Straits Trading Company

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fy2010--
Group
sales: 1375m,
ebit margin<1%,
nav:3.52,
curr. px: 3.90,
P/B:1.11
issued shares: 326M

=======================================
subsidiary MSC sales:1159M
EBIT: 41M
ebit margin:3.5%

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MSC tin production volume: 45000 tonne
tin ASP: USD 21000/tonne
current LME tin px: USD 32000/tonne
average production cost: USD 18000/tonne
optimistic projected profit: USD 630M
conservative projected profit based on 50% of optimistic projection: USD 315M
conservative projected profit share of straits trading: USD 170M ,approx SGD 210M
projected EPS: 64 cts
forward PE: 6X

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The World's first Sn-added ferritic stainless steel, having high corrosion resistance and Alloy-saving.
www.ns-sc.co.jp/fw

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Tin could cool Fukushima reactor say Chernobyl team



Release date: 21 Mar 2011



A special working group set up in Ukraine has passed Japan its proposals on stabilizing the situation at the Fukushima nuclear power plant in Japan, the Interfax news agency reported. The group comprises specialists who were involved in clearing the aftermath of the nuclear breakdown at the Chernobyl plant in Ukraine twenty five years ago. "The proposals were passed through the Japanese embassy in Ukraine," the Ukrainian Emergencies Service said in a statement circulated on Thursday. A team of Ukrainian nuclear specialists is ready fly out to Japan to help put these proposals into practice.

The Ukrainian plan suggests that to bring the heat processes in Fukushima-1 reactors under control, it is necessary "first, to ensure a normal cooling mode in the spent fuel pools by pumping water, sea water as a last resort, into them; second, the type of reactor fuel coolant needs to be changed – water should be replaced with low-melting and chemically neutral metal, for instance tin, which will pull heat away from the fuel rods (molten or damaged) towards the inner walls of the reactor, while continuing to use sea water to cool down its outer walls". The tin 'lake' inside the reactor will "reduce the discharge of heavy fission products and bring ionizing radiation levels down. Chipped tin could be pumped in through steam communications under pressure using cylinders with helium or argon".

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PT Timah profits tripled



Release date: 01 Apr 2011



Indonesia's state-owned tin enterprise, PT Timah reported that its audited 2010 net profit tripled to 948 billion Indonesian rupiahs (US$104 million) compared with a year earlier, as a result of higher global tin prices. Net profit was 18% higher than the company's unaudited net profit of Rp 802.4 billion reported February. Operating cash flow (EBITDA) rose by 65% to Rp 1,393 billion (US$ 153 million), as margins on lower volume of sales and production rose sharply.

Sales of refined tin dropped by 18% to 40,507 tonnes. but Timah reported a 47% rise in its average realised price to $19,981/tonne. With average delivered costs per tonne last year recorded at $16,477/tonne, this gave a margin per tonne of $3,504.

Production of refined tin fell by 10% to 40,413 tonnes, as previously reported by the company, while production of tin-in-concentrates (including ore obtained from contractors/partners) dipped marginally by 0.2% to 37,616 tonnes. A 12% rise in offshore production to 20,444 tonnes, was offset by a 12% fall in inland mine production to 17,172 tonnes. Offshore production reached its highest absolute level and share in total output (54%) since 1997.

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www.itri.co.uk

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MSC Beneficiary Of High Tin Prices (RHB)
Malaysia Smelting Corporation
Share Price : RM4.29
Fair value : RM6.69
Recom : Not Rated

Beneficiary Of High Tin Prices
♦ Background. MSC is one of the world’s leading integrated producers of tin metal and a global leader in custom tin smelting since 1887. In 2010, MSC was the second largest supplier of tin metal in the world. Currently, MSC operates a tin mine in Hulu Perak through its wholly-owned subsidiary, Rahman Hydraulic Tin Sdn Bhd and another tin mine in Bangka Island, Indonesia through 75%-owned PT Koba Tin.

