My Read on the Beijing Flood

by Raymond Chan

We are certainty less upbeat on China after witnessing the death toll of “77” from Beijing Flood. What surprises us is the flooding issue seems to happen at the newly built Beijing metropolitan areas while the nearby Forbidden City (the Chinese imperial palace for Qing Dynasty built some 600 years) never suffer from flooding problem. Has China got better engineers in the past than now? Of course not, we can’t help but believe the government funding has been mis-allocated during its recent boom. A prime example is the Beijing Olympic Stadium. As shown on picture on your left, after billions of dollars were spent on the Beijing Olympic in 2008, the stadiums now become dumping grounds. Just image if the government was spending those money on water infrastructure. (Note: The London Olympic costed only US$42 million, which was only 1/8 of what was spent at Beijing Olympic, according to Financial Times)
Position One:                Sell WOW Sept $28.01 Calls at 100 cents  
Current Share Price:        $28.57
Research Target Price:        $29.01

Woolworths will report their profit result on 24 August 2012 (prior to equity options expiry on 30 August).

Position Two:                Sell ORG Aug $11.51 Puts at 30 cents
Current Share Price:        $11.81
Research Target Price:        $15.80

ORG will report their profit on 23 August 2012.
The shares are currently on a forecast dividend yiled of 4.2% fully franked.

Position Three:        Sell NAB Aug $25.01 Puts at 40 cents
Current Share Price:        $24.98
Research Target Price:        $30.49
With CBA reporting around the middle of this month, there may well be some interest in the other big banks.
NAB is on a forecast dividend yield of 7.3% fully franked at current prices.
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