Saturday, July 9, 2011

TEE International Poised for explosive growth (NRA)

TEE International Ltd
Current Price S$0.25 @ 05/01/11
Fair Value S$0.380

Poised for explosive growth
 Initiate coverage with Buy recommendation. We adopt SOTP methodology to evaluate the counter. By applying 30% discount to RNAV of real estate segment and pegging at 10x FY11 PER for engineering segment, we derive a target price of $0.38. The premium over industry average of 7x PER is justifiable given its stronger earnings growth and specialized engineering services which command better margins. We estimate sales and earnings to grow at 30% and 40% respectively in FY11.

 Record order books and visibility into FY12. The company as of Dec 2010 secured about $380m order books, representing an increase of close to 11 times from $35m recorded as of FY07. The current order book has surpassed the previous record high achieved before the onset of the financial crisis. As the typical project duration is about 18months, it is quite certain that the company will be busy until FY12.

 To benefit from more civil works and overseas jobs. The public civil engineering works is expected to dominate construction demand in Singapore in the years ahead, thanks to the LTA’s Downtown Line Stage 3 and JTC’s initiatives. This trend bodes well with the company given its focus on engineering works. Additionally, its recent $147m contract win in Brunei is a testimony to the management’s competency to grow via geographical expansion.

 Real estate to contribute substantially to FY13 earnings. The company partnered with local developers to co-develop two high-end projects namely 145 Killiney Road and Peak@Cairnhill. The management plans to launch both projects by 1Q2011 and expects to receive TOP by FY13. We view the demand for high-end properties to stay firm. Although selling price could be capped by introduction of another round of cooling measures, the odds of drastic decline are very low.
 Rerating catalysts include better-than-expected churn rate for property projects, higher ASP and addition of order books.
 Risks. Policy risk in property market, execution risk in overseas projects

Company Background
TEE has two major operating divisions – Engineering and Real Estate. For Engineering, the company provides specialized infrastructure engineering services, rebuilding and conversion of existing facilities, turnkey design and build services as well as system integration. Its geographical presence includes Singapore, Thailand, Malaysia and other region countries.
Real Estate is a newly-established segment launched in 2007. The company positions itself as a boutique developer. It acquires, designs, develops and markets unique residential developments in Singapore, Bangkok, Thailand, and Vietnam. To advance its competency in property development, the company has entered into joint ventures or joint development with renowned developers in certain large-scale high priced developments.

Business Segments
Engineering has a positive correlation with the cycle of the construction sector. There are many players in this highly competitive sector. To differentiate from its rivals, TEE is focused on securing larger rebuilding contracts, which include alteration works at existing buildings or spaces for new users, of which the mechanical and electrical engineering work content constitutes about 40-60% of the project. Customers range from developers of high-rise commercial buildings to waste and water treatment facilities, mass transit stations to airport terminals and logistics centres.

So far, the company has secured 3 projects with value more than $100m, including North and South Podium at Marina Bay Sands, Asia Square Tower 1, and Brunei housing project. The existing order book was about $380m, almost two times bigger than half a year ago. The contract wins in other countries such as Brunei and Thailand is a testimony to the company’s ability to expand beyond Singapore.

Real Estate
Venturing into real estate business is a natural expansion for TEE given its expertise in engineering works. Although it is less than 3 years old, the company has development projects in Thailand and Vietnam via joint ventures with local partners. To reduce execution risk, it formed partnerships with local boutique developers to develop two high-end properties located at Killiney Road and Cairnhill Circle and one mid-end property at 5 Geylang Lorong 26. The trio is scheduled for launch by March 2011. Both Cantiz@Rambai (21 Rambai Road) and The Thomson Duplex (323B Thomson Road) were fully sold and they will contribute positively to both top and bottom lines in FY11.

In Thailand, the company is currently undertaking three development projects, specifically The Surawong (60% sold), Chewathai Ratchaprarop (50% sold), and Chewathai Ramkhambeang (20% sold). The take-up rate for both Surawong and Chewathai Ratchaprarop has been positive. Ramkhambeang project, the latest project comprising one-bedroom and studio residential units, is expected to receive brisk sales too as the units will attract middle-income residents who live and work close to the city centre of Bangkok. The site is near to the Ramkhamhaeng University (one of the largest and more popular universities in Thailand), the Rajamangala Stadium (Thailand’s largest stadium), The Mall Bangkapi (a mega shopping complex comprising three buildings) and the Nida University.

On top of property developments, TEE enjoys steady flow of income from its investment property. It currently owns 33 Changi North Crescent in Singapore and Rom Klao Estate in Thailand via an associate and operates TEE Marina Bay Dormitory. In aggregate, the estimated annual revenue contribution is more than $9m.