♦ Beneficiary of rising tin prices. We believe MSC’s earnings will be boosted by high tin prices, which are at US$32,500/tonne now versus 2010 average of US$20,340. This compares with its cost of production of US$15,000- 20,000/tonne. In 2010, MSC’s total tin production was 8,413 tonnes.

♦ Ongoing divestment of non-tin investment a positive. MSC has made several non-tin investments in the past. On the back of the global financial crisis in 2008, MSC undertook a strategic review of its growth strategy and decided to reposition itself to focus on its core tin business, which we believeis positive for the company given the favourable outlook for tin prices going forward.

♦ Tin prices to remain high for the next few years. Due to a long-term lack of investment in new mine capacity worldwide, the recovery in tin demand (mainly for solder, tinplate and chemicals applications) is expected by ITRI to result in tin supply shortfalls for four consecutive years from 2010 through 2013, resulting in high tin prices. According to ITRI, the industry’s stocks supply pipeline will reduce to historically very low levels (2 to 3 weeks’ supply compared to recent historical average of over 6 weeks). Therefore, ITRI expects that tin prices could rise to a cyclical peak of approximately US$35,000-40,000/tonne by 2013 and 2014.

♦ Risks to our view. The risks include: (1) A decline in global tin consumption owing to disruption in Japan’s electronics component supply chain as well as a slowdown in China; and (2) Surges in small-scale mine production that could push the market into over-supply.

♦ Our SOP-derived fair value for MSC is RM6.69. We value MSC’s mining business using DCF based on certain key assumptions, and its non-core assets based on book value. The current value carried in its book would have reflected fair value for its non-core assets given that MSC has just written down those assets recently for impairment.

♦ Investment case. Based on our fair value, there is a 56% potential upside to MSC’s share price. However, liquidity of the stock still remains an issue, although management has been trying to address it.

Malaysia Smelting Corporation – Beneficiary of High Tin Prices
♦ An integrated tin mining and smelting company. Malaysia Smelting Corporation (MSC) is one of the world’s leading integrated producers of tin metal and a global leader in custom tin smelting since 1887. In 2010, MSC was the second largest supplier of tin metal in the world, after Yunnan Tin. Currently, MSC operates a tin mine in Hulu Perak through its wholly-owned subsidiary, Rahman Hydraulic Tin Sdn Bhd and another tin mine in Bangka Island, Indonesia through 75%-owned PT Koba Tin. Its tin reserves and resources currently stand at 20,058 tonnes and 38,854 tonnes respectively.

Apart from tin mining, MSC also operates a custom tin smelting facility in Butterworth, Penang which processes tin concentrates and crude tin metal obtained from third-party suppliers as well as tin concentrates from its openpit tin mine in Hulu Perak. Through PT Koba Tin, MSC also operates a smelting facility in Bangka Island, Indonesia which processes tin concentrates obtained from its own tin mine.

♦ Beneficiary of rising tin prices. We believe MSC earnings will be boosted by high tin prices, which are at US$32,500/tonne now (see Chart 1) having risen by 59.8% from 2010’s average of US$20,340/tonne. This compares with its estimated cost of production of US$15,000-20,000/tonne. Cost of production of its tin mine in Perak is at the lower range, while the cost of production of its tin mine in Indonesia is at the higher range due to higher administrative cost. In 2010, its Perak tin mine managed to produce 1,769 tonnes of tin metal, up from 1,693 tonnes in 2009. Due to bad weather conditions, its Indonesia tin mine only managed to produce 6,644 tonnes of tin metal in 2010, down from 7,335 tonnes in 2009.

♦ Ongoing divestment of non-tin investment a positive. MSC has made several non-tin investments in the past (see Table 2). On the back of the global financial crisis in 2008, MSC undertook a strategic review of its growth strategy and decided to reposition itself to focus on its core tin business, which we believe is positive for the company given the favourable outlook for tin prices going forward. Consequent upon the shift in its strategic business direction, MSC initiated a divestment programme for several of its non-tin investments and assets, which are ongoing at this moment. Funds received from these asset divestments, together with the RM100m proceeds from its dual-listing on SGX on 27 Jan 2011, will mainly be used for explorations and acquisition of new tin mining projects in Malaysia and Indonesia, as well as brownfield developments at its existing mines.

