at an advantage.

The rules are not clear. But I assume can only trade SGX stocks and not warrants. I shall unofficially enter the contest. I'm confident that at the end of the Challenge, I can beat them :-)