SJKV Newsletter #05

SJKV Monthly Newsletter #05 January

See important disclosure at the end of this newsletter

SJKV Monthly Newsletter #05

Disclaimer All SJKV Stocks to Watch, Stock Selection, Stock to Trade, Stock Reviews that are published and shown in any newsletters are merely for reference only. SJKV does not purport to identify all risks that may be involved in the securities or investments referred to in the newsletters. In spite of the efforts made in ensuring the accuracy of data and information, SJKV recognises that unintentional and chance errors occurs. SJKV is not responsible for any loss resulted from the investments made using the data and information provided on this newsletter, document or website. SJKV has no legal liability for a dispute between users or a user and a third party over the service provided, and do not take any responsibility for such dispute. If you are unsure, you should seek professional advice. Part

performance does not guarantee future success and does not necessarily indicative of future results. Please read full disclaimer at the back of this newsletter.

Each issue of SJKV Monthly Newsletter will be sent via email at the end of the month. Market prices are at Friday’s closing price unless indicated.

Successive JK Ventures Sdn. Bhd. (953338-M) Website: www.sjkventures.info (Site to be moved soon) Tel: (+6) 088 448 688 / Fax: 088 448 488 Email: [email protected]

Memo

‣Dear Subscribers

Welcome to our 5th monthly issue and a brand new 2015. This month’s newsletter we will be covering some of our January’s frequent asked questions from subscribers regarding the Iron Ore sector and a few stocks reviews. Other than that, we also received several positive feedbacks from subscribers.

To show our appreciation, we decided to refine our monthly newsletter and add in a Stocks to Watch section, specially picked stocks from our watch-lists and portfolio to help subscribers save time in your stock screening processes.

I will take this chance to say thank you to all our supporters and readers. We appreciate your feedbacks and comments. Khin ChongExecutive Director & Editor

Stock Market Updatesby Khin Chong | 23 January 2015

ASX

Markets are still trading on the high side and may go higher in the coming months if you are looking it at a technical angle. European Central Bank’s plans for a stimulus injection of €60 billion of bond buying per month.

The ASX (Australian Stock Exchange) is again hitting the peak, another few hundred points to reach last year’s highest at 5,679.50. Since 2011 minor crisis, ASX climbed from 4,000 points to 5,500 points within 3 years, it still looks technically strong and solid even with commodities collapsing with oversupply problems. However, on the fundamental and other out of the box analysis, I suggest investors should start reducing or sell some of the profited holdings and go for other alternative less volatile investments, start

looking for undervalued bluechip stocks with good dividend payout.

The recent fall in Australian Dollar is another important factor to take note of, that may contribute some impact to the market and economy. It may turn out to be a good opportunity for some of the investors. The Australian dollar is buying $US0.798, down $0.0255 over the week.

Reported Data:

The S&P/ASX 200 index climbed 82 points today, widening the weekly gain of 203 points to finish the week at 5,502. The value of trades was $4.44 billion on volume of 705 million shares at the close of trade.

Hang Seng HK

Closed at 24,850.45 points last Friday, looking bullish and may break the resistant level of 25,000 points.

JAN

mailto:[email protected]

mailto:[email protected]

See important disclosures at the end of this newsletter

Alibaba & Tencent

“If you were to invest in one of these two, which will you invest?”

Alibaba and Tencent are currently vying to be China's top one-stop online shop. The two companies are willing to spend billions to be the one-stop online shop that Chinese consumers would trust the most. Alibaba and Tencent have already spent more than $8 billion on 2014 in their race to be the top online one-stop shop that could cater to the needs of the Chinese netizens.

Alibaba the innovative and well known for it's partnering attitude, open to all potential businesses to join the group. Tencent, well known for its social application, creating the ultimate internet softwares and applications that will suit best for the mainland market. Now that Tencent pushes it's marketing and advertising businesses to a new level, with it’s ads income forecast by 18% to RMB15.6 billion. Based on the current estimate, the company's ads income will account for 16% of total revenue this year.

Alibaba Group Holding Ltd is reportedly planning an investment in the state-run New China Life Insurance Company Ltd. The investment arm of Chinese government Central Huijin Investment Ltd currently holds the largest stake in the $24 billion insurance company, and is planning to offload some of its shares to Alibaba Group. Both companies shows strong potential and are run by smart decision makers, the best answer to this question is to invest in any of these two at a good price or when they reach a certain bargain price, make sure you know what your portfolio needs. An all-rounder stock with diversified businesses or a strong niche player who focuses and specialises on a certain product line, with the same level of risks, both seems fairly solid and reliable to me.

