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Suzlon - Leading India’s wind energy sector

Mon, 03 Mar 2008 20:28:54 EST

Suzlon - Leading India’s wind energy sector - by franeddu

In recent years, India’s wind energy sector has received substantial investments from foreign companies due to development potential, presence of competitive wind farm equipment and government policies. On a year-on-year basis, the wind energy sector is growing in India at a rate around 50%. Wind energy is seen as safe and cheap alternative to fossil fuel, which is hovering around $100 per barrel.

Wind energy has great potential and the industry is gaining prominence. India is the third-largest wind power generator in the world, US is second, and Europe is the first. The wind power generation is a global industry. In India the potential for wind energy is around 45,000 MW, and the country aims to have additional capacity of 100,000 MW in few years. Of which 10%, or 10,000 MW, is proposed from wind energy sector.

Suzlon is India’s largest producer of wind turbine generators and has tied up with companies around the world to supply the turbines that produce power from wind energy. In the next five years, utilities and governments in the US, Europe and China plan to earmark around $150 billion (Rs 5.9 trillion) for renewable projects, and the outlook looks good for investment in this emerging sector.

For Suzlon Energy stock, the recent market decline is given an excellent entry opportunity. Within a timeframe of 2-3 years, Suzlon stocks will yield good returns. At the prevailing market price, the stock will pay 24 times its expected earnings for 2009. During the quarter ended on December 31, 2007, the company showed upward growth, largely due to climatic concerns paving way for wind energy solutions.

Ongoing capacity expansion, a strong order book, and flow of IPO funds into subsidiary Hansen Transmissions will show the company’s earnings over the coming years. Due to one-off expenses such as relocation cost of projects and taxes happened due to hedging transactions that showed fourth quarter numbers negatively. At present Suzlon is vertically integrated energy merchandize provider. As on January, 2008, the company reported robust order book position of USD 4,335 million, with $600 million in domestic orders, and $3,726 million in international orders.

Suzlon - :Promising growth...

Sun, 02 Mar 2008 22:35:05 EST

Suzlon - :Promising growth... - by franeddu

Betting on Asian Equities...

Fri, 29 Feb 2008 05:00:30 EST

Betting on Asian Equities... - by franeddu

In recent weeks, a large number of investment analysts are in favor of Asian equity markets, which are seen attractive for various reasons. The region positioned for an upturn in the global economy. In view of investors, the structural changes that are occurring in Asia are important for long term, and these nations are becoming more attractive than other emerging markets, even the developed markets. Asian economies and companies are in good shape due to improved fundamentals and earnings forecasts remain upbeat.

The region’s exports have been growing from 2001 lows. Being aware of these trends, a number of investors have increased their holdings in Asian assets. The region boasts some of the best performing equity markets.

For overseas investors, some other positives are structural reforms, domestic consumption and demographics. The 1998 financial crisis improved the banking, corporate governance, and access to overseas companies. Asia continues to be outsourcing destination and Asian companies are cost-efficient and part of technology supply chain. These countries have youthful populations who will spearhead more consumer spending. Populations are growing rapidly compared to slow rates of Europe or the stagnant situation in Japan

The late January market corrections enabled the region’s valuations cheaper. These corrections have made both Chinese and Hong Kong markets more attractive. Led by China, the growth for Asia is projected to be above 8% in 2008. . There is a positive sentiment on Asia due to strong economic and earnings momentum. A J.P. Morgan report cited that Asia’s growth will be valuable to investors.

Long-term areas that make Aisan equities appealing are growing domestic wealth and integration of Asia into the global economy. They are supported by immediate themes such as attractive valuations, low interest rates, a burgeoning consumer sector, and high GDPs. In Asia discourse, Japan is excluded.

Visa IPO - Largest in US history

Wed, 27 Feb 2008 03:50:25 EST

Visa IPO - Largest in US history - by franeddu

On Monday, Visa proposed initial public offering (IPO) of almost half of its shares that will reap a windfall in coming months. The IPO could very well be the largest in US history, valued nearly $18.8 billion. The proposed price range is between $37 and $42, Visa’s offering of 406 million Class A will net $16 billion and the company might sell additional 40.6 million shares to meet demand. The Visa card use is growing.

According to Securities and Exchange Commission, Visa will trade on the NYSE under the symbol V. Mega-sized deals are comparatively less in the US. Underwriters sharing fees could exceed $350 million. In general for large IPOs the underwriters rake in fees of 1.75% to 3% of the deal value.

Despite the turmoil in the financial sector and bearish environment in the stock market this year, Visa stakes its future as a public company and the IPO bound to stoke bullish sentiment. Fifteen investment banks will distribute the deal including J.P Morgan. The IPO is expected to begin trading at the end of March.

An IPO of MasterCard in 2006 was a huge success, as its shares are still worth five times their value on flotation. Visa too expects a similar benefit. The long-term prospect for both companies is good as the society is moving towards cashless. By 2011, 55% of transactions in the US will be cashless, according to Nilson Report. The trend towards paperless money is not confined to US and Europe, and Visa IPO will provide an access to money to expand into Asia and Latin America, where business is growing and opportunities to scale up are numerous.

