Business

Coal, chocolate and jolly Chinese money

Block trades in Geo Energy Resources and Delfi; China Evergrande buys development from Ying Li

Is Santa Claus Chinese? You question the underpinnings of your childhood as a debt-soaked China developer strikes a deal with an S-chip, China coal demand keeps an Indonesian miner happy and peering under the stock market bull of 2017 reveals a tag: "Made in China".

After a record-breaking push last week, the benchmark Straits Times Index (STI) was ambivalent for a second day in a row. It ended the day up 5.99 points or 0.17 per cent to 3,442.35, bringing it back to where it started on Monday.

On the large cap front, shipbuilder Yangzijiang, which has rallied significantly this year, notably fell 4.8 per cent to $1.59.

While the usual suspects dominated market trading, unusual activity was spotted in some smaller counters.

Some 235 million shares changed hands at precision engineering firm Allied Tech, which makes printer and copier parts. Israeli venture capital play The Trendlines Group rebounded 10 per cent to $0.16.

Other interesting counters are highlighted below.

EVER INDEBTED

The Singapore market deal of the day is one made by China's debt-soaked developer China Evergrande Group, a stock up 450 per cent this year as it tries to pare down its debt mountain.

Evergrande is now buying a Chongqing development and getting a land parcel from Ying Li International, a relatively conservative China commercial developer listed in Singapore. After an initial spike, Ying Li ended trading at $0.151, up 0.1 cent, with 40.5 million shares traded.

But the S-chip won't be getting its cash from Evergrande so easily. Tranches of payments stretch into 2018 and 2019.

INDONESIAN COAL

Coal prices have been rebounding and interest in Singapore-listed Indonesia coal miner Geo Energy Resources picked up a notch after a giant off-market trade of 44.65 million shares at $0.25 yesterday afternoon; the counter ended at $0.26.

For the three months ended Sept 30, 2017, Geo Energy reported net profit of US$8.6 million (S$11.6m) on revenue of $74.9m. It said that its business was driven by strong China demand as the country restricts domestic coal production.

Coincidentally, a Phillip Securities Research report was published in the morning, with a maintained "buy" call and a target price of $0.44. It noted that production is much better than a year ago and fresh senior note funding helps the company's liquidity needs.

INDONESIAN CHOCOLATE

Sweeter stuff was also in play. Over 12 million shares in chocolate seller Delfi Ltd, formerly known as Petra Foods, changed hands off-market yesterday at $1.34.

Delfi's share price has slumped in recent months. Amid weak sentiment in key market Indonesia, the company has made senior management changes and cut underperforming products.

A MERRY MARKET

'Tis the season to do forecasts for next year. Market participants, once again, will indulge in the fantasy that they can predict what is going to happen.

For now, expectations for economic growth continue to be strong. Yesterday morning, Citi's research team distributed a major report on global economic outlook and strategy in 2018.

It said a broad-based rebound in spending on machinery and equipment is going on, which can prolong the business cycle.

Emerging markets were also supported partly by an upside growth surprise in China, though a 2018 slowdown remains a risk.

An ongoing online poll of its readers shows that most are optimistic. Almost two in five say global growth will surprise to the upside and just a quarter say it will disappoint to the downside.

Meanwhile, a note by Dutch investor NN Investment Partners highlighted how Chinese consumption growth, especially through e-commerce, has made the country one of the best-performing emerging markets of 2017.

Joy to the world! Taobao is to come.

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