14 Aug 2013~ Good Morning Singapore!
Central Execution Team - The Excellence of Execution
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Global Flash: While You Were Sleeping
Source: Marketwatch
Quote for the day : Let us learn to appreciate there will be times when the trees will be bare, and look forward to the time when we may pick the fruit.
- ANTON CHEKHOV
Singapore: The Day AheadSINGAPORE DAYBOOK :Trading losses by teenager spark negligence suit [SINGAPORE] Negligence suits taken out by private banking clients are hardly unusual these days; but a case being heard before the High Court today comes with a couple of twists.
At the heart of the matter are losses of $2.6 million suffered by a father and son on account of trades entered into by the son - who had not turned 21 then.
Credit Suisse, one of the two defendants, is claiming that Swiss law rather than Singapore law governs its relationship with its clients, the plaintiffs. And that, as such, the younger plaintiff, who was 19 years old at the time, is considered an adult under Swiss law and that the trades he entered into - which resulted in the losses - are valid and binding.
The lawsuit has been brought by Ow Weng Fye (WF Ow) and his son, Ian Ow, against the Singapore branch of Credit Suisse AG (CS) - which was formerly known as Clariden Leu - and their relationship manager Aaron Chwee, who was with Clariden Leu. Clariden Leu, owned by the Credit Suisse group, subsequently merged completely with the banking giant.
The Ows, represented by Adrian Tan of Drew & Napier, are claiming that CS and Mr Chwee failed to exercise the duty of care owed to them, and breached their contractual and statutory duties; the Ows are claiming damages amounting to $2.606 million, the losses which they claim were suffered by them as a result of the defendants' actions.
In their statement of claim, the Ows said they opened a joint private banking account with CS (then, Clariden) in 2006. Father and son are alleging that Mr Chwee advised Mr Ian Ow, without the knowledge of his father, to trade in Singapore MSCI (SiMSCI) futures contracts.
They claim that Mr Chwee "falsely and/or inaccurately informed Ian Ow that the SiMSCI tracked the Straits Times Index (STI) when in fact the SiMSCI tracked the Singapore MSCI Free Index". They also said that Mr Chwee "negligently and/or falsely represented to Ian Ow that Clariden had in place systems that would be able to tell when exactly to make trades such that the trades would be profitable and risk free so as to induce Ian Ow to act on the advice" when Clariden did not have such systems in place.
The Ows are also claiming that the trades are invalid given that they were made without Mr WF Ow's knowledge and that Mr Ian Ow was, at the material time, a minor - the first time the issue of minority has been raised in a legal suit involving the operation of bank accounts and futures trading. Under Singapore law, a minor is a person under the age of 21.
CS, which is represented by Senior Counsel Alvin Yeo of WongPartnership, has in its defence denied the claims made by the Ows that Clariden did not have the said systems in place and has asked the plaintiffs to prove their claim.
CS also claims that the accounts opened by the Ows and the relevant trades that took place are governed by Swiss law, as per the agreements signed by the Ows. "Under Swiss law, the age of majority is 18 years. Ian Ow was 19 years old at the time the accounts were opened. . . All of the trades were instructed by Ian Ow after he had reached 18 years of age, and are hence valid and binding," the bank said in its defence.
This is believed to be the first time the issue of whether a foreign law applies in place of Singapore law over a banking transaction here is being heard.
CS goes on to say that Mr Ian Ow's conduct, in continuing to instruct Mr Chwee to carry out the futures trades even after he turned 21, "amounts in any event to a ratification of the trades which he instructed before he reached 21".
And, given that both father and son had opened a joint account, in which they were to be jointly and severally liable, "even if (which is denied) the trades are not binding on Ian Ow as alleged, the trades are nevertheless binding on WF Ow, who is jointly and severally liable for the trades which Ian Ow instructed", CS claims.
Mr Chwee, who is represented by Simon Jones of A C Fergusson Law Corporation, claims in his defence that the only advice he gave to the Ows on the SiMSCI futures was that it was the only futures contract relating to the STI which Clariden had at the time and that its constituent stocks rendered the SiMSCI futures contract highly correlated though not identical to the STI.
He said that the futures trading account was set up with the full knowledge and written consent of Mr WF Ow. He said Mr WF Ow even instructed him on various occasions to take instructions from Mr Ian Ow on their SiMSCI trades. He is also disputing the actual amount being claimed by the Ows as the losses they suffered.
The case will be heard by Justice Andrew Ang. (Source: The Business Times)
MARKET SCOOP
Boustead Q1 profit up 45%
Tat Hong Q1 net halves to $8.2m
SBS Transit Q2 profit down 30.6%
Venture sees 10 per cent drop in profit
WBLreports $14.4m Q3 loss
ST Engineering Q2 profit up 3.3%
Kreuz Holdings' Q2 earnings up 9.6%
Tencent plans Singapore IPO for WeChat spinoff: report
(Source: The Business Times)
DBS Securities says...