Genentech - Leader in cancer treatment

Sun, 24 Feb 2008 02:52:28 EST

Genentech - Leader in cancer treatment - by franeddu

On Friday, US regulators approved Genentech (NYSE:DNA) cancer drug Avastin for the cancer treatment and the drug has the potential for revenue. The FDA approval came bit early, surprising the analysts as the announcement was expected in May. The positive decision augurs well for the biotech sector. The FDA decision came after the company produced Avastin report last week that showed the drug in combination with chemotherapy prolonged the survival of breast cancer patients.

Shares of Genentech, a publicly traded unit of Roche, jumped 8.9 percent to $77.99 in extended trading from $71.59. In 2007, Avastin US sales were $2.3 billion and analysts estimate its use for breast cancer treatment could yield nearly $500 a year. Investors are upbeat that the approval for breast cancer will increase sales. Industry experts view it is an excellent time to acquire Genetech shares.

The company is at the forefront in cancer drug treatment. Avastin has the potential to bring in lots sales and will assist to drive growth beyond the investors’ expectations. Further DNA has delivered to shareholders, and has a proven record to solidify the investors’ confidence.

Hewlett-Packard has Favorable Projections for 2008

Fri, 22 Feb 2008 08:50:54 EST

Hewlett-Packard has Favorable Projections for 2008 - by franeddu

Hewlett-Packard (HP) is the largest information technology company in the world. Since the dotcom bust, the H-P has reached impressive record levels. It is a great company and the stock is projected to do well over the long run. The company offered a strong 2008 profit outlook, as strong computer sales lifted fiscal first-quarter that ended on Jan. 31 and profits rose 38% compared to last year.

On Wednesday, the company shares went up $3.66, or 8.3%, to $47.61 - still less to November high of $53.48. In the Dow, H-P’s climb was reflected as it was among 30 components. It has allayed some fears of tech spending slowdown that plagued other big players in the sector. It is predicted to outperform in a softer macro environment where it is well-positioned as it has huge market share in the emerging nations and will do more cost-cuttings. It not only beat first-quarter estimates but also boosted its second-quarter and full-year projections to 17 cents a share, or 5%.

Source: MarketWatch

According to Bear Stearns, H-P continued to perform on its turnaround with balanced results that showcase the company’s diverse customers and extensive portfolio. The Bear Stearns report cited price target on H-P’s share to $70 from $68 due to conservative guidance, cost savings and investments in growth.

Though the macroeconomic uncertainties exist in tech environment, the company controls the levers of performance and is confident to increase earning per share, the CEO Mark Hurd stated. It earned $2.1 billion, or 80 cents a share. Revenue increased 13% to $28.5 billion from last years $25.1 billion. The company stands tall in tech sector, which has showed mixed growth in recent months due to US slowdown and concerns over financial issues.

Sony - it is showtime

Wed, 20 Feb 2008 10:44:15 EST

Sony - it is showtime - by franeddu

In recent months, the Sony’s Blu-ray technology is gaining prominence in the entertainment world. Blu-ray is the next generation high-definition (HD) disc format. Last month Warner Bros and four major Hollywood studios have informed that they would support Blu-ray technology in coming months. Retailers such as Best Buy, Netflix and Wal-Mart too are enthusiastic about Sony-backed technology. With the big names in its kitty, Sony is expecting a windfall and an opportunity. The Blu-ray technology has made rival Toshiba Corporation’s HD, DVD redundant.

Shares of Sony have gained 4.1% in Tokyo over the Warner’s decision in January. Investors are upbeat and want Sony to recoup fast the large sums the company invested in research, development, and promotion. Sony’s third-quarter earnings will be strong. According to Golman Sachs’ Yuji Fujimori the company’s October-December operating profit increased 17%, to $1.9 billion, from last year same quarter on a 6.3% uptick in sales to $25.4 billion. Operating margins will exceed 7% for the quarter if Sony delivers.

Analysts are positive on Sony for this year as the company released many top-notch products at the 2008 Consumer Electronic Show in Las Vegas. On Monday, investors anticipating an end to format war pushed the shares of both Toshiba and Sony. With Blu-ray set to become the standard for the next generation of HD home movie DVDs, Sony’s shares rose 2.7%.

Foreign Bonds - Gaining Prominence

Sat, 16 Feb 2008 08:11:33 EST

Foreign Bonds - Gaining Prominence - by franeddu

Foreign bonds have high risks compared with stocks and currencies traded within the US. However, they have potential to give high returns for an investment. Some of the favorable aspects of foreign bonds are tax advantages, high return, protection of assets, and diversifying of portfolio, among others.

Foreign bonds are of two types: bonds from developed nations, and bonds from emerging markets.

The bonds from developed countries such as Canada Japan, and from Europe and others have efficient financial markets and pose lower risks, whose bond yields are comparable to US yields. However, bonds from emerging countries or developing world have risks that are not found in the developed such as currency collapse to a military coup.

