NextInsight - Latest News (Main) https://www.nextinsight.net/ Sun, 24 Jun 2018 16:42:04 GMT FeedCreator 1.8.0-dev (info@mypapit.net) Electric vehicles: Battery minerals investors race up the learning curve http://www.nextinsight.net/story-archive-mainmenu-60/940-2018/12274-electric-vehicles-hurdles-faced-by-investors We are at the start of the electric vehicle era, and investors are increasingly attracted to battery minerals. Listed on the Singapore Exchange is Alliance Mineral Assets which is about to merge with JV partner, Tawana Resources.

The pro-forma market capitalisation of about A$450m will place the merged group -- which owns the Bald Hill lithium project in Western Australia -- on the radar of many mid-cap institutional investors. In fact, they have started to come. See: 
ALLIANCE MINERAL ASSETS: 2 funds become substantial shareholders this month


Here, we excerpt from interesting interviews that The Lithim Spot has just conducted with 
Guy Bourassa, President and CEO, Nemaska Lithium; Richard Seville, MD and CEO, Orocobre Limited; and Ken Brinsden, MD and CEO, Pilbara Minerals. For the full interviews, see links at the bottom. 



Q: The big elephant in the room is the Morgan Stanley downgrade of the lithium sector. What are your thoughts on this and what are they missing?

ElectricCar1.18Nemaska: I believe that Morgan Stanley is relatively new to the lithium space and the authors of this report lacked the depth of knowledge of the lithium sector and what it takes to bring new lithium salts production on line, be it a hard rock mine or a brine project.

It is challenging to bring new production on line and to immediately achieve nameplate capacity. One has to look no further then Orocobre, which is the newest producer, who just reduced their yearly production guidance to 12,000 tonnes of carbonate from their nameplate of 17,000 tonnes, after more that 3 years of ramp-up.

Also achieving the customer quality specification for batteries and qualifying as a new supplier in this market is extremely challenging.

This is why at Nemaska Lithium we built the Phase 1 Plant to allow us to run a small scale semi-commercial operations to work out the technical issues in advance of building the full scale commercial facility. Also it allows us to send product samples to customers thereby starting the qualification process as new lithium salts provider.

Another fallacy in this report is the assumption that both Albermarle and SQM will immediately ramp their production to 500,000 tonnes by 2021 and flood the market with product and crash the price of lithium carbonate to US$7000/tonne.

Both companies have said they intend to increase production in step with the market and have no intention of flooding the market with lithium salts. In addition, both companies have indicated that increasing production will require massive investment and is technically very challenging.

Remember also that SQM is leasing their property and will be renegotiating their mining lease with Corfo in 2030. SQM has also clearly mentioned lately that they do not intend to increase their production to more than 100,000 tonnes from their actual 48,000 capacity.

The risk of investing large sums on money into this project for expansion has to be carefully weighed by SQM.

Finally, roughly half the world's production has cash costs around $6,000/tonne so selling it at US$7,000/tonne as suggested by Morgan Stanley will not allow for much margin and potentially take some production off line all together.

baldhill2.18@ Bald Hill lithium project of Alliance Mineral Assets and Tawana Resources. Both companies are set to merge in Sept 2018, forming an entity with a pro-forma market cap of about A$450 m. Photo: Company
Q: What is the biggest hurdle you have to overcome when meeting with new investors interested in the lithium space, but perhaps not as well informed?


Nemaska: The lithium space does require that the investor do some reading and become educated in the space. Not all lithium companies are equal and investors should do their own due diligence to cut through the noise to decipher who has quality assets, experienced management teams and the ability to create shareholder value.

Orocobre: That the supply side of lithium is capital intensive, technically complicated, and most importantly it takes time for production to get off the ground. Even the lithium majors have had challenges in ramping up.

In the most recent quarter, major Chinese producers Tianqi and Ganfeng prices were reportedly stable at H2 levels with no un-committed volume available as both experienced an imbalance between spodumene concentrate supply and lithium salt production due to longer than expected maintenance or completion and commissioning of expansion volume.

Similarly, another significant conversion plant Yahua conceded it had temporarily ceased production to improve plant equipment (Benchmark Minerals, April 2018). Meanwhile, no information could be sourced to confirm that Shandong Ruifu's product line installed to convert direct shipping ore was completed on time.

Further investment is required in downstream conversion capacity to address the existing bottleneck for spodumene conversion. In response, many of the existing conversion plant operators announced expansions of varying scales and timeframes.