Article - Alibaba & Tencent by Khin Chong | 23 January 2015

Four of the biggest events that shaped the Australian share market in 2014 Commodities: The plummeting iron ore and oil prices were one of the biggest factors impacting the sharemarket over the last 12 months. Increasing supply combined with weakening demand from China, saw the iron ore price plunge more than 47% since the beginning of the year. The oil price faced a similar issue with global supply far outpacing

demand. Brent oil, the global benchmark, has nearly halved in value since June which has reaped havoc on the energy sector. Qantas Airways Limited (ASX: QAN) has certainly benefited however thanks to lower petrol prices with

the stock up more than 90% over the last six months.

IPOs

Plenty of corporations took advantage of the market’s sentiment by listing on the ASX over the last year. In what was a heavily oversubscribed float, the sale of Medibank raised the government roughly $5.7 billion. While mum and dad investors were sold the stock for $2.00, it has since risen to $2.43 – a 21.5% paper profit.

Free Trade AgreementThe Australian government reached a historic Free Trade Agreement with China earlier in the year, as well as agreements with Korea and Japan. The Chinese deal will see a huge reduction in the tariffs currently applied to various Australian exports with some of the biggest beneficiaries to be in the agriculture and dairy industries. Interest RatesThe Reserve Bank held interest rates at just 2.5% over the course of the year which saw investors flock towards some of Australia’s best dividend stocks. Commonwealth Bank of Australia (ASX: CBA), which is Australia’s largest bank, recently recorded a fresh all-time high price while Telstra Corporation Ltd (ASX: TLS) managed to hit a new 13-year high at $6.03. With unemployment levels rising however, analysts are now expecting the RBA to cut rates at least once in 2015, while some say they could drop to just 2%.

Article - Australian Share Market by Lucas Leong XJ | 15 January 2015


Commodities by Khin Chong & Aaron Chong CY (News Assistant) | 23 January 2015

Gold The price of gold is buying $US1,297 an ounce, up $37.62 over the week. According to our previous newsletters, we covered and mentioned about potential bullish for gold commodity and gold miners, however we still need to take note on other factors and sectors which may impact the gold price in both good and bad ways. One of the reason for gold price to rebound and show some positive momentum this early January are simply because of market uncertainty. With fragile economies in US,Japan and Europe, we may see an increase in the price of gold in the coming months. Please see our stock review page (pg.4) for further reviews on gold mining stocks.

Iron Ore 20 January 2015, the price of iron ore has fallen overnight, from US$68.00 to new low US$67.80 per tonne. The commodity remains around 50% below its position at the same time last year as investors concerned about an oversupply that has been driven by surging production as demand growth stalls. Iron ore plummeted last year as surging global supplies topped demand (from USD$128.12 in Jan’14 to USD$ 68.80 in Dec’14 / loss more than 45%) However, the bright news in 2015, it opened by posted 18-month biggest gain amid speculation that China will take steps to spur growth as the world’s largest user. Almost two-third or 62% of the Iron Ore are exporting to Qingdao, Mainland China.

Australia Iron ore giants suffered a price decline in 2014. Here’s some quick data:

• BHP Billiton Ltd (from A$37.66 to A$29.48 in 2014, or loss more than 20%) • Rio Tinto Ltd (from A$66.92 to A$57.56 in 2014, or loss more than 12%) • Fortescue Metals (from A$5.75 to A$2.75 in 2014, or loss more than 50%) • Atlas Iron Ltd (from A$1.22 to A$0.2 in 2014, or loss more than 80%)

Possibilities for a better Iron Ore outlook in 2015

A minor bullish movement occurred on several major mining companies and commodity prices this January, thanks to China’s better than expected growth numbers and strong mining production results. Today China was shown to have improved manufacturing sector activity with the HSBC Markit Flash PMI lifting in January but remaining in contraction territory. With consumer spending at 18-months low, there is a possibility for the government to take action to boost its economy. China’s economy may improve in the first half of 2015 according to recent official statements, if that happens, it may boost the pace for iron ore price to recover and also improve consumer demand. Producers such as BHP Billiton, Rio Tinto and Vale appear set on plans to expand production, hopes for a slight price recovery on Chinese demand growth in 2015. It definitely takes time for iron ore to recover. While low cost miners are continuing their production and dominating the oversupplied market, while other smaller players will continue to struggle and quit the game. So it would be better off changing your holdings from the smaller miners to the larger ones for a safer iron ore game.