Outlook for Tin Prices
♦ Price to remain high for the next few years. Due to a long-term lack of investment in new mine capacity worldwide, the recovery in tin demand is expected by International Tin Research Institute (ITRI) to result in tin supply shortfalls for four consecutive years from 2010 through 2013, resulting in high tin prices. According to ITRI, the industry’s stocks supply pipeline will reduce to historically very low levels (2 to 3 weeks’ supply compared to recent historical average of over 6 weeks). Therefore, ITRI expects that tin prices could rise to a cyclical peak of approximately US$35,000-40,000/tonne by 2013 and 2014 (see Chart 2), which is in line with management’s expectation.

By then, market mechanism will ensure that supply and demand is re-balanced, by stimulating investment in more new mines and substitution by alternative materials in marginal applications. This is expected to result in tin prices settling at somewhat lower levels in 2016 through 2020. Through price-induced substitution, increased recycling and additions to mine capacity, ITRI expects these will eventually end a period of supply shortages and bring prices down from the cyclical peak. From 2016 to 2020, tin prices are likely to fall between US$15,000- 25,000/tonne, and eventually average at approximately US$20,000/tonne.

♦ Demand growth to be driven by solder. Nearly all recent growth in tin usage has been related to the expansion of the electronics industry in Asia, especially during 2004-2006 and in particular, by the rapid uptake of high tin content lead-free solders in most parts of the world in response to new legislative requirements (see Charts 3 & 4). The lead-free share of electronics solder market has increased from just 2% in 2002 to over 65% in 2009, and remaining transition would mean additional consumption of tin in the future. This will be in addition to the increase in tin consumption due to the growth of the electronics industry. With current electronic assembly technologies, there is little immediate threat of substitution for solder as the only viable alternative to tin is lead, which is increasingly envinronmentally unacceptable.

♦ Limited increase in supply over the next few years. In recent years, both Indonesia and China have accounted for over two-thirds of world production of tin, with much of the balance of supply coming from South America, Central Africa, and Australia. Production in Indonesia has been declining in recent years owing to a long running crackdown on illegal mining, while China supply has been outstripped by local demand. While stronger market conditions in recent years have resulted in a modest revival of mine project activitiy, only few new mines of significant size are expected to start up in the next two or three years.

Risks
♦ Risks to our view. The risks include: (1) A decline in global tin consumption owing to disruption in Japanese electronics component supply chain as well as a slowdown in China; and (2) Surges in small-scale mine production that could push the market into over-supply.

Valuation
♦ Our SOP-derived fair value for MSC is RM6.69. We arrive at a fair value of RM6.69, having valued MSC mining business using DCF based on certain key assumptions (see Table 5), and its non-core assets based on book value. The current value carried in its book would have reflected fair value for its non-core assets given that MSC has just written down those assets recently for impairment.

♦ Further upside to MSC fair value. We highlight that there could be further upside to our fair value for MSC as we have not factored in the renewal of the mining licence for its Indonesia mine once it expires by 2013. In addition, MSC’s 30% stake in KM Resources is likely to be worth more than its book value of RM110.3m (last revalued at the end of 2009) given the surge in prices for copper (+27%), gold (+40%) and silver (+147%) since 2010.

♦ Investment case. Based on our fair value, there is a 56% potential upside to MSC’s share price. However,liquidity of the stock still remains an issue, although management has been trying to address it.




Source/转贴/Extract/:RHB Research
Publish date:05/05/11

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below info extracted from www.sgvalue.blogspot.com

Why WBL Corp

BACKGROUND INFORMATION FROM SGX

The Company was incorporated in 1912, under the name CFF Wearne & Co as a public company. However, it traces its history to a family automotive business in the early 1900s.
WBL Corporation Ltd (“Wearnes”) is a dynamic international group with key activities in Technology Manufacturing, Automotive Distribution and Technology Solutions. Management continues to focus on building the Group’s operational and technical expertise to keep Wearnes in the forefront with the leaders in these areas and to build and sustain shareholder value. Today, Wearnes is ranked among the top 75 companies by market capitalisation on the SGX-ST and has revenues of some S$2 billion with operations in over 10 countries.