Industry Outlook
Civil works helped construction sector to weather global slowdown. Thanks to the two integrated resorts, construction demand surged a hefty 46% to $35.7b in 2008. The construction boom began in 2005 and peaked in 2008, during which the sector grew at a remarkable 46% compounded-annual-growth-rate (“CAGR”). The demand shrank almost 41% to $21b in the following year because of global recession. Private demand almost ground to a halt, sliding almost 63% or $12.7b to just $7.5b in 2009 from the previous year. The drastic decline in private investment was partly offset by the steady flow of public contracts. Public demand in 2009 amounted to $13.5b, only $2b or 13% lower than that of 2008. The government support was undoubtedly critical during the downturn, given that 64% of total construction demand in 2009 was attributable to public works.

Construction sector to experience slow recovery. We forecast construction demand in 2010 to climb to $24b, thanks to the strong comeback of residential projects in private sector. Of note, our 2010 forecast represents the mid-range of BCA forecast of $21b to $27b. Also, we believe the construction sector will experience a slow recovery that could last for another 3 to 5 years. The chances are low that the sector will record a new high in anytime soon. We forecast construction demand in 2011 and 2012 to register $25b and $26b respectively.

Civil engineering likely to enjoy greater growth. According to BCA, public civil engineering contracts dropped to just $1.8b for the first ten months in 2010. The decline was mitigated by robust private sector construction demand, which totalled $14.1b for the first ten months in 2010 versus $6.8b in 2009. We opine the delay in awards of public civil works was partly due to counterbalance measures undertaken by government to ensure sustainable development in the construction sector. We believe, however, the demand for civil works will be strong in the years ahead with the projects led by LTA’s Downtown line phase 3 and JTC’s initiatives.

Policy risk for residential sector. The prevailing conditions of residential sector in Singapore are favorable for harboring an asset bubble. Factors such as low interest rate, high liquidity, influx of both skilled and unskilled workers and lack of supply caused property prices in Singapore to skyrocket. Cooling measures introduced by HongKong and Chinese governments will divert international buyers’ attention to Singapore. To tame the rising property prices, policies to weed out speculative money in property market are very likely to be introduced in addition to the measures announced on 30 August 2010. Potential ones may include higher downpayment, higher stamp duty and ban on sub-sales. The following table shows the comparison between Hong Kong and Singapore policies.

Momentum to decline for residential. The current low interest environment will not last forever and it is just a matter of time for it to increase. Rate hike can reduce the buyer’s affordability and hence demand for property. Coupled with more stringent policies, upside for property prices could be limited. Barring any major development in the global stage, we see the property market in Singapore remaining steady. Rising price may not be sustainable, but drastic decline in price and demand for property to vaporize in short to mid-term are unlikely too.

More land sales this year. The Singapore government said in November it will increase the supply of land for residential development in the first half of 2011. First half 2011 land sales programme will have a total of 30 sites available for residential development that can generate about 14,300 private residential units. It comprises 17 confirmed sites for sale and 13 reserve sites. This is higher than the land for 13,900 units offered in the second half of 2010. The objective of the move is clear, which is to increase supply of private housing to meet demand.

Company Outlook
Order book hit a record S$380m. TEE’s order book soared to $380m as of end of 2010, most of which will be recognized in 24 months. It increased by almost 11 times in less than 4 years from $35m in FY07. It is noteworthy that projects amounting to more than $100m were clinched throughout the past four financial years, except FY10. That partly explained why there is a dip in order book in FY10. The revenue, however, shows a steadily rising trend due to the overflow of unrecognized orderbook to the subsequent financial year. Now, the visibility is clear in the next two financial years. Based on existing orders, the revenue for engineering segment to be recognized in FY11 and FY12 is estimated to be $172m and $165m respectively.

Real estate to contribute substantially to bottom line in FY03. The company recognizes revenue from property development projects only when it receives TOP. It books its revenue based on confirmed transactions. It currently has eleven ongoing property development projects, specifically three in Thailand, one in Vietnam and the remaining in Singapore. We forecast share of profit from associates (mainly Killiney and Cairnhill projects) to contribute substantially to the bottom line in FY13, the expected TOP year for both projects. Both Killiney and Cairnhill projects are the largest in scale among the projects undertaken by the company. The realizable sales for each are estimated to be approximately $250m. Based on estimated take-up rate of 70% by TOP, estimated margin of about 20%, and the respective stakes in both projects, we estimate the company would rake in about $16m profits in FY13.