Historically, actual effective conversion capacity has been significantly less than claimed nameplate capacity.

Therefore, the actual conversion capacity realised in the short to medium term will lie somewhere between the existing capacity and claimed new nameplate capacity. We continue to see significant headwinds for new production and supply.

Pilbara: It started with how real the overall demand equation was, then moved to the validity of the respective supply bases and can't the brines just swamp supply? (still some laggards thinking along these lines).

Overall, I think the weight of numbers has started to win the day and in our view will continue to do so for a couple of years to come. Demand growth (especially from China) will continue to underwrite the broad story with global car makers capitulating and rolling out more EV product.

Energy storage should also not be underestimated. Li Ion batteries become the lowest cost rechargable batteries and as such become a bit subset of supply to this market.

For more, see Lithium CEO Roundtable I and Lithium CEO Roundtable II.

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ct.leong@nextinsight.net (Leong Chan Teik) Sun, 24 Jun 2018 00:09:42 GMT http://www.nextinsight.net/story-archive-mainmenu-60/940-2018/12274-electric-vehicles-hurdles-faced-by-investors
5 Ways Your Family Can Lose A Lot Of Money If You Don’t Do Estate Planning http://www.nextinsight.net/story-archive-mainmenu-60/940-2018/12273-5-ways-your-family-can-lose-a-lot-of-money-if-you-don-t-do-estate-planning

ornella binni 148189 unsplash 1024x683Photo: Unsplash

Death is a topic that most Singaporeans would rather avoid thinking and talking about.  

Unfortunately, by not doing proper estate planning and discussing such matters, our surviving loved ones might lose out on large sums of money. We highlight 5 ways this can happen, in the hope that it might inspire you to kickstart your estate planning.


# 1 Forced Liquidation Of Assets At Unfavourable Prices

If you do not have a will, your assets will be distributed according to the Intestate Succession Act. For details of how this works, you can read this article about how assets are distributed when someone passes on.

The thing is, it is easy to split money among your surviving family members in accordance with the law. However, if you have assets like a private property, then it will need to be sold before the proceeds can be split.

Unfortunately, this can mean that the property is sold at unfavourable prices, either because the market isn’t ideal for sellers, or the short time frame forces your family to accept whatever offer was received.
 

# 2 Surviving Heirs Unable To Manage Your Investment Portfolio

LQM CF99B9If you have assets like a private property, then it will need to be sold before the proceeds can be split.

Unfortunately, this can mean that the property is sold at very unfavourable prices, either because the market isn’t that ideal for sellers at that point in time, or the short timeframe meant that your family had to accept whatever offer was received.

You might have spent a large part of your life carefully assembling your investment portfolio, spending your weekends devouring the best investment and trading blogs in Singapore.

When you’re no longer around, do you have a plan on how your surviving family members should take over your portfolio?

Should they liquidate all your holdings? Or perhaps you’d like them to sell off those assets that require active management, and hold certain blue chip stocks and REITs for recurring dividends?

If you’re not properly planning and briefing the heirs of your portfolio, they could be making decisions that would make you turn in your grave.

# 3 Your Surviving Family Members Not Knowing About Assets

Part of the will-making process is doing up a proper schedule of all your holdings, including bank accounts, life insurance policies, properties, shares in companies, investment accounts, and even personal IOUs.

Without this schedule, your family might not be aware of assets that can amount to a not insignificant sum of money. Making an inventory of your assets or briefing your executor is crucial to ensure that all your assets are accounted for and taken over in a timely manner after your passing.

As part of the process of making a will in Singapore, one has to do a CPF Nomination, since CPF funds are not covered under the Intestate Succession Act. This ensures that your CPF monies are distributed in accordance to your wishes.

# 4 Overspending On Your Funeral

LQM CF99B9Part of the will-making process is doing up a proper schedule of all your holdings, including bank accounts, life insurance policies, properties, shares in companies, investment accounts, and even personal IOUs.

After your passing, you probably don’t care so much about appearances. What matters most are for your beloved family and friends to mourn, and then honour your memory by living the best lives they can, while keeping memories and values you left them.

This might be your intention, but if it isn’t communicated to your family, then they might (with the best intentions and in all sincerity) feel like they need to give you a grand and spectacular send-off. 

Exquisite coffins, large rented spaces, full-page obituaries, and elaborate ceremonies – there are many ways to upscale a funeral. If that is what you want, that’s great. But if you prefer an intimate, private affair, then letting your intentions be known would save your family from spending unnecessarily.

