In this week’s likes and dislikes are a Chinese insurance firm and a major petroleum company.
Michael McCarthy of CMC Markets likes South32 this week, which he believes is an unconventional commodity portfolio.
“While the share price has lifted, a recent sell down means the shares don’t reflect the big uplift in coal prices. Buying S32 won’t make you popular with environmentalists, but it may help round out a commodity portfolio” said McCarthy.
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In McCarthy’s not-so-good books this week is Caltex (CTX) at its current share price.
“The chart shows resistance at $35, and next year’s earnings will be hit by the divestment of the Woolworths petrol business. Margins may also come under pressure as China moves more refining onshore. In my view a good level to take profit,” he said.
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Mary Manning, Portfolio Manager of Ellerston Asian Investments, an LIC that invests exclusively in Asia, likes Ping An Insurance – the largest insurer in China with operations in life insurance, banking, securities and health care.
“Ellerston Asia Investments’ like Ping An because of its strong growth outlook, inexpensive valuation and upcoming catalysts to unlock hidden value in its technology assets” Manning said.
“The value of new business growth (VNB) for Ping An in the first three quarters of this year was 35%. This is incredibly high and is a testament to the under-penetration of insurance in China.”
“Ping An is trading at only 13x PE with expected earnings per share growth of over 18% and Ping An has over 430 million internet users and over 300 million app users and all its businesses are linked via technology.”
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Singapore Telecommunications (SingTel) is the largest listed telecoms provider in Singapore, and is in Manning’s ‘not-so-good’ books this week.
“Ellerston Asian Investments does not hold any telcos in Asia and SingTel is an example of a stock we think investors should avoid.”
“Fundamentally the outlook for telecom in Asia is clouded by increasing competition and technological changes that are putting pressure on margins and profitability,” she said.
[4]Source: Yahoo Finance
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