Recurring income from rental business. The company currently has three properties that yield steady stream of cash flow. The biggest one is MBS dormitory which yield an average of $500k per month, translating into about $6m income a year. Nevertheless, annual renewal application is required to submit to relevant authority. The risk, therefore, is that the company fails to get approval.

The second key property, located at 33 Changi North Crescent, yields about $1.8m a year for a period of 10 years and the contract expires in 2017. The tenant has the option to extend another 10 years. The last one is the Thailand investment property, which yield about $1.3m a year. In total, the trio provides a steady income of $9m a year with fat PBT margins close to 30-35%.

Financial Overview
Segmental breakdown: Engineering segment will continue to be a dominant revenue and profit contributor until FY13. In order to ensure continued growth, its engineering team is increasingly focused on big contracts typically worth more than $100m. Over the past three years, the company managed to secure contracts amounting to more than $530m, representing an average contract win per year of $170m. Conservatively, we assumed annual order book’s replenishment in FY12 and FY13 to be about $150m, 11% lower than historical average. We forecast significant contribution from associates in FY13, particularly from Cairnhill and Killiney projects.

High gearing ratio but interest coverage remained healthy. Financial leverage (Asset/Equity) remained high, although it has improved from 4.7x in FY09 to 4.4x in FY10. It utilized $35m long-term loan and $56m short-term loan in FY10 to finance its operation. The company ended FY10 with undrawn borrowing facilities amounting to $52m. Interest coverage (EBITDA/interest) was healthy, registering 6.3x and 5.2x in FY10 and FY09 respectively.

Smaller war chest could restrain growth. We are less concerned with the financing requirement for engineering projects even if the company continues to win contracts. The cash flow from each individual project is often self-sustaining given that contractors are typically given 7% of the contract value to kick off the project and collection of payment is done on a monthly basis. However, we think that the company will be less competitive when comes to land acquisitions as it has much a smaller war chest than most of its rivals.
Specialized engineering jobs fetch higher margin. PBT margin for this segment ranges between 8% and 12%, which is higher than that for a typical construction business that only fetches about 4-8%. The fatter margin was attributable to more specialized engineering jobs performed. Net margin is expected to cross EBITDA margin in FY13 due to a surge of share of profits from associates

Dilution from warrants. Funds raised from warrant proceeds would come in handy for the company as it seeks aggressive growth in property development in coming years. The company has 70.4m and 22.5m outstanding warrants which carry the right to subscribe for one ordinary share with exercise price of 31 cents and 40 cents per ordinary share with exercise dates up to Feb 2013 and April 2011. Following the share split taking effect at the end of December 2010, the warrant exercise prices are halved while the number of outstanding warrants doubles accordingly. Both of them are in-the-money based on the current trading price. After dilution, outstanding shares would be 467.4m.

Dividend policy. Over the past three years, dividend payout ratio ranged between 25% and 30%. Based on FY11 earnings and payout ratio of 30%, dividend yield is estimated to be 6.4%. We expect dividend per share to dip in FY11 due to the share split, but the amount to increase proportionally with earnings.

High variance for GPM due to mismatch of revenue recognition: Average and median for gross profit margin (“GPM”) over the past 10 half-yearly results was 17.5% and 14.8% respectively. The chart below shows that the actual GPM can deviate significantly from the average GPM. The high variation was mainly due to the mismatch between revenue recognition and cost expensed. The standard deviation for the ten samples is 5.8%, meaning 68% chance that GPM is likely to range between 11.7% and 23.3% based on normal distribution.

Project costs overrun. Running a project overseas is a different game from a local project. The contract value of the Brunei project is huge, constituting almost 40% of total existing order book. Missteps could occur especially when one is operating under different business environment. Our estimated PBT margin for all the projects is 8%, as compared to the historical average of 8.5% over the past ten half-yearly results. Cost overrun or failure to execute could have detrimental impact on its earnings.

Lumpiness in engineering segment. We incorporated an assumption of $150m annual contract wins in FY12 and FY13, a 12% discount to its historical average contract win of $170m. If the company fails to replenish its order book, the impact will be particular significant in FY13. Of note, the visibility for engineering projects is about 18 months. Based on the existing order book, we are confident that the prospects for FY11 and FY12 are bright.

Lukewarm response to property launches. We made a number of key assumptions on property development projects undertaken by the company. One of them is that while property prices will be capped by potential cooling measures, it will not fall off the cliff. Additionally, we also expect the construction price to maintain steady. A drastic decline in property price and sudden increase in construction cost can have a negative impact on profits. Also, the response to the sales launch for Cairnhill and Killiney projects in the coming months might be less positive than what we forecast. We have assumed the projects will be 70 per cent sold by the time it receives TOP.