# 5 Your Family Being On The Hook Needlessly For Credit Facilities

While generally, your family members are not liable for your debts, they would be responsible if they are co-signees on loans and credit cards.

You might have put their names years ago but this has large financial implications, especially if you’re the sole breadwinner.

If you’re still young and in good health, speak to your bank and see if you can ‘clean up’ some of your accounts, so that if the worst were to happen to you, that misfortune does not continue to haunt your surviving loved ones.

Proper Planning Prevents Problems
We spend lots of time trying to optimise our earnings and get the best bang for our buck. Now that we understand how our loved ones could stand to lose from a lack of estate planning and discussion about such matters, there is no better time than now to do something about it.


This article is republished with permission from Dollars and Sense.

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simkih@nextinsight.com.sg (Sim Kang Heong) Sun, 24 Jun 2018 03:51:07 GMT http://www.nextinsight.net/story-archive-mainmenu-60/940-2018/12273-5-ways-your-family-can-lose-a-lot-of-money-if-you-don-t-do-estate-planning
TRENDLINES GROUP: You are invited to 27 June event http://www.nextinsight.net/story-archive-mainmenu-60/940-2018/12270-you-are-invited-to-trendlines-event Trendlines’ senior management team will be in Singapore next week (on a Singapore-government sponsored trip), and will hold an investor relations event on Wednesday, 27 June.

SteveTodd3.18Trendlines co-chairmen Steve Rhodes and Todd Dollinger will be at the 27 June event. File photo.The event will showcase Trendlines’ operations in Israel and provide insights into the incubation of startup companies.

Trendlines invents, discovers, invests in, and incubates innovation-based medical and agricultural technologies.

"As intensely hands-on investors, we are involved in all aspects of our portfolio companies from technology development to business building. Simply stated, we create and develop companies to improve the human condition," the Singapore-listed company says on its website. (See also: 
)


Investors, shareholders, analysts and media who are interested to attend -- please email your full name and contact number to: reyna@financialpr.com.sg

Zoom In On TrendlinesHow an incubator builds portfolio value

Meet the Trendlines Senior Management Team

Venue

Meeting Point @JTC Launchpad, Block73B, Ayer Rajah Crescent, Singapore

11:00

Opening remarks: Eric Loh, CEO Trendlines Medical Singapore

11:15

Panel discussion with Trendlines Senior Managers: "Lessons learned on building a start-up ecosystem"

12:00

Portfolio company presentation

12:10

Q&A

12:45

Israeli-style lunch and networking

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ct.leong@nextinsight.net (Leong Chan Teik) Wed, 20 Jun 2018 21:29:48 GMT http://www.nextinsight.net/story-archive-mainmenu-60/940-2018/12270-you-are-invited-to-trendlines-event
SILVERLAKE AXIS, ISOTEAM, KSH: Orderbooks piling up high http://www.nextinsight.net/story-archive-mainmenu-60/940-2018/12268-silverlake-axis-orderbook-near-record-highs

Silverlake Axis is the third company this month that analysts have highlighted as having achieved record orderbooks. The others are ISOTeam and KSH Holdings. See: 



Excerpts from RHB Research report

Analysts: Jarick Seet & Lee Cai Ling

Maintain BUY and SGD0.65 TP, 25% upside. Silverlake’s poor FY17-18 financial performances have been on regional banks cutting/pulling back on major IT spending over the last two years.

Silverlake

Share price:
52 c

Target: 
65 c

However, we understand these banks are now open to large IT capex again, with some needing to upgrade core banking systems.

This trend is justified by Silverlake’s contract wins over the last few months and orderbook at near record highs.

Hence, we think earnings will surge strongly over the next two years, especially in FY19, and maintain our call on this counter.



Silverlake Axis has announced the winning of several sizable contracts in the past few months, eg upgrading Malaysia Building Society’s (MBS MK, NR) core banking system. This has bumped up the existing orderbook to MYR380m, near its peak levels. Management also said it is in talks with a few Indonesian financial institutions that are looking to upgrade their core banking systems.

Silverlake RaymondKwong GohPengOoiSilverlake MD Raymond Kwong and Founder-Chairman Goh Peng Ooi. Photo: CompanyWe estimate each of these contracts to be worth ~MYR150-200m and implemented over a 2-year period. Thus, we expect these factors to translate into earnings visibility and potentially add on to its 89.8% surge in net profits, especially in FY19 (Jun).

