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.

Equity Bottom-Up

CNMC Goldmine Holdings / Equity Bottom-Up

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<li>
Four of the five stocks remained in the black for 1H2020 – CNMC Goldmine swung to a net loss from a year-earlier net profit due to an unrealised FX loss. 
	 </li>
	<li>Notable performers were Asiaphos and Jiutian Chemical – Asiaphos narrowed its 1H2020  attributable loss from the year earlier, while Jiutian swung to a 2Q 2020 net profit from year-ago net loss.</li>
</ul>
 

CNMC Goldmine

·       CNMC said on 31 August the Group’s Chinese migrant workers are <a href="https://links.sgx.com/1.0.0/corporate-announcements/SVMHWDQX52J37GCR/629968_WorkersReturn.pdf">gradually starting to return</a> on site at its flagship Sokor gold field in Malaysia’s Kelantan state

<ul>
<li>A small number of Chinese Workers recently completed a mandatory 14-day quarantine upon their arrival in Malaysia from China and are now back at work at Sokor</li>
	<li>There is another team of Chinese Workers who have returned to Malaysia and are currently serving a 14-day quarantine, and are expected to be back at Sokor next week, barring any unforeseen circumstances</li>
	<li>Another team of Chinese Workers, primarily workers for the Group’s underground mining operations, are expected to be back in Malaysia in September 2020, subject to final approval from the Malaysian authorities</li>
</ul>
·       Upon the return of its underground mining crew, the Group will resume underground infrastructure construction and mining

<ul>
<li>Underground mining is expected to be a key engine of growth for the Group given its potential to yield high-grade ore, which is expected to translate into increased gold production</li>
	<li>Open-pit mining currently accounts for all of the Group’s gold output</li>
</ul>
·       In 1H2020, CNMC reported an attributable loss of US$0.90 million as revenue fell by nearly half from the same period last year to US$10.5 million

<ul>
<li>It was hit by an unrealised US$0.67 million foreign exchange loss stemming from the Malaysian ringgit’s depreciation against the US dollar in 1H2020</li>
</ul>
·       Beyond gold, CNMC intends to produce feldspar on its own after its existing production agreement with a third-party contractor expires this year

<ul>
<li>Doing so in-house is expected to yield higher profit margins over the long term</li>
</ul>
·       It hopes to ramp up gold production in the near term even as it pushes ahead with plans to monetise other minerals including silver, lead and zinc

 
Click <a href="https://links.sgx.com/1.0.0/corporate-announcements/7RLIXFUDDJQ5QHV5/1H2020_PressRelease.pdf">here</a> for full results release.

 

Jiutian Chemical Group

·       Jiutian reported 2Q 2020 net profit of RMB 32.6 million, compared to a loss of RMB 7 million YoY, and up from RMB 2.8 million profit in 1Q 2020

·       The positive results are due to a combination of:

<ul>
<li>The recovering Chinese economy</li>
	<li>Generally depressed market for energy and related commodities, resulting in low raw material prices</li>
	<li>Robust demand in the main products of Methylamine and DMF which benefited from the recovering economy and permanent closure of one of its largest competitors due to environmental reasons</li>
</ul>
·       Various cost cutting and loss containment measures taken since 2H2019 have put the Group on a firmer footing

<ul>
<li>This has allowed it to continue to operate efficiently and profitably, focusing on products with robust demand and firm prices and taking advantage of the low raw material prices</li>
</ul>
 

Click <a href="https://links.sgx.com/1.0.0/corporate-announcements/YKLVWZ1E6FIFL7HG/627418_2Q%20press.pdf">here</a> for full results release.

 

Avarga Ltd 

·       On 24 August 2020, Avarga said <a href="https://links.sgx.com/1.0.0/corporate-announcements/08CNPSENJC75LDZK/629051_Response_to_SGX_Queries.pdf">in response to SGX queries</a> regarding the company’s unusual share price movements that it is exploring opportunities relating to its paper manufacturing business that include the expansion and/or a potential listing

<ul>
<li>However, such exploration is still at a preliminary stage and there is no assurance as to whether any transaction will materialise or as to the structure of any such transaction</li>
	<li>The Group will make appropriate announcements in the event that there are any material developments in this regard</li>
</ul>
·       It has also been considering a possible transaction which will allow it to monetise its investment in the power plant located in Yangon, Myanmar

<ul>
<li>The terms of such possible transaction are still not finalised and are still under consideration</li>
	<li>There is no assurance as to whether any transaction will materialise or as to whether any definitive agreement will be reached</li>
</ul>
·       Its subsidiary, Taiga Building Products Ltd, reported strong earnings growth for the period ended 30 June 2020

<ul>
<li>Companies in the building materials industry in North America have generally performed strongly in the stock market given recent strong demand in housing and home renovation projects</li>
</ul>
·       The Group reported net profit after tax of S$20.4 million for 1H2020, down 25% YoY

 

Click <a href="https://links.sgx.com/1.0.0/corporate-announcements/AX2Y6N7LS4KQ12G2/626907_1HFY2020_Results_Announcement.pdf">here</a> for full results release.

