SPC 180209

SPC forming a double-top?

If SPC doesn't break the 2.74 resistance (red --) or the downtrend resistance (upp red) soon, we could see it re-visiting the 2.57 support (green --).

But if SPC breaks the 2.80 uptrend resistance (upp blue) as well, we could see it testing the 3.00 mark.


For tomorrow :

Support @ 2.67, 2.63 (pink --), 2.61 (low blue), 2.57 (mid red, green --), 2.50 (green ...)Resistance @ 2.72 (upp red), 2.74 (red --), 2.795 (upp blue), 3.01

SPC 221008

The 1st hint of warning came on 6 oct when SPC broke the 4.27 neckline support (blue --). Confirmation came the next day when SPC broke the long term downtrend support (low red) and downtrend support (mid grey) with volume.

As you can see from the chart, SPC spiralled down after that and the highest it came back to was to test the downtrend resistance (mid grey) again on 14 oct. I've just added in the short-term downtrend channel (black). After 15 oct, SPC never closed above the downtrend resistance (mid grey).

Today, it gapped down and opened right on the short-term downtrend resistance (mid black), more importantly, it broke down with volume, just like it did on 7 oct.

As it stands now, things don't look too good for SPC. There could be some sideway tradings but I guess it's going to trend within the downtrend channel (black).



For tomorrow :

Support @ 2.57, 2.31 (low black)
Resistance @ 2.64 (mid black), 3.01 (pink --), 3.07 (low grey, upp black)

SPC Q3 profit plunges 99%

SINGAPORE - Singapore Petroleum Co on Tuesday reported a 99 per cent fall in quarterly net profit and said it expected to continue being affected by the global financial crisis and oil price volatility.

The oil refining and marketing firm said it earned S$619,000 (US$$418,000) in the three months to the end of September, compared with S$98.1 million a year earlier.

According to Reuters calculations, refining margins in Singapore for complex units cracking benchmark Dubai crude made an average of US$5.80 a barrel in the third quarter, historically decent but below the US$7.18 average of the past year.

Margins rose in September as benchmark US crude oil prices plunged from a record near-US$150 a barrel in July to around US$100 by the end of the quarter.

Shares in SPC fell 29 per cent in the quarter, versus a 20 per cent fall in the benchmark Singapore index in the same period.

Keppel Corp, the world's number-one offshore oil drilling rigs builder, owns 45 per cent of SPC, which equally shares ownership of a 285,000 barrels a day refinery in Singapore with US oil major Chevron.

Commodities Sector Research Report

by OCBC Investment Research (3 Sep)

OUTPERFORMING the broad market: Commodities performed well in Q2 2008. Corporate earnings for Q2 2008 were relatively mixed. Compared with last year, fewer companies reported earnings growth, and in general, many succumbed to inflationary cost pressures and saw margins being compressed as a result.

Amid an increasingly challenging operating environment, the commodities sector continued to perform and even surpassed expectations. For instance, Noble Group Holdings impressed with a 191 per cent y-o-y surge in H1 2008 net profit, Olam International posted a 54 per cent growth in FY2008 earnings, while Straits Asia Resources (SAR) dazzled with H1 2008 earnings soaring 263 per cent y-o-y. We believe that the commodities sector will continue to outperform the broad market in H2 2008.

Mid-long term growth intact: Despite recent swings in commodity prices, the medium- to long-term growth profile for commodities remains intact. According to Noble, volumes remain robust despite fluctuations in spot market prices, which it is hedged against.

It remains confident that demand for commodities will grow. Similarly, SAR has been riding on record high coal prices and is enjoying upward price revisions for its new contracts, owing to global demand-supply imbalances. It has raised its average selling price for 2009 delivery by 47 per cent to US$104 per tonne (versus US$70.5 per tonne in 2009).

Global demand for energy has been estimated to grow by more than half over the next 25 years, according to the International Energy Agency, and this will continue to put upward pressure on energy prices.

