FRANKFURT/SHANGHAI (Reuters) - General Motors stock fell sharply in Frankfurt on Tuesday on renewed bankruptcy fears, weighing on autos stocks across the region, as peer Chrysler pinned its hopes on a tie-up with Fiat.
Abu Dhabi's government-linked investment fund Aabar, a leading GM investor, on Friday ruled out buying more shares in Daimler or a stake in GM's Opel unit.
This was followed on Sunday by a report in the New York Times that the U.S. Treasury Department was directing GM to lay the groundwork for a bankruptcy filing should it fail to agree debt-for-equity deals with stakeholders by the deadline set by the Obama administration two weeks ago.
The news sent GM stock down 17 percent in early Frankfurt trade after a 16 percent fall in U.S. trade on Monday.
By 1111 GMT (7:11 a.m. EDT), the stock had recovered slightly to trade down 10.39 percent, against a 2.34 percent gain in the wider DJ Stoxx European Autos index.
Asian stocks also suffered on fears of a GM bankruptcy. Japan's Nikkei average fell 0.9 percent as worries spurred investors to lock in profits on auto shares. more...
Selasa, 14 April 2009
Associated Press Stocks move lower after lackluster retail sales report stirs caution about economy's direction
NEW YORK (AP) -- Wall Street fell early Tuesday after an unexpected drop in retail sales in March tested a notion that the economy is starting to find its footing.
The worries over the retail sales data also overshadowed better-than-expected profit reports from Johnson & Johnson and Goldman Sachs Group Inc.
Financial stocks showed some of the steepest losses even after Goldman's results came in well ahead of what analysts had been expecting. Other financial companies are due to report quarterly results this week.
Federal Reserve Chairman Ben Bernanke's assertion Tuesday there have been "tentative signs" of easing in the recession appeared to contain selling pressure after a five-week surge in the stock market.
In the early going, the focus was on the Commerce Department's report that retail sales fell 1.1 percent in March, the biggest drop in three months. Analysts polled by Thomson Reuters had expected an increase of 0.3 percent.
In the first half-hour of trading, the Dow Jones industrial average fell 93.82, or 1.2 percent, to 7,963.99.
Broader stock indicators also lost ground. The Standard & Poor's 500 index fell 10.75, or 1.3 percent, to 847.98, and the Nasdaq composite index fell 16.49, or 1 percent, to 1,636.82.
The worries over the retail sales data also overshadowed better-than-expected profit reports from Johnson & Johnson and Goldman Sachs Group Inc.
Financial stocks showed some of the steepest losses even after Goldman's results came in well ahead of what analysts had been expecting. Other financial companies are due to report quarterly results this week.
Federal Reserve Chairman Ben Bernanke's assertion Tuesday there have been "tentative signs" of easing in the recession appeared to contain selling pressure after a five-week surge in the stock market.
In the early going, the focus was on the Commerce Department's report that retail sales fell 1.1 percent in March, the biggest drop in three months. Analysts polled by Thomson Reuters had expected an increase of 0.3 percent.
In the first half-hour of trading, the Dow Jones industrial average fell 93.82, or 1.2 percent, to 7,963.99.
Broader stock indicators also lost ground. The Standard & Poor's 500 index fell 10.75, or 1.3 percent, to 847.98, and the Nasdaq composite index fell 16.49, or 1 percent, to 1,636.82.
Business Times Palm futures extend uptrend on weak stockpile
CPO FUTURESCrude palm oil (CPO) futures prices on Bursa Malaysia Derivatives ended mostly higher yesterday, extending its uptrend on weak stockpile.
OSK Research in its note said the decline in the palm oil inventory last month has helped drive palm oil prices higher rather than strong demand.
It said Malaysia's inventory fell by 12.7 per cent to 1.364 million tonnes, its lowest since July 2007 as production was still low in absolute terms.
However, it is still maintaining a cautious outlook premised on strong production recovery in the second half of the year.
"Hence, should production recover, inventory will again start to go up if the rise is not matched by an increase in exports," OSK added.
At the close of trading yesterday, the CPO futures contracts for April 2009 jumped RM38 to RM2,455 per tonne, May 2009 dipped RM12 to RM2,418 per tonne, June 2009 went up RM36 to RM2,335 per tonne and July 2009 added RM41 to RM2,290 per tonne.
The day's volume amounted to 14,825 lots, down from last Friday's 10,824 lots, while open interests slide to 85,966 contracts from 86,545 previously.
As for the physical market, the CPO for April shipments in the southern region was higher at RM2,480 per tonne compared to last Friday's RM2,430 per tonne.
Macquarie Positive data points for thermal coal
Positive data points for thermal coal
Macquarie commodities team keeps its cautious outlook on thermal coal, but recent developments on China coal inventory and price gap between domestic and export look encouraging to me. China’s thermal coal inventory is at three year low, while export price is now cheaper than domestic. This could point to an increased importation of thermal coal by China in the short term. My personal favourite coal names are Bumi Resources and Adaro.
Figure 1. China thermal coal inventory
Figure 2. Price gap between domestic and import for thermal coal
Macquarie commodities team keeps its cautious outlook on thermal coal, but recent developments on China coal inventory and price gap between domestic and export look encouraging to me. China’s thermal coal inventory is at three year low, while export price is now cheaper than domestic. This could point to an increased importation of thermal coal by China in the short term. My personal favourite coal names are Bumi Resources and Adaro.
Figure 1. China thermal coal inventory
Figure 2. Price gap between domestic and import for thermal coal
CLSA Bumi, maintain Sell, BUT .... Salesdesk
Research Today:
Our analyst Olie has just written a report on Bumi Resources (BUMI IJ). Olie’s TP is Rp650 (up from Rp500 previously), but SELL recommendation is maintained. The TP is based on the blended valuation method, assigning 40% discount to conservative NPV.