A niche player in engineering. There are many players in the value chain of civil engineering, which can be segmented into structural engineering, transportation engineering, surveying engineering, construction engineering, environmental engineering, mechanical and electrical (M&E) engineering, etc. TEE International, a specialist in M&E engineering, is a niche player in the construction sector. It faces direct competition from players such as Guthrie Engineering in the realm of M&E engineering.

More small developers to emerge. There are quite a number of construction players venturing into property development business. There are several reasons for the trend, but we think the key one is that property development offers greater profitability. Some of them are Chip Eng Seng, Wee Hur, Koh Brothers, KSH, Lian Beng, Tiong Seng and so on. TEE may not be competing with them. For instance, the company formed a joint venture with KSH and Heeton in one of the high-end project development.

Above average ROE and dividend yield. TEE is the smallest amongst its peers in terms of market capitalization. It is noteworthy it had the highest historical ROE and dividend yield.

Order book below average, margins above average. Based on the latest announcements made by the peers in the construction sector, TEE’s order book was slightly below the sector median and average of $407m and $515m respectively. Gross profit margin and operating margin was above sector average, thanks to its specialized engineering services.

Sales growth and financial leverage above average. TEE recorded highest revenue growth rate among the peers, partly due to its smaller base as evidenced by its smaller sales value, about half of sector average. Nevertheless, the gap is expected to narrow in the years ahead on greater revenue recognition from its existing order book. High leverage on equity means that the capacity for the company to take on more projects will be limited. The proceeds from warrant can help ease the financing strain, but it will not be sufficient to bring it lower than sector average.

Valuation and Recommendation
Initiate coverage with Buy recommendation and target price of S$0.38. We adopt sum-of-the-part methodology to evaluate the counter given its exposure to different sectors. We applied 30% discount to RNAV for real estate segment and pegged 10x FY11 PER for engineering segment, representing a premium over industry average of 7x PER on account of higher growth and specialized engineering services. The values of both segments were summed and divided by fully diluted share capital of 467m. As such, we derive a target price of 0.38.

Rerating catalysts. Higher ASP, better-than-expected churn rate, and additions of order books

Source/转贴/Extract/Excerpts: NRA Capital
Publish date:05/01/11

TEE International Upside surprise in FY11 is likely (NRA)

TEE International Ltd
Current Price S$0.250
Fair Value S$0.380

Upside surprise in FY11 is likely
 New contracts from repeat customers. On April 25, Tee International (“TEE”) announced that it won contracts again from repeat customers. It secured $9m project from Citibank NA – Singapore and $2.1m from Changi Business Park. We estimate PBT margin for both engineering works to approximate 8-10%.

 $324.5m order book: On May 4, TEE was awarded RM63.3m (~S$26.4m) contract for construction and completion of 120Mld Bertam DAF Phase 2 water treatment plant. The project started last month and will last 22 months. Outstanding order book stood at S$324.5m, assuring the company about 1.5 years of business visibility.

 Recurring income from Thailand’s water treatment plant. Developing recurring business has been TEE’s focus. On June 6, Chewathai Ltd, 49% owned by TEE’s wholly-owned subsidiary, entered into a sales and purchase agreement to acquire Global Environment Technology (“GETCO”) for THB240m (~S$9.7m). The concession will expire on 30 Nov 2029 (18 years from now) and total investment by the company would be S$4.8m. Assuming existing utilization rate of nearly 60%, we estimate the plant to generate free cash flow of about S$1.3m, representing payback period of about 7.5 years

 Profit for The Boutiq to stream in for FY12. The project, comprising two 10-storey blocks housing 130 units, is located at 143/145 Killiney Road. The company holds only 20% stakes in the project, with the remaining held by Heeton and KSH. So far, 54% of total units were sold at a median selling price of about S$2.3k psf.

Additionally, projects in Thailand such as The Surawang, Chewathai and Ramkhambaeng all will contribute positively at associate level while revenue from East Coast project will be consolidated. The management plans to launch The Peak@Cairnhill and another project at Geylang Lorong 26 by December this year.

 Policy risk and interest rate hike. Property cooling measures and widely expected looming increase in interest rate will dampen buying interest

 Reiterate Overweight. We are pending to revise our FY12 forecast until the release of FY11 results due in July. Our recent discussion with management reinforced our positive view on the company prospect. There could be an upside surprise to our FY11 estimates. We like the stock not only for its attractive estimated dividend yield of more than 6%, but also strong earnings visibility. Our target price of S$0.38 is based on a 30% discount to its RNAV for the real estate segment and 10x FY11 PER for the engineering segment.