Hurricane Gustav to boost oil prices? Adding to the tight demand-supply landscape, oil prices could spike should Hurricane Gustav result in production disruptions in the US. According to news reports, at least nine refineries, with together account for 12.5 per cent of US refining capacity, have been closed in anticipation of the hurricane.

Depending on the extent of damage, supply shortages could drive oil prices up, with spill-over effects flowing to coal and energy prices.

Top picks - Noble and Straits Asia Resources: Under our coverage of commodity-linked stocks, we continue to favour Noble and SAR. Catalysts for the stocks include:


- for Noble, the upcoming listing of its subsidiary, Donaldson Coal, on the Australian Stock Exchange in Q4 2008, which will enhance its cash position; and


- for SAR, the acquisition of coal interests in Madagascar and Brunei, which will increase its reserves substantially and let it evolve into a global coal player.

-Research Report by OCBC Investment Research (3 Sep)

SPC 080808

After hitting the 7.10 neckline (blue --) and downtrend resistance (upp pink) on 15 jul, SPC has softened considerably and has now broken the 6.40 support (green ...). From the chart, we can also see that SPC has formed the Head & Shoulders formation.

Taking the peak of 8.25 on 21 apr, we calculated the diffrence with the 7.10 neckline to be 1.15. So we might be looking at SPC to hit a low of about 5.95 (7.10 - 1.15), or thereabouts.



For monday :

Support @ 6.06 (low blue, low red), 6.00 (low pink)
Resistance @ 6.153 (mid pink), 6.264 (mid red), 6.29 (green --), 6.40 (green ...), 6.475 (upp blue)

SPC Q2 revenue leaps 65%, but profit up marginally

Higher costs, weak US$ offset better refining margin; no divestment gain

By NISHA RAMCHANDANI

DESPITE revenue surging almost 65 per cent to $3.25 billion for the second quarter, Singapore Petroleum Company (SPC) recorded a marginal 0.6 per cent year-on-year rise in net profit to $180.26 million for the three months ended 30 June.

Earnings per share rose to 34.96 cents for the quarter from 34.79 cents for the year-ago comparative period.

For the first six months of this year, net profit fell to $278.75 million from $291.34 million in 1H07 while revenue grew 52.8 per cent from $3.9 billion to $5.96 billion.

An interim one-tier (tax exempt) dividend of 20 cents per share will be paid out on Aug 26.

In Q2, SPC completed its scheduled maintenance programme of the Catalytic Reformer (CRU) and the Hydrocracker 2 (HCU2) upgrading units which led to total crude and feedstock throughput being reduced by 9 per cent to 263,000 barrels per day. However, sales volume increased to 19.3 million barrels from 18.3 million in the corresponding quarter for 2007.

For the quarter, the group achieved an average refining margin of US$13 per barrel, compared with US$9 per barrel for 2Q07. This was offset by lower refinery product throughput, higher processing costs, higher hedging costs and the weaker US dollar, said SPC.

Another key factor is that there was no divestment income in Q2 2008, against $14.1 million in Q2 2007.

Downstream activities contributed $3.15 billion in Q2 turnover and a pre-tax profit of $164.2 million, while exploration and production (E&P) contributed $94.3 million in turnover and a pre-tax profit of $61.1 million.

While the group achieved a higher pre-tax profit of $225.3 million in Q2 2008, higher E&P taxes totalling $23 million increased the group's overall income tax expense to $45.1 million, 75.6 per cent higher than in Q2 2007.

For H1 2008, 'demand for refined products remained robust despite the increases in oil prices,' said SPC.

On prospects ahead, demand might be hit by the slowing global economy in the next 12 months and the reduction of government subsidies in several Asian countries, SPC said. 'The new Reliance Jamnagar refinery coming onstream would add to supply and affect refining margins,' it said.

'However sustainable demand from China, India, Russia and the Middle East will lend support to refining margins. We expact margins to remain healthy.'

The company expects to stay profitable for the rest of the year. SPC shares closed trading yesterday at $6.53, down 2 cents.

You can read SPC's news release here.

Oil prices drag down most commodities

by AFP (21 July)


(LONDON) Oil prices slumped last week as traders worried the slowing US economy would dampen demand from the world's biggest energy consumer, sparking losses across other key commodity markets.