Other information

(Analysts forecast)Morgan Stanley = average US$79 / tonneCiti = less than US$60 / tonneGoldman Sachs = US$80 / tonne

Company 2015 Forecast P/E

2015 Prospective Yield

PE10 (Price/10-year average earnings per share)

BHP Billiton 9.9 6.6% 8.4

Rio Tinto 10.0 5.4% 8.5

Anglo American 9.0 5.5% 5.0

Generous dividend yield for holding these stocks and relatively small increment of P/E as

compared to previous 10-year EPS


BHP Billiton Limited (ASX:BHP) has improved iron ore production by 16 per cent to 113.43 million tonnes in the first half of the 2015 financial year. Australia’s largest company boosted group production by 9 per cent over the six month period with records achieved for eight operations and five commodities. Metallurgical coal production grew 21 per cent, petroleum production gained 9 per cent to a record and records were also achieved with manganese ore and alumina production. CEO Andrew Mackenzie says BHP is cutting costs and improving operating and capital productivity to help mitigate some of the impact of lower commodity prices. Potential bullish, looking good for those who wish to buy some BHP shares for long-term investment.

Rio Tinto Limited (ASX:RIO) has beaten its own guidance and achieved better than expected iron ore output and shipment growth over the 2014 calendar year. The mining giant reports annual global iron ore output climbed 11 per cent to 295.4 million tonnes and shipments rose 17 per cent to 302.6 million tonnes. With RIO as one of the top 3 low cost producer in Australia and also one of the top mining giant, once the commodity sector find its way to rebound from the bottom, these low cost miners will be enjoying some good investment returns and bullish trend.

Santos Limited (ASX:STO) rose after delivering record sales revenue of $1.1 billion over the fourth quarter and $4 billion over the full 2014 calendar year. The oil and gas producer’s result was boosted by ramped up production from its PNG LNG project and the Cooper Basin. A rebound in the oil price helped STO to show some positive pushes, however it will take time to recover both STO and oil price. No harm to hold some shares in STO, it looks good for long-term investors who are willing to accept some investment risks.

Newcrest Mining Limited (ASX:NCM) Shares in Newscrest went up nearly 30% to welcome 2015. NCM’s interim earning result will be released early February. Hold for potential long-term bullish, while for short-term holders there may be another dollar or two to go. Stockland Corporation (ASX:SGP) Trading at its highest, both fundamental and technical analysis shows a good and positive up-trend, however it seems a little risky to join the high ride. Trading Sell, looking good for a long-term buy, but why rush, there may be a better bargain price in the coming months by monitoring the ASX index.

WuMart (HKG:1025) Shares at Wumart, trading at its lower end. Looking at the current price movement, it recently went down under the resistant level and it may continue to hold around the HK$5 line, however to think of consumer spending may recover with China’s government boost and the coming lunar new year, there may still be some hope and opportunity for short-term trading. Neutral rating for the coming weeks, however investors who are willing to take some level of risks may consider a trading buy. Minimal shares for long-term buy may be a good try.

Arrium Limited (ASX:ARI) ARI declined after warning of a $1.3 billion write down and flagging the closure of one of two mining operations in South Australia. The iron ore miner also revealed it plans to cut its capital expenditure by 30 per cent over the following three financial years. Shares in Arrium were also hurt by the iron ore price trading at five year lows and the miner’s stock declined 8.89 per cent to end the week at $0.21. Arrium Limited (ASX:ARI), declining 8.89 per cent to close at $0.21. Looking at the trend of ARI, it looked dull and risky for investors to join the ride. Definitely not a right time to take the risks.

Wesfarmers Limited (ASX:WES) fell 1 per cent after announcing its former Coles boss will depart. Looking at the ASX index, there may be another dollar or two for traders on WES, and yes the dividend hunters are welcome to join the game since WES is looking strong and solid in the long-run. On the other hand, no harm waiting for a slight correction for a better buy price in the coming months since ASX may hit the resistant level on the high side. Rating remains Neutral. Hold for Long-Term investors.

Stock Reviews by Khin Chong | January 2015

Disclaimer All SJKV Stocks to Watch, Stock Selection, Stock to Trade, Stock Reviews that are published and shown in any newsletters are merely for reference only. SJKV does not purport to identify all risks that may be involved in the securities or investments referred to in the newsletters. In spite of the efforts made in ensuring the accuracy of data and information, SJKV recognises that unintentional and chance errors occurs. SJKV is not responsible for any loss resulted from the investments made using the data and information provided on this newsletter, document or website. SJKV has no legal liability for a dispute between users or a user and a third party over the service provided, and do not take any responsibility for such dispute. If you are unsure, you should seek professional advice. Part performance does not guarantee future success and does not necessarily indicative of future results.