Source/转贴/Extract/Excerpts: NRA Capital
Publish date:27/06/11

2011-0706-57金錢爆(重溫油價最初的感動 )


Source/转贴/Extract/Excerpts: youtube
Publish date:06/07/11

Friday, July 8, 2011

Global Investments (KE)

Global Investments Limited
Share price S$0.156
52-wk price range S$0.14-0.20

NAV per share: $0.27

Up-to-date in 60 seconds
Background: Global Investments Limited (GIL) is a mutual fund company which invests primarily in operating lease assets and loan portfolio and securitization assets. It was heavily affected by the global financial crisis due to several loans that it has invested in being reduced to junk ratings. This led to the appointment of ST Asset Management as the replacement manager of the company.

Recent development: GIL has completed a non-underwritten 2-for-5 rights issue of 157m new shares at S$0.138 per share, which was 152% oversubscribed. Net proceeds of $21.47m would be used for further investments. Operationally, the company has recorded a third consecutive profit-making quarter of $7.2m since FY09.

Our view
Portfolio breakdown. GIL’s portfolio of assets and economic exposures include an investment in a listed entity operating in the aviation industry, an investment in two commercial aircraft subject to lease, freight rolling stock operating in North America, and passenger train fleets, locomotives and freight wagons operating in Europe, all subject to lease. It also has a diversified portfolio of loans, equity notes and net interest margin notes in securitisations secured against residential and commercial properties in Australia and the United Kingdom, as well as investments in European collateralised loan obligation vehicles and a loan secured by inventory and receivables.

Prudent investment approach. GIL is prudent on booking in investments to ensure stability in the balance sheet. In fact, some of the investments’ carrying value has already been written down to zero, which could only have a positive impact should the company decide to sell the assets or loans. Its latest investments involve floating rate notes, which are immune to interest rate risk and provide a steady income.

Valuations improvement. If the rights issue were excluded, the NAV in 1Q11 would have risen to 33 cents (+6.4% YoY). GIL is committed to distributing the bulk of its economic income as dividends. It has provided dividend guidance for 1H11 of 0.75 cents a share, translating to a 4.8% yield. The stock currently trades at a huge discount with P/B at 0.6x.

Source/转贴/Extract/Excerpts: Kim Eng Research
Publish date:08/07/11

Overcapacity threatens container rates

Business Times - 08 Jul 2011

Overcapacity threatens container rates

Container lines add ships to fleets despite drop in rates

(COPENHAGEN) Container lines are ignoring a drop in freight rates and bringing the highest proportion of the shipping fleet out of mothballs since 2008, when the global slump resulted in the industry's biggest losses.

The capacity of idled ships has dropped to about 80,000 containers, according to industry consultant Alphaliner.

That's the smallest number of vessels not in use since the collapse of Lehman Brothers Holdings three years ago triggered a worldwide recession.

Overcapacity threatens to limit the usual seasonal advance in third-quarter rates to Europe, hurting earnings for such shipping lines as Copenhagen-based AP Moeller-Maersk A/S, the world's largest.

About 45 per cent of goods to Europe from Asia are being transported at a loss, and shipping lines need to cut capacity for the route by as much as 10 per cent to balance supply and demand, Nordea Bank AB said on June 29.

'Our view on the container market is relatively negative due to the overcapacity there today,' said Torkel Aaberg, an Oslo- based fund manager at KLP Asset Management. The fund, which has about US$46 billion under management, holds about US$3.3 million in Maersk shares and is under-weighting the stock compared with other equity holdings, he said.

'Rates are really bad. Our view here is that Maersk will perform worse than other stocks' in KLP'S portfolio.

Shares of Maersk, Denmark's biggest company, have lost 13 per cent this year compared with a 4.6 per cent decline in the OMX Copenhagen 20 index.

The world's second-biggest shipping line, Geneva-based Mediterranean Shipping Co, and Marseille- based CMA CGM SA, the third-largest, are both privately held.

Shipping lines are not cutting capacity because the ships that they have ordered are now coming on line, because vessel-sharing agreements require multiple negotiators to cut capacity and because the first company to do so loses market share until others follow.

'It's a waiting game,' Rahul Kapoor, a container analyst at RS Platou Markets AS, said by phone from Singapore. 'Every shipping line wants the other ones to cut capacity first.'

The difference between now and the 2009 slump is that the market is growing, not shrinking. Container volume will grow 6 per cent to 8 per cent this year, Maersk Line said on May 11.

Maersk has orders for new ships equal to 22.9 per cent of its existing fleet, according to Alphaliner. MSC has orders for 24.5 per cent, while CMA CGM has orders equal to 14.4 per cent of its fleet.