Oil: Crude futures plummeted further from record high points above US$147 per barrel that were struck exactly one week ago. By Friday, Brent North Sea crude for September delivery dived to US$132.30, sharply down from US$144.15 a week earlier. New York's main oil futures contract, light sweet crude for August plummeted to US$131.15 from US$146.55.

Coffee: Coffee prices dipped after the sharp drop in oil. By Friday on Liffe, Robusta for September delivery fell to US$2,373 per tonne from US$2,361 a week earlier. On the NYBOT, Arabica for September delivery slid to 137.50 US cents per pound from 142.62 cents.

SPC 040708

After completing the double-bottom formation in jun, SPC broke the 1st neckline of 6.65 (blue ...) on 1 jul, and then the 2nd neckline of 6.79 (pink --) on 2 jul.

SPC now seems to have hit resistance at the 3rd neckline of 6.95 (light blue --). We could see some profit taking for SPC next week, with SPC trading between the 6.95 neckline (light blue --) and 6.79 support (pink --).



For monday :

Support @ 6.81 (low blue), 6.79 (pink --), 6.66 (low pink), 6.65 (blue ...), 6.60 (low red)
Resistance @ 6.95 (upp pink, light blue --), 7.13 (blue --), 7.21 (mid red)

Hope you find my analysis helpful. Thank you for your support !!

SPC Research Report

by DBS Group (11 June)

REFINING margins (Reuters' Singapore complex margin) continue to exhibit high volatility - it touched this year's low of US$4 per barrel (bbl) in early January and peaked at US$13.30/bbl in early April.

Margins averaged $6.90/bbl in Q1 2008 and US$8.80/bbl for the quarter to date. Current refining margins are hovering at US$7-9/bbl, supported by exceptionally strong middle distillate (diesel and jet fuel) crack spreads, but offset by soft petrol and fuel oil spreads.

Given seasonally strong refining margins in Q2 2008 and the strong crude oil price, Singapore Petroleum Company's (SPC) quarterly results should peak in Q2 2008. We expect it to book US$8.50/bbl refining margin, up from US$7/bbl in Q1 2008 but below the $9.50/bbl in Q2 2007.

Exploration and production performance should also be boosted by strong crude price; we expect Brent crude to average US$118/bbl in Q2 2008, up from US$97/bbl in Q1 2008. Net profit should jump 81 per cent q-o-q (but flat y-o-y) to $177 million.

We raised FY 2008-09 forecast net profit by 8.4 per cent and 10.1 per cent, respectively, to reflect current strong crude prices, but maintain our refining margin assumptions.

At the current price, SPC is attractive for the following reasons: limited downside risk from current level, strong Q2 2008 results should be near-term share price catalyst, attractive dividend yield of 10 per cent, and 30 per cent upside.

The counter is trading at a 2008 P/E of only 6 and an enterprise value (EV)/Ebitda multiple of just 4.2 versus regional peers' (excluding-Japan) 2008 P/E of 8.7 and EV/Ebitda multiple of 5.7.

-Research Report by DBS Group (11 June)

SPC 300508

SPC continued the downtrend when it started the week below the 7.20 support (blue --) and the long term downtrend support (mid red). We even saw SPC breaking the 6.95 support (light blue --) momentarily on 28 may, before closing 1 bid above it.

There was a small hope of a rebound on 29 may when it broke the uptrend resistance (upp blue) and tested the long term downtrend resistance (mid red). However, the selling resumed the next day, accompanied by an even bigger volume, finally pushing SPC below the 6.95 support (light blue --) and closing right on the uptrend support (low blue).

The next support for SPC, based on volume distribution, looks to be around the 6.80 level. Which is also near where the 2 downtrend support meet (low pink, low red). If the 6.80 support breaks, the next support, based on volume distribution, looks to be around the 6.70 level.



For monday :

Support @ 6.90, 6.81 (low red, low pink), 6.70
Resistance @ 6.92 (low blue), 6.95 (light blue --), 7.103 (upp blue), 7.128 (upp pink), 7.14 (mid red)

Good Luck !!