Buy = Good to buy. Trading Buy = For stock trading and willing to take risks, you might want to buy some. Neutral = Price may be volatile (-/+ 10%) Hold = Hold, wait for further updates. Sell = Good to sell. Trading Sell = For stock trading, you might want to sell some. Monitor = Start monitoring. For buy or sell opportunities.

Potential Bullish = Price may go up in the coming months. Potential Bearish = Price may go down in the coming months. Short-Term = Within 1-6 months Long-Term = More than 6 months


Stocks Update / Company News by SJKV News Team | January 2015

• The Reject Shop Limited (ASX:TRS) has warned that results from the first half of 2015 look set to come in below expectations. The discount retailer has updated its net profit outlook to between $12.7 and $13 million with first half sales up 4.4 per cent to $402.2 million on the same period last year.

• HUTCHISON (00013.HK) agreed to have exclusive talks with Telefonica, the second largest mobile telecom operator in UK, on the possible acquisition of O2 UK with a proposed price of approximately HK$107.6 billion. Ping An Insurance (Group) Co. bought Tower Place, an office property in the City of London financial district, for 419 million euros ($482 million).

• Atlas Iron Limited (ASX:AGO) has shipped higher volumes than its guidance anticipated for the December quarter amid challenging conditions and falling average prices for iron ore. The Pilbara miner says it will cut capital expenditure for the financial year by $25 million, to $69 million.

• Iluka Resources Limited (ASX:ILU) has posted sinking output and revenues over the 2014 calendar year. The Australian based minerals sands producer has shown total mineral sands production dropped 14.7 per cent to just over 900 tonnes. Excluding the impact of ilmenite production of zircon, rutile and synthetic rutile rose 13.5 per cent to almost 535 tonnes.

• Whitehaven Coal Limited (ASX:WHC) has reported a drop in output and sales in the second quarter of the 2015 financial year. The mining company’s quarterly saleable coal production fell 17 per cent to 2.4 million tonnes and total sales fell 7 per cent to 2.95 million tonnes.

• EBay plans to cut 2,400 jobs, or 7 percent of its staff, in the first quarter to simplify its structure and boost profit ahead of a planned separation of its business. The e-commerce company reported that its fourth-quarter net income rose 10 percent on the continued strength of its PayPal payments business, which it expects to spin off in the second half of the year.

• Rio Tinto Limited has beaten its own guidance and achieved better than expected iron ore output and shipment growth over the 2014 calendar year. The mining giant reports annual global iron ore output climbed 11 per cent to 295.4 million tonnes and shipments rose 17 per cent to 302.6 million tonnes.

• As at the end of 2014, the number of small loan companies nationwide reached 8,791, and the balance of loans amounted to RMB942 billion, according to the official website of PBOC. New RMB loans totalled RMB122.8 billion in 2014.

• Stockland Limited (ASX:SGP) has bought a $67 million site in Queensland it plans to develop into a project with an end value of $590 million. The company has advised its continued development of the new lakefront and bayside community will start early 2016 and first settlements are expected in FY17.

• Origin Energy Limited (ASX:ORG) says Contact Energy Limited (NZE:CEN) will purchase between 22 and 26 petajoules of gas from Maui Development Limited. Origin holds a 53 per cent share in the New Zealand company Contact which says the gas deal covers two to three years and replaces an agreement that expired at the end of last year.


Stocks Update #15(Previously Stock Market News)

23 January 2015


Stock Recommended Date

Price Current Price Recommendation / Remark

Alibaba Group Holding (NYSE:BABA) October 2014 USD 90.00 USD 103.11 Hold

BHP Billiton (ASX:BHP) December 2014 AUD 28.40 AUD 29.38 Hold. Potential Bullish

ChinaMobile (HKG:0941) May 2014 HKD 104.50 N/A, Target Hit ([email protected], [email protected])

CNOOC (HKG:0883) December 2014 HKD 10.80 HKD 10.66 Hold

Geely Automobile (HKG:0175) June 2014 HKD 3.10 Trading Sell, Target Hit ([email protected], [email protected])

Li & Fung Limited (HKG:0494) August 2014 HKD 9.80 HKD 7.41 Sell

Myer Holdings Ltd (ASX:MYR) June 2014 AUD 2.10 AUD 1.51 Hold, Trading Sell

Newcrest Mining (ASX:NCM) July 2014 AUD 9.63 AUD 13.80 Hold. Potential Bullish

PetroChina Company (HKG:0857) December 2014 HKD 8.45 HKD 8.94 Neutral, Trading Sell