Container companies will launch new ships that will add 9 per cent to capacity this year, said Finn Bjarke Petersen, a Copenhagen-based analyst with Nordea, the Nordic region's biggest bank. Most of those vessels were added in the first half of the year to be ready for the third quarter when deliveries of goods to Europe and US peak ahead of Christmas sales.

The result may be overall losses for the industry in 2011, according to a July 5 note by London-based Drewry Maritime Research.

'The fuelling of the newbuild market is not helping current sentiment, and we are running the risk of repeating the mistakes of the ordering frenzy of 2007/08 - the legacy of which the industry is still paying for now,' said the note, written by Neil Dekker, editor of Container Forecaster. 'With current mid-year fundamentals in mind, we forecast that the carrier industry could make significant losses in 2011.'

The industry turned unprofitable in 2009 as container lines cut prices to maintain market share while demand fell.

Companies, including Maersk, then began idling ships, sidelining capacity of as much as 1.5 million containers. That helped raise freight rates, guiding the industry back to profit a year later.

'There are certainly similarities between now and the situation two, three years ago,' said Mr Kapoor. 'Nobody wants to lose market share so rates are falling. If we don't see rates recovering in July, then 2011 will be a pretty bad year for the container industry.'

Freight rates are now down 60 per cent from March 2010, according to Paris-based Alphaliner. In June, it cost about US$850 to transport a standard-size 20-foot container to northern Europe from the Far East, according to spot rates provided by Alphaliner. It cost more than US$2,000 15 months earlier.

Shipping lines would have trouble cutting capacity even if they wanted to, said Bjoern Vang Jensen, vice-president for global logistics at Electrolux AB, the world's second-largest appliance-maker. Reason: Taking ships off-line thus requires negotiation among multiple participants in sharing agreements. - Bloomberg

Publish date:08/07/11


Created 07/08/2011 - 11:55

























Source/转贴/Extract/Excerpts: 星洲日報
Publish date:08/07/11

Commodity to watch: Crude oil

Commodity to watch: Crude oil

Crude oil: Strong breakout could spur prices higher to retest US$110 zones
 Nymex crude oil surged 2.1% to US$98.67 (3-week high) amid declining weekly U.S. crude oil inventories and a weaker greenback after ECB increased its benchmark rate by 25bps to 1.5%. Sentiment was also boosted by lower weekly jobless claims, strong retail sales and better-than-expected ADP report, raising hopes that economic recovery is regaining traction.

 Despite tumbling from 52-week high of US$114 on 2 May to US$91 lately, crude oil has rebounded strongly by 8.8% (from recent low) to US$99/barrel overnight.

 On the back of a strong breakout and bullish technical readings, crude oil prices are likely to turn more bullish in the near term. Immediate resistance zones is US$101.5 (upper Bollinger band), followed by a cluster of resistance from US$105-110/barrel. Key support levels are US$97.4 (30-d SMA), US$95.8 (mid Bollinger band) and US$91.

Source/转贴/Extract/Excerpts: HLIB Research
Publish date:08/07/11

Marco Polo Good Things Come in Threes (Amfraser)

Marco Polo Marine Ltd

Update: Good Things Come in Threes
On Monday, MPM announced that i) it had won a contract for five barges worth S$10m for a third party customer. Wednesday, it updated with more pieces of good news: ii) MPM had submitted to the Taiwan Stock Exchange (TSE) and the Taiwan Central Bank its applications to offer and to list TDRs; and iii) its first-ever mention of a formal dividend policy.

Dividend Policy
The most unexpected news, by our reckoning, is that on the dividend policy. Prior to this announcement, MPM had never committed to any dividend policy, nor even paid a single dividend.

The terms of the policy are not actually very restrictive. The net profits will be adjusted for accumulated losses (not likely in our opinion), non-cash fair value adjustments (mostly depreciation) and other provisions to be made. The big item foreseeable that could reduce the dividend falling under the last category is future planned expenditure for more OSVs. Further, the minimum dividend is a small 3% of this adjusted net profit, which itself approximates to free cash flow assuming no large planned inflows of equity capital leading to large working-capital investments.

We see this dividend policy allowing management to retain a large degree of flexibility with regard to cash use, i.e. not much different from most companies with no explicit dividend policy but one more implicit in their dividend histories.

We believe that this dividend policy signals a subtle change in management’s mindset. Prior, the Group had always needed more cash to fund their rapid growth, and 100% reinvestment of profits was the norm. With this dividend policy, we believe that management feels more confident about future cash flows, and that this step, though small, is one taken in the right direction.

Offer and Listing of TDRs
MPM will offer 51.19m shares on the TSE, of which 25m will be new shares and 26.19m will come from existing shareholders.

