SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Thematic (Sector/Industry)

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§  The SGX Maritime &amp; Offshore Services (MOE) Index, a benchmark for the MOE Sector, has rebounded 19.7% from its trough on 1 Sep 2016 in tandem with the recovery of crude oil prices, which may be an indication that the sector could be bottoming out.
 
§  Despite the rally, the 18 constituents within the SGX MOE Index are trading at an average current price-to-book (PB) ratio of 0.7x, with 10 of them trading below their book values.
 
§  Consensus estimates are expecting oil prices to stabilise and…
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§  The SGX Maritime &amp; Offshore Services (MOE) Index, a benchmark for the MOE Sector, has rebounded 19.7% from its trough on 1 Sep 2016 in tandem with the recovery of crude oil prices, which may be an indication that the sector could be bottoming out.
 
§  Despite the rally, the 18 constituents within the SGX MOE Index are trading at an average current price-to-book (PB) ratio of 0.7x, with 10 of them trading below their book values.
 
§  Consensus estimates are expecting oil prices to stabilise and…



SGX's MOE Sector Sustains 4Q16 Momentum into 2017

CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

We pick stocks. We construct portfolios. All our effort is focused on how to better pick stocks and construct portfolios. We serve fund management companies, family offices, and high net worth individuals.

Equity Bottom-Up

<ul><li>Cheap on a core profit basis, slow asset growth, and low correlation with Western stock markets relative to its sector</li><li>AirAsia became the first and only carrier to connect Kuala Lumpur and Luang Prabang (Laos) and expects to benefit from increased tourist arrivals to Philippines by launching Taipei to Manila and Cebu flights in 4Q16</li><li>New digitalization plan for 2017 focused on developing new mobile and online solutions to reduce costs and facilitate booking with target to raise mobile contribution to sales from current 10% to 25% share in 2017</li><li>AIRA trades below ASEAN Transportation at 17CE* 1.1x PB but offers more than double the ROE</li><li>Risk: Accidents, terrorist incidents and higher fuel prices</li></ul>* Consensus Estimates

Cheap on a core profit basis, slow asset growth, and low correlation with Western stock markets relative to its sectorAirAsia became the first and only carrier to connect Kuala Lumpur and Luang Prabang (Laos) and expects to benefit from increased tourist arrivals to Philippines by launching Taipei to Manila and Cebu flights in 4Q16New digitalization plan for 2017 focused on developing new mobile and online solutions to reduce costs and facilitate booking with target to raise mobile contribution to sales from current 10% to 25% share in 2017AIRA trades below ASEAN Transportation at 17CE* 1.1x PB but offers more than double the ROERisk: Accidents, terrorist incidents and higher fuel prices* Consensus Estimates

AIRA: Innovative Budget Carrier Is Cruising Nicely

Asean-focused. Ex-Head of Thai Research

Athaporn Arayasantiparb, CFA

New entry. Little is known of Vichai Srivaddhanaprabha, but this year, he fulfilled our criteria of owning listed equities when he bought a large stake of Asia Aviation (the Thai arm of low-cost carrier Air Asia) for bit more than Bt4/sh when it was trading 30% higher than that...in a private placement from the Thai CEO Tassapol Bijleveld. It's pretty amazing, because even if Tassapol needed the money badly, he shouldn't have discounted the stock so much. The operations are doing really well…

New entry. Little is known of Vichai Srivaddhanaprabha, but this year, he fulfilled our criteria of owning listed equities when he bought a large stake of Asia Aviation (the Thai arm of low-cost carrier Air Asia) for bit more than Bt4/sh when it was trading 30% higher than that...in a private placement from the Thai CEO Tassapol Bijleveld. It's pretty amazing, because even if Tassapol needed the money badly, he shouldn't have discounted the stock so much. The operations are doing really well…

<ul><li>Slow asset growth, good price momentum, and low correlation relative to its sector</li><li>Malaysia Airlines’ business strategy to restrict its focus to premium clients should enable AIRA to capture higher budget carrying market share</li><li>Fuel hedging to boost earnings on lower jet fuel cost; hedged 74% of its 2H16 fuel requirement at US$55/bbl and 40% in 2017 at US$58/bbl</li><li>AIRA trades below ASEAN Transportation at 16CE* 1.4x PB but offers more than double the ROE</li><li>Risk: Accidents, terrorist incidents, and higher fuel prices</li></ul>* Consensus Estimates

Slow asset growth, good price momentum, and low correlation relative to its sectorMalaysia Airlines’ business strategy to restrict its focus to premium clients should enable AIRA to capture higher budget carrying market shareFuel hedging to boost earnings on lower jet fuel cost; hedged 74% of its 2H16 fuel requirement at US$55/bbl and 40% in 2017 at US$58/bblAIRA trades below ASEAN Transportation at 16CE* 1.4x PB but offers more than double the ROERisk: Accidents, terrorist incidents, and higher fuel prices* Consensus Estimates

AirAsia: Budget Carrier's Momentum Is Cruising Nicely

Founder, Riedel Research

David Riedel

Founder

Independent equity research on GEM Markets

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<ul>
<li>Obama continues the 'pivot to Asia' by attending the ASEAN meeting in Laos.</li>
<li>ASEAN is a critical component of SE Asian stability, partnership with the US and should be a united front in protesting Chinese intrusions into the South China Sea.</li>
<li>A high-profile spat with Philippine president Duterte was an unfortunate distraction and an unhelpful development for the Philippines which benefits from strong U.S. support.</li>
<li>Thailand and Malaysia look like the best opportunities in ASEAN in the medium-term.</li>
<li>BUY…</li>
</ul>


Obama continues the 'pivot to Asia' by attending the ASEAN meeting in Laos.
ASEAN is a critical component of SE Asian stability, partnership with the US and should be a united front in protesting Chinese intrusions into the South China Sea.
A high-profile spat with Philippine president Duterte was an unfortunate distraction and an unhelpful development for the Philippines which benefits from strong U.S. support.
Thailand and Malaysia look like the best opportunities in ASEAN in the medium-term.
BUY…


Takeaways from ASEAN - Investment Opportunities

Malaysia

AirAsia Berhad provides low-cost air carrier service. The company provides services on short-haul, point-to-point domestic and international routes. AirAsia, headquartered in Malaysia, operates from hubs in Malaysia, Thailand, Indonesia, Philippines and India.

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AirAsia Berhad (AIRA MK)

SGX's MOE Sector Sustains 4Q16 Momentum into 2017

§ The SGX Maritime & Offshore Services (MOE) Index, a benchmark for the MOE Sector, has rebounded 19.7% from its trough on 1 Sep 2016 in...

Singapore Exchange Ltd (SGX)

AIRA: Innovative Budget Carrier Is Cruising Nicely

Cheap on a core profit basis, slow asset growth, and low correlation with Western stock markets relative to its sector AirAsia became the first...

A. Stotz Investment Research

Thai-Coons Ep. 7: Man of Leicester

New entry. Little is known of Vichai Srivaddhanaprabha, but this year, he fulfilled our criteria of owning listed equities when he bought a large...

Athaporn Arayasantiparb, CFA

AirAsia: Budget Carrier's Momentum Is Cruising Nicely

Slow asset growth, good price momentum, and low correlation relative to its sector Malaysia Airlines’ business strategy to restrict its focus to...

A. Stotz Investment Research

Takeaways from ASEAN - Investment Opportunities

Obama continues the 'pivot to Asia' by attending the ASEAN meeting in Laos. ASEAN is a critical component of SE Asian stability, partnership with...

David Riedel

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