Midwest Moolah

CNOOC - A quick learner

2010-03-15T08:50:00.000-07:00

CNOOC has been a long-standing blog favorite.

China will continue to use CNOOC to buy assets abroad so the JV with Bridas Energy Holding should come as no surprise. CNOOC has learned quickly from its failed bid for Unocal and has structured this deal as JV.

As detailed in the Business Week -

" The offer values Bridas’s proven reserves around $10 a barrel, about half of what BP Plc paid Devon Energy Corp. last week for assets in Brazil, the Gulf of Mexico and Azerbaijan, according to Sanford C. Bernstein & Co. analyst Neil Beveridge.
Cnooc estimates the Bridas investment will add 318 million barrels of reserves, an increase of about 12 percent, and also boost its average daily production by 46,000 barrels."

This will not be the last time we see CNOOC make a bid for foreign oil assets and there should be more deals in the future.

Shanghai Dreams?

2010-03-08T07:35:00.001-08:00

Getting married in China? First get the apartment, then the wedding ring!

Yanlord has recently acquired a residential development site in Shanghai. Further details are reported in Today(Singapore) -

"Singapore-listed property developers Yanlord and Ho Bee have jointly acquired a 13.69-hectare prime residential development site in Shanghai's Qingpu District for around $784 million. The site is 5.5 km from the heart of the Hongqiao Commercial District which has been earmarked by the Shanghai municipal government to be the city's fully integrated financial, commercial and logistical hub servicing the Yangtze River Delta region. The site can generate more than 246,000 sq m of residential gross floor area. Yanlord will own 60 per cent of the project, while Ho Bee will have the rest."

A not so hidden gem - Yanlord - Z25.SI

2010-03-02T08:07:00.000-08:00

Bought into Yanlord (Z25.SI) on Feb 22, 2010 at 1.77

The discerning reader of this blog should question - why Yanlord?

1. It is proxy for investing in real-estate in China. Since everyone wants to own a piece of Shanghai - why not start with owning Yanlord which has a significant portion of its portfolio in that city! (real estate in Asia is a secular growth story)

2. The government is trying to cool the property market in China. Since this is an open secret, the 'forced cooling' is baked into the share price.

3. The stock is no longer the most speculative real estate stock ever since it was excluded from the STI

And in an uncanny re-affirmation, Goldman just upgraded Yanlord to a "buy" .

CNOOC: Triple Play

2008-09-20T10:47:00.001-07:00

NYT - China Oil Giants Crave Respectability and Power

CNOOC is an attractive ‘triple play’ on:
China - It is a good proxy for investing in China which remains one of the few regions in the world which continues to grow rapidly. From a long term investment horizon the current global slowdown offers an opportunity to buy China stocks at attractive valuations
Oil - The demand for oil will continue to rise. Oil spikes might lead to temporary demand destruction but global demand for oil will continue to increase as the developing nations aspire for a better quality of life. The US government will have not dole out subsidies to develop alternate sources of energy after the massive bailout of the market using taxpayer money. Of the three large Chinese oil companies CNOOC has the least investment in downstream refining and its profits are more correlated to the price of crude.
Government Put - The Chinese government has a 66% stake in the firm which means that the firm is well securitized

Ahead of the curve?

2008-09-14T18:29:00.000-07:00

These are turbulent times - Lehman faces liquidation and Merrill Lynch has sold itself to Bank of America for about $44B.
Jim Rogers has consistently warned about the problems with the financial systems in the US. The attached video is interesting viewing as Wall Street faces its biggest crisis in years. He is bullish on commodities - especially oil and agriculture (and China)

Current Positions - Sept 5

2008-09-06T18:06:00.000-07:00

FXI(Building position): Interestingly FXI has substantial exposure to only three sectors (Energy 25%, Telecoms 19%, Financial Services 43%)

China to allow exchangeable bonds

2008-09-06T18:05:00.001-07:00

Amidst fears of a slowdown, the government is both reassuring investors and taking steps to halt the slide in the equity market. The slide of the equity markets has left investors vary of new equity issues. China is trying to ease oversupply in stocks by allowing exchangeable bonds
There seems little doubt that the economy is slowing. Pessimism abounds whether such short term measures will work. Steel consumption continues to fall as detailed in the Financial Times
On the M&A front, Coke is looking at buying Huiyuan Juice for $2.4B, the single largest investment in China. They obviously see value in this deal, offering almost three times the closing price of HK$4.14 per share

Stack up the 'Red Chips'

2008-09-06T18:02:00.000-07:00

The essential elements of the China story remains intact – growing middle class, rapid industrialization, and increasing global influence
Speculative money inflow is decreasing with disillusioned retail investors in China. Millions of retail investors are no longer opening new accounts per month. Rumors of government intervention are pervasive
PE Ratio of 16.92 times 2008 earnings (as of July 31). The market is down about 30% (YTD)