Recurring dividends back to attractive 5-6% levels plus special dividends. FY17-18 dividends were majorly supported by special dividends from share sales in Silverlake’s China-listed associate Global InfoTech (GIT). With earnings having taken a hit, dividends from recurring NPAT have decreased significantly.

However, with Silverlake’s projected recovery going forward, we expect recurring dividends to recover to 5.7% in FY19. Additionally, proceeds from further sales of GIT shares are likely to translate into special dividends to shareholders – further increasing the dividend yield. Share buy-backs have also commenced, and 31.8m shares have been bought back YTD.

The next Silverlake in the making? Silverlake’s insurance business has been experiencing double-digit growth since inception, and management has expressed interest in doing acquisitions to hasten the growth pace.

As we see it, once its insurance revenue reaches a more sizable base, a spin-off should be possible, This ought to benefit shareholders and – at the same time – provide the insurance business with ample resources to grow at a faster speed.

Maintain BUY and TP of SGD0.65, 25% upside. With bumper years of PATMI growth ahead – justified by Silverlake’s strong orderbook of >MYR380m (not seen since FY15-16) – we believe the company’s business cycle has bottomed – with earnings likely to surge over the next few years.

In addition, positive signs from Silverlake’s licensing and project services revenue streams in 3QFY18 also point towards a strong outlook. Our unchanged DCF-backed TP reflects 21x FY19F P/E. A key risk to our call is the delay in or implementation of orders.



Full report here. 

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ct.leong@nextinsight.net (Leong Chan Teik) Wed, 20 Jun 2018 14:09:22 GMT http://www.nextinsight.net/story-archive-mainmenu-60/940-2018/12268-silverlake-axis-orderbook-near-record-highs
SASSEUR REIT: Citi initiates coverage with 92-c target price http://www.nextinsight.net/story-archive-mainmenu-60/940-2018/12267-sasseur-reit-citi-initiates-coverage-with-92-c-target-price In the second broker initiation report on Sasseur REIT this month, Citi Research has set a target price of 92 cents, which is higher than Maybank Kim Eng's 90 cents.

Maybank Kim Eng

Citi Research

Target price

90 c

95 c

Date of initiation report

7 June
2018

19 June 2018

Citi, which used the dividend discount model (DDM) for its target price, said the REIT is a pioneer in China’s fast-growing outlet malls segment.

The REIT listed on the Singapore Exchange in March 2018 at 80 cents, and currently trades at 76 cents.

AnthonyAng Anthony Ang, CEO of Sasseur REIT.
NextInsight file photo.
Like Maybank Kim Eng, Citi noted that the downside to distributions in FY18-19 are protected under the guaranteed resultant rental (S$115mn / S$124mn in FY18E/19E).

"We think current valuation at 9.7% 2019E dividend yield is attractive considering the risk profile," it said.

The REIT's key strengths are viewed as including a strong brand portfolio and close, proactive cooperation with tenants; and first-mover status with strong industry expertise in targeting customer preferences, outlet design, inventory management,etc.;

Like Maybank Kim Eng, Citi said key risks include competition from other retailers, outlet operators, and e-commerce.

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ct.leong@nextinsight.net (The NextInsight Team) Tue, 19 Jun 2018 08:47:41 GMT http://www.nextinsight.net/story-archive-mainmenu-60/940-2018/12267-sasseur-reit-citi-initiates-coverage-with-92-c-target-price
NO SIGNBOARD: Introduces Little Sheep hot pot franchise, buys remaining 20% of beer biz http://www.nextinsight.net/story-archive-mainmenu-60/940-2018/12263-no-signboard-holdings-to-operate-little-sheep-hot-pot-franchise-acquire-20-beer-business No Signboard Holdings, best-known for its chain of seafood restaurants in Singapore, has entered into a franchise agreement to develop and operate Little Sheep restaurant concept in Singapore.

Little Sheep is a well-known hot pot restaurant in China. 

littlesheepEstablished since 1999 with origins from Inner Mongolia, Little Sheep has over 280 outlets across China and markets including the USA, Canada and Japan. Of these, 270 are franchised. Photo: Company
Under the agreement, No Signboard will operate the franchise for 10 years, starting from 18 June 2018.

Stock price 

15.4 c

52-week range

15  – 33 c

PE (ttm)

8.6

Market cap

S$71 m

Shares outstanding

462 m

Dividend 
yield (ttm)

0.2%

P/B

4.2

Source: Bloomberg

No Signboard targets to launch one restaurant per year in Singapore within the first five years.