SPC 230508

After its dramatic rise and fall in apr, SPC has more or less, been trading within the downtrend channel (red) and between the 7.20 support (blue --) and 7.37 resistance (green --).



Today, we saw SPC trading above the downtrend resistance (upp pink, upp red), and testing the 7.37 resistance (green --). However, there wasn't enough buying momentum and SPC closed right on the downtrend resistance (upp pink).

If SPC opens above the downtrend resistance (upp red) on monday, there's a good chance we might see it testing the 7.37 resistance again.

However, if SPC opens below the downtrend resistance (upp red), we could see it trading sideways again, just like it was doing since 29 apr.

For monday :

Support @ 7.23 (upp pink), 7.20 (blue --), 7.17 (low blue), 7.11 (low red)
Resistance @ 7.29 (upp red), 7.37 (green --), 7.47 (upp blue)

Good Luck !!

SPC 250408

SPC's dramatic rise on 16 apr has been matched by its dramatic drop this week. After trading above the 8.00 support level (blue ....) on 21 and 22 apr, SPC gapped down on 23 apr, and even broke the uptrend support (upp blue --).



And SPC gapped down today again, breaking the 7.47 support (red --), 7.35 support (green --) as well as the uptrend support (upp blue).

Next support can be seen around the 7.22 level (light blue ...). If SPC breaks that support, we might see it testing the long term downtrend support (low red).

For monday :

Support @ 7.22 (light blue ....), 7.15 (low blue), 7.10 (low red), 6.95 (light blue --)
Resistance @ 7.35 (upp blue, green --), 7.41 (mid red), 7.47 (red --), 7.52 (low blue --), 7.65

Good Luck !!

SPC Research Report

by DBS Group (April 23)

WHILE the group's operating profit was up 7 per cent y-o-y, operating profit from refining business actually dropped 24 per cent or S$25 million from a year ago. This was despite a stable refining margin of US$7 per barrel. Oil hedging loss, weak US dollar, and high freight rate contributed to the y-o-y decline in operating profit from refining business.

Management did not disclose details of its hedging activities but indicated that hedging cost was $10 million higher than in Q1 2007. Trading volume is expected to recover in Q2 2008 from a decline in Q1 2008 to 19.3 million barrels, versus 20.5 million barrels in Q1 2007. However, the scheduled maintenance in Q2 2008 would lower refinery crude throughput by 3 per cent from the Q1 2008 level.

SPC is still seeking to acquire operating E&P assets. However, management acknowledged that at current record-high oil prices it would be difficult to find any acquisition opportunity at good price. Therefore, SPC will likely focus more on E&P organic growth during the next two years.

It expects to drill 18-19 exploration wells in 2008 with allocated budget of US$50 million-US$60 million. Refining business will continue to dominate SPC's earnings in the coming years. We expect SPC's quarterly earnings to peak in Q2 2008, supported by seasonally strong refining margins and record crude prices.

We expect quarterly earnings to jump to S$160 million-S$180 million in Q2 2008, and soften to S$100 million-S$130 million in Q3-Q4 2008.

Based on our recently raised crude price assumptions, we forecasted FY08-09 net profits that are 1.8 per cent and 11 per cent higher respectively. Hence, we revised our sum-of-parts TP to S$7.84 based on: 1) attractive dividend yield of 7.5 per cent; 2) current strong refining margin and high crude prices; and 3) relatively cheaper valuations compared with regional peers.

-Research Report by DBS Group (April 23)

SPC 180408

SPC did indeed open above the 7.35 resistance (green --) on 16 apr. To say that it tested the 7.52 resistance (red --) was an understatement. It practically pierced through the resistance and rocketed.



SPC went on to test the 8.10 neckline (pink --), which we saw it briefly breaking through on 17 apr, before settling down around the 8.00 support level (blue ...).

It remains to be seen whether the 8.00 support (blue ...) can hold since SPC has already been on the uptrend since 17 mar.

We would probably see some profit taking for SPC next week, with the price bouncing between the 7.80 support (green ...) and 8.10 (pink --) or 8.00 (blue ...) resistance.