SUPER GROUP LTD | BUY | TP: S$5.35
2Q13 profit came in at S$36.5m; Super is on track to meet our S$115m estimate for the year
Revenue was slightly below at S$138m vs our S$145m estimate
Food Ingredients revenue grew 65% y-o-y vs 10% for Branded Consumer, with growth in the former driven by higher volume sales and the latter by Myanmar and Thailand markets
Group gross margin beat estimate again at 39% vs our 36% estimate
1H13's net profit of S$58.6m is 51% of our full year estimate
In May, the company announced the sale of its entire 35.3% stake in Sun Resources for a total consideration of S$26m
Sun Resources develops property in China, which is a non-core investment for Super
The sale consideration comprised S$9.3m in loans, S$0.7m equity, and S$16m profit or net gain
Super has received the first instalment of S$13m on 6 May and will receive S$13m on 5 May 2014
The company declared final 5.1 Scents in 4Q12. Given stronger net profit and proceeds from the sale of Sun Resources, we expect the FY13 final dividend to be as good as in FY12
We expect Super to ramp up activities in 2H13
Firstly, ingredient manufacturing will move into high season towards winter
Secondly, we should see the impact of its ongoing rebranding exercise in the coming quarters
Thirdly, Q2 tends to be seasonally weaker for the Branded Consumer segment but will pick up in 2H
Super remains on track to meet our full year estimates
Our TP is intact at S$5.35, pegged to 26x FY14F earnings
UOB KAY HIAN says ...
NAM CHEONG LTD | BUY | TP: S$0.34
Nam Cheong (NCL) reported a net profit of RM40.7m (+81% yoy) and RM76.5m (+37% yoy) for 2Q13 and 1H13 respectively
1H13 net profit amounts to 47% of our full-year net profit forecast of RM162m
Consensus 2013 net profit forecast id S$165m
2Q13's group gross margin of 20% (1Q13: 19%' 2Q12: 20%) is stable
On 2Q13's gross profit of RM53.8m, RM44.9m (+110% yoy) was from the shipbuilding segment and RM8.9m (+9% yoy) from the chartering business
Shipbuilding gross margin - at 17.3% - is stable vs 1Q13's 17.4% (2Q012: 14.6%)
But, charter segment's gross margin appears to have deteriorated to 55.5% in 2Q13 vs. 61.0% in 1Q13 (2Q13: 83.8%)
Strong orderbook underpins earnings visibility
Nam Cheong's orderbook stands at RM1.4b, providing strong earnings visibility for the next three years
Maintain BUY
Our target price of S$0.34 is based on 9.7x FY14F PE (2014F EPS: 8.8 sen or 3.5 S cents)
Our target PE is 1.3SD above peers' long-term PE mean of 7.0x, which we think is justified given Nam Cheong's dominant 50-75% market share in a high barrier-to-entry market
OCBC Securities says...
CWT LTD | BUY | TP: S$1.68
CWT reported a decent set of 2Q13 results that were in line with our expectations
Revenue jumped 66% YoY to S$1.7b, driven by higher contribution from its newly established Commodity business
However, the group incurred (i) higher administrative expenses (S$43.7m, +17% YoY) from management and restructuring costs, and (ii) higher financing costs (S$8.5m, +8% YoY) from higher borrowing and trade volume
Consequently, net profit eased 6% YoY to S$18.1m for 2Q13
For 1H13, revenue and net profit formed 50% and 46% of our FY13F estimates, respectively
On 23 May 2013, CWT announced a leadership change at MRI Trading Group, the Commodity business it acquired in late 2011
Adam Slater and Alan Kuek were appointed the Executive Chairman and CEO of MRI respectively, replacing former employees who have left the team
Adam Slater is the Deputy CEO of CWT and brings to the table vast knowledge and experience in the commodities and resources industry
Alan Kuek joined MRI in Feb 2012 and has more than 16 years of experience in originating and structuring financing in banks and commodity traders
With the changes, CWT expects to streamline its operations, enabling greater control over the trading business
While the consolidation of the Commodity business remains a work-in progress at least for the time being, CWT's logistics capacity expansion is proceeding on track
The construction of Cold Hub (TOP:1Q2014) and Toh Guan Road East (TOP: end-2013) are 60% and 40% completed
Redevelopment for the newly acquired site at Pandan Avenue will commence in 3Q13
We still like CWT, but lowered our valuation peg for its Commodity business to a conservative 9x (previously 12x) after its recent management reshuffle
This in turn lowered our SOTP valuation to S$1.68 (previously S$2.08)
Maintain BUY
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