In recent years, foreign bonds have paid off for investors willing to withstand volatility in exchange for high returns. It is predicted that the next big bull market will emerge outside the United States. It is helps to tread the off beaten path. Nowadays, bonds in emerging markets and foreign bonds have been outperforming U.S. issues substantially. In recent months, both Credit Suisse First Boston and Merrill Lynch have increased their allocations of non-U.S. equities.

Ignoring foreign bonds is seen shortsighted. Bond experts are of the view that little foreign diversification can be an advantage for the fixed-income side of a portfolio and can facilitate smooth returns in case dollar declines. In recent years, investors after embracing foreign-stock funds are giving close attention to foreign-bond funds. Last year inflows into foreign-bond funds doubled as investors poured $19 billion. These funds managed total assets doubled in the past two years to $84 billion, according to Financial Research Corp.

Similar to international stocks, foreign bonds offer same benefits, such as foreign currency exposure - a chance to profit in case US dollar weakens further, and an opportunity to tap into economies that are growing faster than the U.S. Foreign bonds are seen safer than foreign stocks, even varied risks. In the past two years, nearly a fourth of the around 100 foreign-bond funds were launched. It is predicted that the dollar will decline against other currencies to make bonds purchased in local currencies worth more. Some managers anticipate that foreign countries to cut interest rates, which eventually will boost bond prices.

India Calling ...

Thu, 24 Jan 2008 10:42:24 EST

India Calling ... - by franeddu

There is a general feeling that the 21^st century will be an Indian Century. In the globaleconomy, India is gaining prominence rapidly. Today, it is second-fastest growing economy in the world and brimming with investment opportunities. A number of big players such as Microsoft to Nokia and Samsung to auto majors consider India as the most attractive place for investment.

Source: National Geographic

India’s emergence as a powerful economic force is seen as one of the unique investment stories in recent decades. It is 10^th largest economy in the world and Asia’s third economy. According to American Express, the number of millionaires in India will increase in coming years. McKinsey predicted that by 2025 the average Indian income will increase by three-fold. By 2035, India will be third largest economy in the world, Goldman Sachs report cited.

The country has low-cost workforce with varied skills and English being one of them. The Indian middle class is large as the US population, wages are low; and investors are optimistic. The country has a youthful population. Over 50 percent of the population is below the age of 30. It has credible democratic and legal institutions that provide secure business environment.

Key indicators	2007	2008	2009	2010	2011	2012
Real GDP growth (%)	8.0	7.9	7.4	7.4	7.5	7.5
Consumer price inflation (av; %)	6.2	5.6	5.2	5.1	5.0	5.0
Budget balance (% of GDP)	-3.3	-3.0	-2.8	-2.6	-2.5	-2.3
Current-account balance (% of GDP)	-1.2	-1.5	-1.3	-1.3	-1.6	-2.0
Lending rate (av; %)	13.1	12.9	12.0	11.0	10.0	10.0
Exchange rate Rs:US$ (av)	41.2	38.4	37.4	36.5	36.0	35.5
Exchange rate Rs:¥100 (av)	35.1	36.5	38.8	39.0	39.2	38

Source: The Economist

The purchasing power of the vast middle class, the large reserves of foreign exchange and the presence of stable exchange rates are some of the key factors for attracting overseas investors. A recent Asian Development Bank (ADB) report gave favorable projections of India’s economy for the year 2007 and 2008 due to industrial expansion, robust investment and average agricultural growth. In the fiscal year ending March 2007, the economy grew at brisk space of 9.4% - fastest expansion in the past 18 years.

The US is the largest trading partner of India, and all the mentioned factors should make India appealing to informed investors.

Emerging International Markets - An Overview

Wed, 23 Jan 2008 08:52:32 EST

Emerging International Markets - An Overview - by franeddu

In 21^st century due to developments in information technologies, especially Internet, have enabled the global markets and global economy to strengthen or expand. Today, many businesses are expanding virtually or physically to emerging markets. Japan, after World War II, rose from ruins to an economic powerhouse due to trade and investment with foreign countries. Emerging international markets or countries are experiencing an economic expansion and are eager to move out of their third world status. Thus, the stage is ideal for foreign investors to capture these growing markets.

The emerging markets are outperforming the developed ones, growing almost four times. The factors have contributed to this impressive performances are strong fundamentals, and strong commodity cycle, These economies account for 30% of world GDP, their exports 45% of the global total, consume more than half of world’s energy, and possess 75% of global foreign exchange reserves. They are reducing external debt, converting current account deficits into surpluses, and making currency regimes flexible.

In recent years, their strength is shown in their steeply climbed stock markets, and their economies have potential to lift the world economy. Although emerging market (EM) equities have risen rapidly, for investors, the asset class does offer investors compelling reasons to invest.

Africa, Asia and Latin America have young workforce compared to aging and labor shortage developed countries. The wages are very low in EM countries. Faster productivity will generate economic wealth. By 2050, according to PriceWaterhouse Coopers, six of the largest 10 economies will be these countries

For investors, these markets are attractive in a low-return world. Local currency returns for equities have been impressive with 30.4% returns, double the 13.3% returns of equities in the developed markets.