Mr Sam Lim, Executive Chairman and CEO of No Signboard, said, "Little Sheep is known for its delicious soup base that is made from 36 spices and Mongolian lamb delicacies.


"Singapore remains a key, proven and familiar market for our Group with the right demographics to expand our restaurant business portfolio. Given the popularity of hot pot restaurants among Singaporean consumers over the last couple of years, we are confident that this venture would be a great success.”

With 30 years of track record in the F&B industry, No Signboard, in April 2017, diversified its business by starting The Ma2 (Mama) Shop.

This is a cluster of vending machines that sells ready-to-eat meals and medical supplies in seven locations including Tampines and Holland Drive.



draftdenmarkEstablished since 2014, Draft Demark is distributed across around 300 outlets in Singapore comprising mainly pubs, coffee shops and clubs. Meanwhile, No Signboard's fully-owned subsidiary – Tao Brewery -- has entered into a Sales and Purchase Agreement with Mr Samuel Chen Shangming to acquire the remaining 20% stake in Danish Breweries for S$400,000.

Mr Chen is an executive under the Group’s Beer Business.

The Acquisition, to be funded by the Group’s IPO proceeds (S$23.9 million gross), will be spread out across 10 monthly instalments of S$40,000.

Danish Breweries owns its signature Draft Denmark brand as well as manufactures and distributes Draft Denmark lagers in Singapore. 

SamLim"There are about 1,200 coffee shops in Singapore, definitely more than the number of pubs and clubs establishments in Singapore. Therefore, we have also taken the strategic view to focus on increasing our market share and presence in distributing our Draft Denmark beers to more coffeeshops. Our Group remains committed and cautiously optimistic of turning around our Beer Business in the coming quarters.”

-- Sam Lim (photo), 
Executive Chairman & CEO, 
No Signboard Holdings

Draft Denmark sells approximately 80,000 barrels, or 2.4 million litres, of lager annually in Singapore.

Prior to No Signboard’s IPO listing on the Catalist board of SGX in Nov 2017, the Group acquired 80% of Danish Breweries in June 2017 for S$1.78 million.

The initial acquisition boosted No Signboard’s revenue by around S$3.1 million for FY2017 in a span of 4 months and contributed about 14.5% of its FY2017 revenue.

Revenue from its beer business grew 23.1% from S$1.3 million in 1Q2018 to S$1.6 million in 2Q2018. The Group has set aside S$10.0 million of the IPO proceeds to expand the beer business.

Mr Sam Lim, Executive Chairman and CEO of No Signboard, said the acquisition of the remaining 20% stake was to "fully capitalise on the potential of the beer business."

The company is seeking to reduce the operational costs of the beer business, especially the marketing and distribution expenses, and expects it to boost earnings.

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ct.leong@nextinsight.net (The NextInsight Team) Tue, 19 Jun 2018 00:23:18 GMT http://www.nextinsight.net/story-archive-mainmenu-60/940-2018/12263-no-signboard-holdings-to-operate-little-sheep-hot-pot-franchise-acquire-20-beer-business

Share Prices

Counter NameLastChange
AEM Holdings1.1500.080
Alliance Mineral0.360-
AusGroup0.0410.001
Avi-Tech Electronics0.390-
Best World Int.1.3200.110
China Sunsine1.530-0.010
DISA Limited0.008-0.001
Dutech Holdings0.290-
Federal Int. (2000)0.255-
Food Empire0.6600.010
Geo Energy0.2250.010
Golden Energy0.355-0.005
GSS Energy0.1410.004
Heeton Holdings0.555-0.005
ISOTeam0.3500.015
KSH Holdings0.6650.040
Lian Beng Group0.5550.015
Miyoshi0.055-
Nordic Group0.520-0.020
Oxley Holdings0.4350.015
REX International0.0480.002
Riverstone1.010-0.030
Roxy-Pacific0.5050.010
Serial System0.150-0.002
Sing Holdings0.425-0.005
Sino Grandness0.220-
Straco Corp.0.750-0.005
Sunningdale Tech1.3300.050
Sunpower Group0.580-0.025
The Trendlines0.121-
Tiong Seng0.3950.005
Trek 2000 Int.0.1450.015
Uni-Asia Group1.350-
XMH Holdings0.200-
Yangzijiang Shipbldg0.9550.010

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