The 25m new shares will, at current prices, result in a $10.6m inflow of cash to MPM. The immediate effect will be to reduce the net gearing to about 23.6% from 34.2%, and to raise book value per share to about 39.5c from 36.4c. The strengthening of the balance sheet should alleviate some of the investors’ concern about the tight cash position in which MPM had been operating.

We believe that the TDRs will be offered at a price at least equal to the price of MPM shares on the SGX, if not at a premium (which may depend on the market conditions on the TSE). Such a move is immediately preferable to a private placement on SGX, where a significant discount is typically applied.

The dilutive effect of the 25m shares works out to about 7.3%, which is not an overly-large amount. Based on MPM’s historical capital structure for new assets, the $10.6m raised could be used to purchase two small AHTS vessels or one medium-sized one, which could contribute significantly to future profitability.

$10m Newbuilding Contract
Apart from the balance-sheet effect of the TDR-offering, we leave our model unchanged as we had already assumed this level of newbuildings for the shipyard division in our initiation piece. The confirmation of this contract gives us more confidence that management can deliver at least the $17.4m net profit that we forecast for FY11F.

Overall, we remain positive on MPM’s prospects both for the near future and for the long term. One near-term catalyst would be the successful TDR-listing that would boost book value significantly and reduce net gearing by a third. Long-term drivers include strong shipyard (building and repair) profits, contributions from the 49% stake in BBR, and continued growth in the higher-margin segment Offshore division. We leave our target price unchanged at $0.505, an 18.8% upside to today’s close. Recommendation unchanged at BUY.

Source/转贴/Extract/Excerpts: AmFraser Securities
Publish date:08/07/11

Venture Attractive dividends make up for lack of growth (KE)

Venture Corporation
Price $8.68
Target $10.40
52‐week high (S$) 9.99
52‐week low (S$) 8.34

Attractive dividends make up for lack of growth
What’s New
 The US economy has been in a slump for the whole of the first six months of this year. As a result, Venture is feeling the effects of the cautious business sentiment. While we had previously modelled a gradual QoQ earnings improvement, 2Q11 earnings could just be flat YoY. We have cut our FY11 forecast by 10% to reflect this. However, there was a glimmer of recovery last month as manufacturing data showed a pick‐up. Further, dividend yield is expected to be secure and attractive at 6.3%. Maintain BUY but with the target price lowered from $11.60 to $10.40 (15x earnings).

Our View
 America’s persistent economic weakness may have led to weaker‐thanexpected earnings for Venture in 1H2011. With growth coming mainly from the Test & Measurement and Retail Store Solutions segments, whose key customers are American (ie, Agilent and IBM), Venture will depend on the US market for much of this year’s momentum. We had previously modeled a gradual QoQ earnings improvement but 2Q11 earnings could just be flat YoY.

 Despite an encouraging jump in 4Q10, consumer spending did not pick up in 1H11 due to rising inflation and lower household wealth. Businesses have responded negatively to this weakness, as suggested by the poor outcome of the Institute for Supply Management (ISM) manufacturing index from February to May 2011. However, this is not just a US phenomenon. Globally, the picture is the same as shown by the JPMorgan Global ex‐Japan manufacturing output index.

 However, there was a glimmer of recovery last month as the ISM manufacturing index picked up slightly. The effects of Japan’s earthquake and tsunami on global supply chains appear to be easing as Japanese companies have brought production back on line, while the moderating costs of oil and other raw materials are brightening prospects for a secondhalf recovery.

Action & Recommendation
We continue to recommend a BUY on Venture in view of its attractive dividend yield of over 6%.

Reducing earnings forecast…
We are reducing our full‐year earnings forecast by 10% because we believe the Test & Measurement and Retail Store Solutions businesses experienced slowerthan‐ expected growth rates in 2Q11. We had previously modelled a gradual QoQ earnings improvement but 2Q11 earnings could just be flat YoY. As a result, fullyear earnings are also expected to be relatively flat.

In the past few quarters, Venture’s growth has come mainly from the Test & Measurement and Retail Store Solutions segments, whose key customers are American (ie, Agilent and IBM).

In addition, the US$ has continued to weaken against the S$ since the beginning of the quarter. As at end‐2Q11, the pace of the depreciation has accelerated to a negative 12%, relative to 10% in 1Q11 and 8% in 4Q10. Although Venture transacts mostly in US$, it reports in S$. Further, the natural hedge between receivables and payables is not perfect. There is still some currency exposure.