 

AsiaPhos Ltd

·       AsiaPhos said on 23 September 2020 it is <a href="https://links.sgx.com/1.0.0/corporate-announcements/57JSUC3X9B1C0MHS/632570_Asiaphos%20-%20Holding%20announcement%20on%20restructuring.pdf">weighing a restructuring exercise</a> to restore its financial position and to transform the company into a more suitable listing platform for new assets/business

<ul>
<li>The potential restructuring, which could include potential acquisitions, follows an interruption of the group's mining operations in China on the back of regulatory issues there</li>
	<li>The Management’s negotiations have since been escalated to the Chinese government via the Ministry of Commerce</li>
	<li>The Group continues to be open to consider any compensation proposal from the Chinese government</li>
	<li>The board believes negotiations and arbitration with the Chinese government over the closed mines may take years to settle and require substantial funding</li>
</ul>
·       Gross profit decreased from $0.06 million in 2Q2019 to $0.005 million in 2Q 2020, due to change in product mix and disruptions from Covid-19

·       Trading conditions remain challenging

·       Management continues to try to expand the geographical base of the Group’s customers of downstream phosphate chemicals like STPP and STMP produced by its tenant and cooperation partner Lianyungang Zexin Food Ingredients

·       A further writeback of allowance for doubtful trade receivable of RMB1.5 million (S$0.3 million) is expected when the bills receivable used in the settlement of trade debt by the state-owned company matures in 3Q 2020

·       Management is also exploring several opportunities for cooperation but they are in preliminary stages and there is no certainty that any deal may materialise

 

Click <a href="https://links.sgx.com/1.0.0/corporate-announcements/EJ913TNGOWYIH9V5/626216_Asiaphos%20-%202Q2020.pdf">here</a> for full results release.

 

China Sunsine Chemical

·       1H 2020 revenue decreased 26% YoY mainly due to slowdown of the economy and continued downward pressure on average selling prices (ASP) during COVID-19

·       ASP dropped by 21% YoY in 1H 2020 mainly due to lower raw material prices, and weaker demand for its products resulting from the lower production utilisation rate in the tire manufacturing industry

·       Net profit declined 69% YoY due to intensifying competition and weak demand from COVID-19 and slowing down of economies

·       Strong balance sheet provides sound fundamental support for further challenges and future development

·       COVID-19 outside China is still very severe, while the relationship between US and China is getting more toxic, which causes greater uncertainties

·       Raw material prices are still hovering at low levels, and as such, the Group’s ASP is still under pressure

·       Some players in its industry may have increased their production capacity which will result in greater competition

·       The Group will endeavour to improve its sales, focus on operational improvement, reduce raw material consumption, control cost and strengthen its cash flow management in order to achieve sustainable growth

·       Management remains confident about the Group’s profitability in the next 12 months

 

Click <a href="https://links.sgx.com/1.0.0/corporate-announcements/7HULWBEN0FOX08EV/627345_20200812%20CSCH%20-%20Press%20Release1H2020.pdf">here</a> for full results release.
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Four of the five stocks remained in the black for 1H2020 – CNMC Goldmine swung to a net loss from a year-earlier net profit due to an unrealised FX loss.  
	 
	Notable performers were Asiaphos and Jiutian Chemical – Asiaphos narrowed its 1H2020  attributable loss from the year earlier, while Jiutian swung to a 2Q 2020 net profit from year-ago net loss.

 

CNMC Goldmine

·       CNMC said on 31 August the Group’s Chinese migrant workers are gradually starting to return on site at its flagship Sokor gold field in Malaysia’s Kelantan state


A small number of Chinese Workers recently completed a mandatory 14-day quarantine upon their arrival in Malaysia from China and are now back at work at Sokor
	There is another team of Chinese Workers who have returned to Malaysia and are currently serving a 14-day quarantine, and are expected to be back at Sokor next week, barring any unforeseen circumstances
	Another team of Chinese Workers, primarily workers for the Group’s underground mining operations, are expected to be back in Malaysia in September 2020, subject to final approval from the Malaysian authorities

·       Upon the return of its underground mining crew, the Group will resume underground infrastructure construction and mining


Underground mining is expected to be a key engine of growth for the Group given its potential to yield high-grade ore, which is expected to translate into increased gold production
	Open-pit mining currently accounts for all of the Group’s gold output

·       In 1H2020, CNMC reported an attributable loss of US$0.90 million as revenue fell by nearly half from the same period last year to US$10.5 million


It was hit by an unrealised US$0.67 million foreign exchange loss stemming from the Malaysian ringgit’s depreciation against the US dollar in 1H2020

·       Beyond gold, CNMC intends to produce feldspar on its own after its existing production agreement with a third-party contractor expires this year


Doing so in-house is expected to yield higher profit margins over the long term

·       It hopes to ramp up gold production in the near term even as it pushes ahead with plans to monetise other minerals including silver, lead and zinc

 
Click here for full results release.