Ping An Insurance (HKG:2318) July 2014 HKD 86.95 N/A, Target Hit ([email protected], [email protected])

Santos Limited (ASX:STO) December 2014 AUD 8.25 AUD 7.80 Hold

SaSa International (HKG:0178) August 2014 HKD 5.40 HKD 4.93 Trading Sell, Monitor

Shangri-la Asia Limited (HKG:0069) November 2014 HKD 10.80 HKD 10.20 Neutral

Sony Corp (ADR) (NYSE:SNE) August 2014 USD 22.17 N/A, Target Hit ([email protected], [email protected])

Tencent Holdings Ltd (HKG:0700) November 2014 HKD 118.00 HKD 132.50 Hold, Trading Sell

Wumart Stores Inc (HKG:1025) November 2014 HKD 6.20 HKD 5.73 Monitor, Potential Bullish, Long-Term

ZTE Corporation (HKG:0763) August 2014 HKD 15.80 HKD 17.48 Hold, Trading Sell

Stockland Corporation (ASX:SGP) December 2014 AUD 4.35 N/A


Changes will be made without notice, so please refer our back issues or contact us for the latest update.

SJKV Guide to our Recommendations / Remarks

Buy = Good to buy. Trading Buy = For stock trading and willing to take risks, you might want to buy some. Neutral = Price may be volatile (-/+ 10%) Hold = Hold, wait for further updates. Sell = Good to sell. Reduce = Reduce / Cut Loss. Trading Sell = For stock trading, you might want to sell some. Monitor = Start monitoring. For buy or sell opportunities. Potential Bullish = Price may go up in the coming months. Potential Bearish = Price may go down in the coming months. Short-Term = Within 1-6 months Long-Term = More than 6 months

Target Hit = Reached our Target Sell Price. RB = Recommended Buy Price (Bought) RS = Recommended Selling Price (Sold)

N/A = Wait for next Recommendation / Rating OR Stock is not within research coverage for this month. If you need our help for some general opinion / recommendation on any specific stock, send us an email or give us a call.

Stocks To Watch | January 2015


Disclaimers, Terms & Conditions, Terms of Use

All contents and information mentioned in any newsletters published by Successive JK Ventures Sdn. Bhd. (“SJKV” or “We”) (Newsletters, Methods, Opinions, Recommendations, Articles, Guides, Stock Picks, Stock Indicators) may not be suitable for all types of readers (investors or subscribers) Information herein is based on sources believed to be reliable but the opinions contained herein are purely for reference only and SJKV do not make any presentations as to its accuracy or completeness. Readers must take investment decision based on their own investment objectives, financial position and particular needs and consult their own professional advisers where necessary.

The information provided has not taken your personal circumstances into account. You therefore agree that all commentary and statements of opinion made in our Newsletter Services is for general information only and not intended as personalised investment advice. Therefore, you should not merely be relied upon in that regard.

All such information, opinions and projections are subject to change without notice. The publisher, its associates and/or employees may from time to time have a position in the securities mentioned in any issue of the newsletter publication. SJKV will not accept any liability directly or indirectly that may arise from investment decision-making based on any publication by SJKV. The Board of Directors and employees shall not be liable for any financial loss in connection with any information provided or from anyone acting in reliance on this information. No consideration has been given to the particular investment objectives, financial situation or particular needs of any recipients. Investors should note that investment involves ricks.

Newsletter published, printed, sent via mail or e-mail and distributed by SJKV do not purport to identify all risks that may be involved in the securities or investments referred to in the newsletters. Redistributing any parts of this newsletters by any means is strictly prohibited and if so, no responsibility or liability is accepted in relation to the use or reliance of any information contained in this newsletters.

All SJKV Stocks to Watch, Stock Selection, Stock to Trade, Stock Reviews that are published and shown in any newsletters are merely for reference only. In spite of the efforts made in ensuring the accuracy of data and information, the SJKV recognises that unintentional and chance errors occurs. SJKV is not responsible for any loss resulted from the investments made using the data and information provided on this newsletter, document or website. SJKV has no legal liability for a dispute between users or a user and a third party over the service provided, and do not take any responsibility for such dispute. If you are unsure, you should seek professional advice. Part performance does not guarantee future success and does not necessarily indicative of future results.

Economy & Finance

SJKV Newsletter #05