While the company's main revenue (and profit) drivers are from technology, the company's substantial landbank in China is of keen interest to us. WBL Corp also has various property assets in Singapore, Malaysia and a sand mine in Australia, all of which have potential for future property development. The company generally trades with low liquidity and suffers from a lack of broker coverage, and thus has a higher potential of being an undervalued stock. Is that really the case? Let's examine the company's underlying assets to find out more:

Outstanding Shares
The company issued $158,427,479 worth of convertible bonds back in April 2009 (at $1 par, convertible at $2.29). As of 31 Dec 2009, there remain 37,117,474 shares to be issued to satisfy the convertible issue, which means that there are 281,924,862 fully diluted shares outstanding (including unissued ESOS). This brings market cap to a manageable $1.4 billion (at today's close).

Brief valuation overview
Last reported NAV per share: $3.34 (price-to-book 1.5X)
Fully diluted NAV per share: $2.89 (price-to-book 1.74X)


Of course, NAV is not a good reflection of WBL's underlying value, considering the many assets (including the huge undeveloped landbank) which are carried at book value. However, based on book value alone, valuations are already not demanding.

Chinese property assets
The company's FY2009 (end Sep 2009) annual report lists the various development properties and undeveloped landbank in five cities in China - Shenyang, Chengdu, Chongqing, Suzhou and Shanghai. To be conservative, we have simply assumed that all WBL's development properties in China are undeveloped land, and have looked at recently transacted land prices as a gauge of valuation.


Land Area (sqm) Estimated Price per sqm (RMB) Estimated Valuation (in RMB)
Shenyang, China 134,432 3000 403,297,200
Chengdu, China 325,864 4000 1,303,456,000
Chongqing, China 51,660 1300 67,157,740
Suzhou, China 133,502 1300 173,552,197
Shanghai, China 213,869 7000 1,497,081,600
Total

3,444,544,737

According to our estimates, the Chinese property assets are worth at least RMB 3.4 billion, or about $706 million. Assuming the stake in Ampwalk (KL) is worth RM550psf, the 2,451 sqm of commercial property adds another $6 million to "development properties" for a total of $712 million. These assets are carried at $258.5 million on the balance sheet (as at 30 Sep 2009).

Listed Equities
WBL Corp owns substantial stakes in three listed companies - Singapore-listed MFS Technology (77%), Nasdaq-listed Multi-Fineline Electronix Inc (58%), and Singapore-listed United Engineers (about 9.2%, classified as available-for-sale non-current financial assets on the balance sheet). As at 25 February 2010, these stakes were collectively worth $614.9 million (based on market value).


Listed Equity investments (as at 25 Feb 2010)

MFS Tech $113,653,800.00
MULTI-FINELINE ELECTRONIX INC., $457,369,208
United Engineers $43,858,240

$614,881,248.23



Debt position
Looking at the balance sheet on 31 Dec 2009, WBL's cash and receivables exceed total liabilities by about $75 million.

Other unlisted entities

This consists of all the other major businesses - automotive, construction, the Australian sand mining operations etc. Most of these businesses are profitable but we are not going to attribute any value to them first.

Stock appears undervalued

Based on the market values of the three listed entities and our conservative estimates for the Chinese development properties (including the Ampwalk property in KL), and factoring in net cash of $75 million, we arrive at $1.4 billion, which indicates that we are getting all other businesses (the unlisted entities) for free. Notwithstanding this, the Chinese assets have been valued conservatively (as if they were raw undeveloped land, at slightly lower than market prices), so we are getting the future development potential of the land for free as well. Throw in the long history of the company with a good track record of corporate governance, and we are getting exposure to the lucrative Chinese property market via the guise of an under-researched technology company.


A target price is difficult to derive, but assuming an RNAV of $1.1 billion for the development properties, and another $400 million for the unlisted businesses (according to Kim Eng's estimates), coupled with the $615 million listed equities, we can derive a $7.47 RNAV for WBL Corp.