 

Jiutian Chemical Group

·       Jiutian reported 2Q 2020 net profit of RMB 32.6 million, compared to a loss of RMB 7 million YoY, and up from RMB 2.8 million profit in 1Q 2020

·       The positive results are due to a combination of:


The recovering Chinese economy
	Generally depressed market for energy and related commodities, resulting in low raw material prices
	Robust demand in the main products of Methylamine and DMF which benefited from the recovering economy and permanent closure of one of its largest competitors due to environmental reasons

·       Various cost cutting and loss containment measures taken since 2H2019 have put the Group on a firmer footing


This has allowed it to continue to operate efficiently and profitably, focusing on products with robust demand and firm prices and taking advantage of the low raw material prices

 

Click here for full results release.

 

Avarga Ltd 

·       On 24 August 2020, Avarga said in response to SGX queries regarding the company’s unusual share price movements that it is exploring opportunities relating to its paper manufacturing business that include the expansion and/or a potential listing


However, such exploration is still at a preliminary stage and there is no assurance as to whether any transaction will materialise or as to the structure of any such transaction
	The Group will make appropriate announcements in the event that there are any material developments in this regard

·       It has also been considering a possible transaction which will allow it to monetise its investment in the power plant located in Yangon, Myanmar


The terms of such possible transaction are still not finalised and are still under consideration
	There is no assurance as to whether any transaction will materialise or as to whether any definitive agreement will be reached

·       Its subsidiary, Taiga Building Products Ltd, reported strong earnings growth for the period ended 30 June 2020


Companies in the building materials industry in North America have generally performed strongly in the stock market given recent strong demand in housing and home renovation projects

·       The Group reported net profit after tax of S$20.4 million for 1H2020, down 25% YoY

 

Click here for full results release.

 

AsiaPhos Ltd

·       AsiaPhos said on 23 September 2020 it is weighing a restructuring exercise to restore its financial position and to transform the company into a more suitable listing platform for new assets/business


The potential restructuring, which could include potential acquisitions, follows an interruption of the group's mining operations in China on the back of regulatory issues there
	The Management’s negotiations have since been escalated to the Chinese government via the Ministry of Commerce
	The Group continues to be open to consider any compensation proposal from the Chinese government
	The board believes negotiations and arbitration with the Chinese government over the closed mines may take years to settle and require substantial funding

·       Gross profit decreased from $0.06 million in 2Q2019 to $0.005 million in 2Q 2020, due to change in product mix and disruptions from Covid-19

·       Trading conditions remain challenging

·       Management continues to try to expand the geographical base of the Group’s customers of downstream phosphate chemicals like STPP and STMP produced by its tenant and cooperation partner Lianyungang Zexin Food Ingredients

·       A further writeback of allowance for doubtful trade receivable of RMB1.5 million (S$0.3 million) is expected when the bills receivable used in the settlement of trade debt by the state-owned company matures in 3Q 2020

·       Management is also exploring several opportunities for cooperation but they are in preliminary stages and there is no certainty that any deal may materialise

 

Click here for full results release.

 

China Sunsine Chemical

·       1H 2020 revenue decreased 26% YoY mainly due to slowdown of the economy and continued downward pressure on average selling prices (ASP) during COVID-19

·       ASP dropped by 21% YoY in 1H 2020 mainly due to lower raw material prices, and weaker demand for its products resulting from the lower production utilisation rate in the tire manufacturing industry

·       Net profit declined 69% YoY due to intensifying competition and weak demand from COVID-19 and slowing down of economies

·       Strong balance sheet provides sound fundamental support for further challenges and future development

·       COVID-19 outside China is still very severe, while the relationship between US and China is getting more toxic, which causes greater uncertainties

·       Raw material prices are still hovering at low levels, and as such, the Group’s ASP is still under pressure

·       Some players in its industry may have increased their production capacity which will result in greater competition

·       The Group will endeavour to improve its sales, focus on operational improvement, reduce raw material consumption, control cost and strengthen its cash flow management in order to achieve sustainable growth

·       Management remains confident about the Group’s profitability in the next 12 months

 

Click here for full results release.



Five Most Traded Materials & Resources Stocks

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China-Focused Materials Stocks Led Sector’s YTD Gains

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Jiutian Chemical Group Ltd. manufactures chemicals.  The Company produces and sells methanol, methylamine, dimethylformamide and gas.

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Jiutian Chemical (JIUC SP)

Five Most Traded Materials & Resources Stocks

Four of the five stocks remained in the black for 1H2020 – CNMC Goldmine swung to a net loss from a year-earlier net profit due to an...

Singapore Exchange Ltd (SGX)

China-Focused Materials Stocks Led Sector’s YTD Gains

Singapore Exchange Ltd (SGX)

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