Key points from the report:
(1) Olie revises his earnings forecast up (by 15% in 2009 and 75% in 2010)
Changes in debt and asset composition that resulted in lower than previously assumed interest expenses.
Inclusion of profit from the recently acquired assets, DEWA and FBS: will add around 5% to earnings in 09.
Debt repayment schedule: faster than what we expected earlier.
(2) Mounting debt and no immediate CFs for many assets that BUMI acquired
BUMI’s mounting debt is approaching US$1.7bn of Dec 08 and the big chunk of the debt proceeds is being used to finance non core assets (reaching US$782mn as of Dec 08). And these investments, except DEWA and FBS, are not going to generate any cash flows in the near future.
(3) Would BUMI pay Rp100/share dividend?
Market has also been talking about BUMI to pay Rp100 dividend/share (we will know in June EGM). This is based on the 30% dividend policy that BUMI stated as its max payout policy, or 30% * US$645mn (FY08 net profit) = US$194mn. BUMI’s cash available, depending whether to include restricted cash or not, would range between US$31mn to US$233mn. There seems to be capacity to pay Rp100 div/share. Bottom line: not impossible but may prove to be complicated.
Sales desk’s comment:
While we agree with most of Olie’s more fundamental view, from trading perspective BUMI is looking very interesting.
(1) BUMI is still by far the most liquid stock in the sector, in fact the most liquid stock in Indo market. It is 4x more liquid than the next most liquid stock in the coal space (PTBA).
(2) Investors have massively reduced their positions in BUMI. And only 1/3 of the analysts who cover BUMI currently have BUY rating for the counter.
(3) BUMI is the most leverage coal play (to coal prices) in Indonesia. BUMI earnings sensitivity is around 2% for 2009 and 5% for 2010, this is for 1% change in contract thermal coal price (vs. less than 1% in 09 and less than 4% in 2010 for other coal companies). Thermal coal futures in Europe has been rising lately and the speculation is that the gap with Newcastle benchmark is going to narrow going forward (to be fair, Olie already assumes US$72 benchmark coal price, which is above current Newcastle spot price, but hard to fight the sentiment).
(4) It appears that most analysts have assigned a zero valuation to most of BUMI’s non core assets, such as Herald Resources. We think improved sentiment in the commodity sector will change this over time.
(5) Our China Reality Research pointed out that coal port inventory -17% WoW to 3.8mn tonnes. Spot prices of higher-quality coal (5,800kcal/kg and 5,500kcal/kg) rose for the second week, up 1.2% and 1.8% WoW, respectively. Meanwhile, inferior coal (5,000kcal/kg) rose by 2.1% WoW.
Our analyst Olie has just written a report on Bumi Resources (BUMI IJ). Olie’s TP is Rp650 (up from Rp500 previously), but SELL recommendation is maintained. The TP is based on the blended valuation method, assigning 40% discount to conservative NPV.
Key points from the report:
(1) Olie revises his earnings forecast up (by 15% in 2009 and 75% in 2010)
Changes in debt and asset composition that resulted in lower than previously assumed interest expenses.
Inclusion of profit from the recently acquired assets, DEWA and FBS: will add around 5% to earnings in 09.
Debt repayment schedule: faster than what we expected earlier.
(2) Mounting debt and no immediate CFs for many assets that BUMI acquired
BUMI’s mounting debt is approaching US$1.7bn of Dec 08 and the big chunk of the debt proceeds is being used to finance non core assets (reaching US$782mn as of Dec 08). And these investments, except DEWA and FBS, are not going to generate any cash flows in the near future.
(3) Would BUMI pay Rp100/share dividend?
Market has also been talking about BUMI to pay Rp100 dividend/share (we will know in June EGM). This is based on the 30% dividend policy that BUMI stated as its max payout policy, or 30% * US$645mn (FY08 net profit) = US$194mn. BUMI’s cash available, depending whether to include restricted cash or not, would range between US$31mn to US$233mn. There seems to be capacity to pay Rp100 div/share. Bottom line: not impossible but may prove to be complicated.
Sales desk’s comment:
While we agree with most of Olie’s more fundamental view, from trading perspective BUMI is looking very interesting.
(1) BUMI is still by far the most liquid stock in the sector, in fact the most liquid stock in Indo market. It is 4x more liquid than the next most liquid stock in the coal space (PTBA).
(2) Investors have massively reduced their positions in BUMI. And only 1/3 of the analysts who cover BUMI currently have BUY rating for the counter.
(3) BUMI is the most leverage coal play (to coal prices) in Indonesia. BUMI earnings sensitivity is around 2% for 2009 and 5% for 2010, this is for 1% change in contract thermal coal price (vs. less than 1% in 09 and less than 4% in 2010 for other coal companies). Thermal coal futures in Europe has been rising lately and the speculation is that the gap with Newcastle benchmark is going to narrow going forward (to be fair, Olie already assumes US$72 benchmark coal price, which is above current Newcastle spot price, but hard to fight the sentiment).
(4) It appears that most analysts have assigned a zero valuation to most of BUMI’s non core assets, such as Herald Resources. We think improved sentiment in the commodity sector will change this over time.
(5) Our China Reality Research pointed out that coal port inventory -17% WoW to 3.8mn tonnes. Spot prices of higher-quality coal (5,800kcal/kg and 5,500kcal/kg) rose for the second week, up 1.2% and 1.8% WoW, respectively. Meanwhile, inferior coal (5,000kcal/kg) rose by 2.1% WoW.
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