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A 2008 report on WBL by kim eng

wbl.listedcompany.com/misc/kimeng_260508.pdf

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Industrial metals find silver lining in China power woes (2011/05/26 09:50AM)

* Power shortages to cut metals output in 2011, cutting
stocks
* Aluminium to be hit the most, smaller feel stronger than
big
* May be a trigger for large imports next year

By Polly Yam
HONGKONG, May 25 (Reuters) - China''s battle with what may
be the worst power shortages in seven years could provide a lift
for metals prices as Beijing forces energy-intensive smelters
and users to curb production, potentially leading to larger
imports.
Power cuts for heavy power industrial users in the world''s
biggest commodity consumer, already hit by higher credit costs
as Beijing tightens monetary policy, could force them to draw on
stocks, paving the way for restocking later in the year and supporting prices in the longer term, analysts said.
"From July, the whole base metals sector would be affected
by power shortages. Aluminium will be hit the hardest as it uses
more electricity than other metals," Li Lijuan, analyst at COFCO Futures in Beijing.
Power deficits in the 26 provinces and regions serviced by
the State Grid Corp of China will total at least 30 gigawatts
this summer, and could increase to 40 GW if coal and water
stocks drop lower thanexpected.[ID:nL3E7GO0FW]
"Copper imports may rise as early as the second half," said
Zhu Bin, chief analyst at Nanhua Futures. Aluminium exports
would fall and imports also rise after production cuts and
expected local stock drawdowns, headded.
China has substantial stocks to work through, according to
estimates from trade sources and analysts. Those estimates peg
bonded copper stocks held in China at more than 400,000 tonnes,
along with more than 600,000 tonnes of aluminiumingots, 500,000
tonnes of refined lead and over 1 million tonnes of refined
zinc.
Imports could continue to surge in 2012 if stocks are drawn
down during power cuts, analysts said. If China ends its
monetary tightening cycle, conditions may als be more
favourable for imports, analysts said.
"Power shortages in China should be a price positive for
metals, as power cuts tend to have a bigger effect on production
than demand and thus, at the margin, tighten the underlying
marketbalance," Barclays Capital said in a note.
"We would expect production losses to be more severe in
aluminum because of the power-intensive nature of the industry
and the large share of the country''s power generation it
consumes."

ALUMINIUM, COPPER
Record monthly aluminiumproduction accounted for roughly
5.2 percent of China''s 376.8 billion kWh power consumption in
April, making it a regular target of government energy
efficiency drives.
But top aluminium producer Chalco <2600.HK> <601600.SS>,
which hasoperations in Henan and controls above 15 percent of
China''s smelting capacity, said it does expects production cuts
to be limited to 100,000 tonnes for 2011. That would be about
2.5 percent of Chalco''s 4 million tonnes annual capacity.
"Oursmelters are principal employers in their locating
areas," a Chalco official said. "Based on previous experiences,
local governments would protect them. Unless the shortages get
very bad."
Smaller firms should feel the squeeze more and earlierthan
large smelters, prompting them to shut for maintenance on a
rotating basis. Still, the smaller smelters could make up for
lost output later in the year, so unless power shortages are
more severe than expected, China''s base metals production in 2011 is expected to rise, analysts said.
State-backed research firm Antaike has adjusted down a 2011
aluminium output estimate by 200,000 tonnes to 19.3 million
tonnes, compared to 17.5 million tonnes in 2010, said analyst Li
Yang said, citingexpected pressure on smaller firms to cut back
sharply this summer or shut for maintenance.
Antaike''s estimates for production are higher than those
published by the National Bureau of Statistics, which pegged
China''s output of primary aluminiumin 2010 at 15.7 million
tonnes.
Li also expects some of about 2 million tonnes of new
aluminium smelting capacity scheduled to start production in
2011 to be delayed until 2012.
Some copper smelters are already cutting supply to the spot market due to what they see as low prices. This has already
leant support to prices and prompted investors to draw bonded
stocks to resell in the spot market, traders said.
On Wednesday, spot Chinese copper prices at
about 68,350yuan a tonne were 200 yuan per tonne lower than the
import cost for bonded stocks in Shanghai, based on the cash LME
and a premium of $80.
That may change later in the year, power shortages
permitting, as overseas miners are paying more t Chinese copper
smelters in the second half of the year, encouraging smelters to
boost refined copper production. [ID:nL4E7GK0EM]

