Ernest Lim's investing blog

Unique insights into SGX small caps

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S&P500 at 2,979 – limited potential upside (8 Sep 19)

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With reference to my earlier write-up (click HERE) titled “Why am I cautious going into July…”, July was coincidentally the peak for S&P500. Hang Seng touched an intraday high of 29,008 on 4 Jul 2019 before slumping 4,108 points to an intraday low of 24,900 on 15 Aug 2019 (Hang Seng closed at 26,691 on 6 Sep 2019.) Personally, given the current market levels and information, I am not comfortable to raise my current percentage invested from 53% to significant levels (say >80%). Why am I cautious in the market? Do read on…   Factors supporting my cautious basis Above […]

HRNet – All time oversold levels amid lowest price since IPO! (29 Aug 19)

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Dear all Another exciting week! This week, HRNet caught my attention as it approaches all time oversold RSI level. In addition, it is trading at the lowest price $0.560 since its IPO price at $0.900. Given the basis below, my personal view is that HRNet may be presenting a favourable risk reward setup for a long trade. Do look at the basis and more importantly, the risks inherent in such trades.   My personal basis a) Average target price $0.93! Based on Figure 1 below, average analyst target is around $0.930, representing a potential capital upside 66%. Estimated div yield […]

CKH Holdings at 19-year oversold levels; multi-year low price amid 10-year low valuations (6 Aug 19)

el15

Dear all What a hectic and exciting week! This week, CKH Holdings (00001.HK) (“CKH”) caught my attention with its 19-year low RSI level since end Dec 2000. At the time of writing this, CKH last trades at HKD67.60, level last seen around 21 Feb 2014. With such a precipitous decline, CKH is trading below its 10-year average valuations. Given the basis below, my personal view is that CKH may be presenting a favourable risk reward setup for a long trade. Do take a look at the basis and more importantly, the risks inherent in such trades.   My personal basis […]

Why am i cautious going into July… (2 Jul 19)

el15

Dear all, With reference to my market write-up published on 29 May 2019 (click HERE), where I mentioned that the sell-off in the markets revealed interesting trading opportunities, markets coincidentally bottomed on 3 Jun 2019 and staged a strong recovery. I have already sold into strength and reduced my percentage invested in stocks from 150% in early June to 12% now. Personally, I am cautious in the market going into July. Why is this so?   Basis below 1) Markets jumped yesterday following the U.S. / China trade truce announced over the weekend, despite the lack of details on what […]

Sinopec falls 33% since last year; nears 19-year oversold level (14 May 19)

el15

Dear all This week, Sinopec (00386.HK) caught my attention with its 33% fall since 21 May 2018. With its sharp fall, it has become extremely oversold with RSI at 15.1. Given the basis below, my personal view is that Sinopec may be presenting a favourable risk reward setup for a long trade. Do take a look at the basis and more importantly, the risks inherent in such trades.   My personal basis a) Attractive valuations At HKD5.63, Sinopec is trading at approximately 10.3x current PE and 0.8x P/BV. These valuations are attractive as compared to its 10-year average PE and […]

Sembmarine – leveraged play among oil companies (29 Apr 19)

el15

Dear all, This week, Sembcorp marine (“SMM”) caught my attention amid positive industry reports and its strengthening chart. I have started to accumulate SMM with my usual take profit target of a few bids, if any. Let’s look at the basis, and importantly, the investment risks.   Basis a) Analysts are turning positive Based on Figure 1 below, average analyst target price for SMM is around $1.93, representing a potential capital appreciation of around 12% from the current price $1.72. It is noteworthy that JP Morgan has turned positive on SMM last month with a target price of $2.10, after […]

Qualcomm – extremely overbought after a 74% rally within 3 months! (23 Apr 19)

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Dear readers, This week, Qualcomm caught my attention as it has appreciated approximately 74% from US$49.10 to trade at US$85.62 in less than 3 months. This is due in part to the favourable announcement that Qualcomm and Apple have reached a multi-year settlement agreement (click HERE for more information)   Why is it interesting? Personally, I think Qualcomm may be a potential short target with a favourable risk to reward proposition with a take profit of a few bids, base mainly on a technical perspective.   Basis to short a) With reference to Chart 1 below, Qualcomm is on a […]

Best World – down 47% in 2 months! Buying opportunity or falling knife? (12 Apr 19)

el15

With reference to my 19 Sep 2018 write-up (click HERE), Best World has appreciated approximately 147% from $1.35 on 19 Sep 2018 to touch an intra-day high of $3.33 on 13 Feb 2019. At that time, Best World has dropped out of my watchlist after its incredible rally. However, with its recent 47% tumble from its all-time intra-day high $3.33 on 13 Feb 2019 to trade $1.76 on 12 Apr 2019, it seems interesting again. Is this a buying opportunity or falling knife?   Why is it interesting? a) Valuations are more attractive now Based on Bloomberg (see Table 1), Best World […]

Chipotle Mexican Grill reaches all time overbought after an 84% rally in less than 4 months! (1 Apr 19)

el15

Dear readers, This week, Chipotle Mexican Grill (“Chip”) has caught my attention with its blistering 84% surge since 24 Dec 2018 and its US$100 rally in the past 16 trading days.   First, what does Chip do? Based on Chip’s company website (click HERE), it is an American chain of fast casual restaurants and has nearly 2,500 restaurants as of 31 Dec 2018 in the U.S., Canada, France, Germany and UK. It is the only restaurant company of its size that owns and operates all its restaurants. Its market capitalisation amounts to US$19.6b.   Why is it interesting? Personally, I think […]

Hong Fok hits 10-year overbought level and up 12 out of 13 trading days! (19 Mar 19)

el15

This week, Hong Fok catches my attention this week because a) It has risen approximately 33% in 12 out of the past 13 trading days from an intraday low of $0.685 on 28 Feb 2019 to close $0.910 today. It is noteworthy the 13th day is at an unchanged level. In other words, Hong Fok has not had a down day since 28 Feb 2019; b) At $0.910, this is near its 25 Oct 2015 high of around $0.91-0.920. The previous high which is higher than $0.920 occurred in Sep 2014. I.e. Hong Fok is trading near a four plus […]