For monday :

Support @ 8.00 (blue ...), 7.80 (green ...), 7.783 (low pink), 7.608 (upp blue --), 7.52 (red --), 7.41 (upp red)
Resistance @ 8.10 (pink --), 8.13 (upp pink), 8.15

Good Luck !!

SPC 150408

SPC has been rising steadily since 20 mar and is now less than 10 cents away from the 7.52 resistance level (red --).



SPC broke the 1st resistance level of 7.35 (green --) today. If SPC opens above this resistance level (green --) tomorrow, we might see it testing the 7.52 resistance (red --).

For tomorrow :

Support @ 7.35 (green --), 7.28 (low blue --), 7.10 (upp blue), 6.92 (low blue), 6.88 (low red)
Resistance @ 7.458 (upp red), 7.52 (red -- , upp blue --)

Good Luck !!

SPC 280308

SPC was trading sideways for the last few days, before breaking out today. SPC broke 2 downtrend resistance (upp red, upp red --) with volume. SPC also broke the 6.66 psychological resistance (red ...) and closed above it.



It would be interesting to see if SPC can open above the 6.66 psychological resistance (red ...) and continue to trade within the uptrend channel (blue --).

For monday :

Support @ 6.66 (red ...), 6.626 (upp red --), 6.55 (upp red, low blue --), 6.33 (low red)
Resistance @ 6.905 (mid blue --), 7.15 (upp blue --), 7.347 (green --)

Good Luck !!

SPC 260308

As SPC was forced into a corner by the uptrend support (blue) and downtrend resistance (upp red), there was no room and SPC chose to break the support (blue).



SPC is trading within the broader uptrend channel (blue --) though. If SPC breaks this support (low blue --), we might see it testing the 6.40 level.

For tomorrow :

Support @ 6.493 (low blue --), 6.40 (mid red), 6.322 (low red --)
Resistance @ 6.588 (upp red), 6.616 (blue), 6.66 (light blue ....), 6.70 (upp red --)

Good Luck !!

SPC 140308

SPC broke the 6.66 support level on 13 mar. It closed right on the downtrend support (upp red) on 14 mar.

(Please note that the volume is wrongly indicated)

I've adjusted the uptrend support (low blue --) to match the lows on 24 jan and 14 mar. If SPC trades within this uptrend channel, we might see it test the 7.50 level again.

However, if SPC breaks this support (upp red), it might trade within the downtrend channel (red) and test the 6.00 level.

For monday :

Support @ 6.57 (upp red), 6.35 (mid red), 6.02 (low red)
Resistance @ 6.66 (low blue --, light blue ...), 7.11 (upp blue --)

Good Luck !!

SPC 050308

SPC has been trading below the uptrend support (low blue --) since 1 mar when it formed a Doji. Since the trend prior to 1 mar was down, it could have signalled a reversal. However, the confirmation signal on 2 mar wasn't convincing.



We may see SPC continue to trade within the downtrend channel (red --) and hitting the psychological support (light blue ...) of 6.66 before reversing.

For tomorrow :

Support @ 6.775 (upp red, low red --), 6.66 (light blue ...)
Resistance @ 7.022 (mid red --), 7.17 (low blue --), 7.35 (green --, upp red --)

Good Luck !!

SPC 290208

After hitting the 7.50 psychological resistance (light blue) on 25 feb, we saw SPC softening, which could be due to profit taking.



I've done some housekeeping and re-adjusted the uptrend channel (blue --). I've also added a downtrend channel (red --).

From the chart, we can see that SPC is trading very near to the downtrend resistance (upp red) and downtrend support (low red --). If these 2 trendlines break, we might see SPC testing the 6.66 neckline (light blue ...).

For monday :

Support @ 6.963 (low blue --), 6.86 (upp red), 6.84 (low red --), 6.66 (light blue ...), 6.52 (low red)

Resistance @ 7.31 (upp blue --), 7.35 (green --), 7.42 (upp red --), 7.50 (light blue)

Good Luck !!