STEEL, NICKEL PIG IRON, LEAD
Steel output is also likely to be hit, though not enough to
ease a supplyglut in China, the world''s top steel producer, the
China Iron and Steel Association said last week. [ID:nL4E7GG0G3]
Energy-intensive production of nickel pig iron, used to make
stainless steel, is also expected to drop. About two-thirds of producers in China are small firms using electric furnaces and
make easy targets for local governments looking to trim power
supply.
Antaike''s analyst Hu Yongda said some lead smelters were
also cutting production and selling stocks, prompted byboth
power cuts and low spot prices. The shutdown of hundreds of
lead-acid battery makers in a crackdown aimed at reducing
pollution in the eastern coastal Zhejiang and southern Guangdong
provinces, has curbed output sharply already. [ID:nL3E7G6061]

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extracted from http://atans1.wordpress.com/?s=straits+trading

2008 recap. As part of an asset rationalising swap, Straits Trading and its controlling privately-owned shareholder swapped assets.

12% of UE was sold to Tecity at around S$1.52 a share, and 7% of WBL Corp was sold to ST as part of the asset swap. ST ended up with 19% of WBL. BTW WBL has another 10% of UE.

They remembered Tecity’s bid for ST which ended with Tecity paying S$6.70 for assets (revalued) worth S$6.52 a share.

executive chairman of Straits Trading said:"

STC [Straits Trading]is an investment company and its subsidiaries should be viewed as business investments, she said. Does that mean every business is potentially for sale? ‘If we are true to what we say, that we must realise shareholder value, anything at the right price we must consider it for sale. One should not be so married or so emotionally attached that nothing is for sale,’ she said. ‘But having said that, the considerations are plentiful; it cannot just be today’s price, it cannot just be 10 per cent above today’s price,’ she said. The group is prepared to hold for 20-30 years if that’s what it takes, in order for value to be realised."

Calling STC’s real estate division as the ‘meat’ of the group, she is mulling over what the balance should be in terms of how much should be developed for sale and what to hold for rental income. STC’s real estate assets include its flagship Straits Trading Building, a 28-storey building at Battery Road, 4 developed bungalows and 5 plots of bungalow land…

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4 mar2008

OCBC noted that Straits Trading has a cash surplus of $347 million and a real estate portfolio worth at least $1.33 billion.

As at 31 dec 2007
RNTA: 2147m or $6.59 per share
ex-cash RNTA: 1800m or $5.53 per share

NAV(1)................PPE(2).........investment properties(3)......(2)+(3)
FY2005:3.45
FY2006:3.96......211.....416.....627
FY2007:5.62......206....821......1027
FY2008:3.67......310...813......1123
FY2009:3.43......313....776....1089
FY2010:3.52......340....853....1193

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kim eng apr 2011 writeup
http://www.remisiers.org/cms_images/ssu25042011ke.pdf

Unique Singapore land bank.
Amongst the listed companies, STC has one of the largest portfolios of Good Class Bungalows (GCB) in Singapore. It has six GCB plots at Cable Road with a total land area of 96,219 sq ft. Four of the plots have been built on, while works have begun on the other two. STC also has another three plots of undeveloped GCB plots at Nathan Road, with a total land area of 48,955 sq ft. Based on the last valuation as at 31 Dec 2010, the three undeveloped plots at Nathan Road and the two plots under development at Cable Road were valued at an average of $1,326 psf.

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Excerpted from The Most Important Thing: Uncommon Sense for the Thoughtful Investor by Howard Marks.

“There’s a big difference between probability and outcome. Probable things fail to happen — and improbable things happen — all the time.” That’s one of the most important things you can know about investment risk.