The Cerebos results meeting yesterday was well attended.  Here is a summary of what I felt were key points raised at the meeting:

Cerebos Pacific Ltd, one of my yield stock picks, has just reported its FY2011 results.  The results announcement makes a comparison of 12 months for 2011 against 15 months for 2010.  I have adjusted the results as best I can to compare 12 months in 2011 against 12 months in 2010 (see table below).

 The October 2011 stock rally – STI rose from 2630 to 2904 before moving down to the 2600 level until the rally in early 2012 (see chart below).

 Jaya shares have been hovering around the price that the  previous major shareholder had divested to some strategic investors in early 2011 - S$0.48 (see chart below). 

 In a TV interview this morning, I was asked about the problems in the US and EU with regard to their national deficits.

 In a recent TV interview, I was asked about the new Governments in Greece in Italy and whether this meant that the worse was and we could expect a Santa rally.   I was skeptical because if major indices fluctuate +/- 2% every other day - it reflects a high degree of uncertainty.  I was also skeptical because even if Governments change - they still need to ratify the measures requested by the ECB for them to tap the rescue funds.   The volatility continues and while the appointments of new Prime Ministers in Greece and Italy did cause the VIX (fear) index to briefly fall below 30 (the so called safe region), it didnt stay there for very long.

 I have been pleasantly surprised by the recent strong gains in stock markets round the world in the hope that the EU can find a way to rescue itself from the current fiscal and financial mess.    The two intra-day charts below show the huge intra-day volatility in both the Dow and the STI as investors place some hope that the worse is over for the EU and things can only improve.

I added Hock Lian Seng to my Stock Picks in January 2010 when the share price was S$0.32.  The company then had an order book of S$600-700mn and just reported a strong set of 2009 results.  Revenue was S$224.8mn and net profit was S$21.3mn.  Gross cash was about S$143mn including S$61mn in progress payments in excess of billings.  The 2010 results were also good with revenue of S$229mn and net profit of S$27mn.  Gross cash was S$165mn including progress payments in excess of billings of S$78mn.  By the end of FY2010, the order book had declined to S$350mn with Hock Lian Seng not being able to secure new MRT projects.  The half year 2011 results were worrying not because revenue and profit declined by 32% and 37% respectively to S$80.4mn and S$9.6mn (as this could be due to progressive recognition issues)  but because the order book had fallen to only S$272mn or just over one and half year's revenue.  Gross cash was S$167.2mn including progress payments in advance of billings of S$90mn.   I have been in contact with the company and have informed them about my concern about the declining order book.   They informed me that they were facing severe competition from foreign contractors who were under-cutting them and were cheaper than them by more than 10%.   On the MRT contracts they were also disadvantaged by their inability to do tunneling work.   They were however very hopeful about getting part of the Tuas West Extension project which involved cut and fill.  The tender closed earlier in Q1-2011.

 Frencken and Juken released an update announcement on the proposed acquisition of Juken by Frencken on 14October 2011.   NO AGREEMENT has been reached yet and the proposed acquisition is subject to a number of conditions such as Frencken being able to raised financing and also due diligence on Juken by Frencken.   The latest announcement informs shareholders/investors that Frencken has just commenced due diligence on Juken.   Although no agreement has been signed and the acquisition terms also not announced yet, I see the announcement that Frencken has commenced due diligence on Juken signalling that the transaction is still moving ahead and they are going through the check list.

 Juken Technology called for a Trading Halt yesterday and announced that it has signed a non binding indicative term sheet with the Frencken Group.   In the announcement, Frencken proposes to acquire all the shares of Juken in a Scheme of Arrangement.  Investors should note that no definitive agrement or terms have been reached and the proposed acquisition may not even take place.   However, if the deal does go through, this will be the third company in my Stock Picks being privatised - starting with Sinomem, then Allgreen and now potentially Juken.  I guess this is a problem that may occur when you recommend stocks which are on low valuatons as the owners or potential investors find it more attractive to delist them.