…on the back of US economic weakness
Despite an encouraging start in 4Q10 following several quarters of softness, consumer spending did not pick up in 1H11 due to rising inflation and lower household wealth. The rise in food and energy prices outpaced the gain in wages, causing average earnings to decline, while continued destruction of home values reduced wealth for the average household. Businesses had responded negatively to this weakness, as suggested by the poor outcome of the ISM manufacturing index from February to May 2011. However, this is not just a US phenomenon. Globally, the picture is the same as shown by the JPMorgan Global ex‐Japan manufacturing output index.

Glimmer of hope in June
However, there was a glimmer of recovery last month as the ISM manufacturing index picked up slightly. The effects of Japan’s earthquake and tsunami on global supply chains appear to be easing as Japanese companies have brought production back on line and other sources of materials and parts have been found, while the moderating costs of oil and other raw materials are brightening prospects for a second‐half recovery.

We note that there appears to be a positive correlation between the ISM PMI and Venture’s revenue. The exception was in the quarters following March 2010, the first quarter that did not include the low‐margin fulfilment business Venture was performing for Hewlett‐Packard in 2009.

Source/转贴/Extract/Excerpts: Kim Eng Research
Publish date:06/07/11

Venture Growth easing (DBSV)

Venture Corporation
HOLD S$8.57
(Downgrade from BUY)
Price Target : 12-month S$ 7.70 (Prev S$ 11.00)

Major Shareholders
Aberdeen Asset Management (%) 22.0
Fidelity Management & Research (%) 9.0
Sprucegrove Investment (%) 8.1

Growth easing
• Q2 stays sluggish; T&M and Industrial pick up was less robust than projected
• Cut FY11F/12F by 10% to reflect weak momentum
• Downgrade to HOLD, TP reduced to S$7.70.

Muted near term growth. Venture participated in our POA conference on Tuesday with brisk investors’ attendance. While presenting long-term strategy and positioning of the company, management highlighted near term softness in the market place, partly weighed down by macro uncertainty. Our channel checks indicated that selected component shortages has pressured deliveries of some products while Hypercom’s volume could be disrupted by the potential acquisition by Verifone, which is now halted by order of the US court on anti-trust grounds. We believe near term growth is muted although Venture’s strategic direction remains intact.

Uninspiring 1H; cut FY11F/FY12F. Contrary to previous expectation for a sequentially stronger Q2, we now believe sales and earnings for the quarter could be flat-lined. This is consistent with Agilent’s and HP’s guidance for flattish sales in the June quarter. Coupled with modest growth in Q1, first half-year could turn out less optimistic than we had expected. We have thus cut FY11F/FY12F by 10% to reflect lower sales while keeping net margin between Venture’s historical trend of 6-8%.

Strong CFs will support dividend payout. Although bottomline growth is lacking, we are confident Venture can comfortably sustain dividend payment of S$150.8m (DPS:
S$0.55) with a projected free cashflow of S$270m in FY11 even if capex rose 53% y-o-y to S$40m. This implies an attractive dividend yield of 6.4%.

TP revised down to S$7.70, downgrade to HOLD. On top of earnings cut, we have also lowered valuation peg from 15x (mean) to 11.5x (-1SD) in view of the muted growth prospect. Our TP is thus revised to S$7.70 accordingly. Notwithstanding potential share price weakness, we believe downside risk would be limited by the attractive 6.4% yield.

Recommend HOLD.

Source/转贴/Extract/Excerpts: DBS Vickers Research
Publish date:08/07/11

World's Most Admired Companies

For the 50 most admired companies overall, FORTUNE's survey asked businesspeople to vote for the companies that they admired most, from any industry

Rank Company
1 Apple
2 Google
3 Berkshire Hathaway
4 Southwest Airlines
5 Procter & Gamble
6 Coca-Cola
8 FedEx
9 Microsoft
10 McDonald's
11 Wal-Mart Stores
12 IBM
13 General Electric
14 Walt Disney
15 3M
16 Starbucks
17 Johnson & Johnson
18 Singapore Airlines
19 BMW
20 American Express
21 Nordstrom
22 Target
23 J.P. Morgan Chase
24 Nike
25 Goldman Sachs Group
26 PepsiCo
27 Caterpillar
28 Cisco Systems
29 Costco Wholesale
30 UPS
31 Nestlé
32 Intel
33 Toyota Motor
34 Exxon Mobil
35 Volkswagen
36 Best Buy
37 Marriott International
38 Samsung Electronics
39 Deere
40 Netflix
41 Wells Fargo
42 Honda Motor
43 DuPont
44 Yum Brands
45 eBay
46 Sony
47 General Mills
48 Oracle
49* Accenture
49* Lowe's

Publish date:08/07/11

Wilmar (KE)

Wilmar International
Wilmar’s share price has been range-bound over the course of the year, with no significant catalysts to drive it one way or the other. The stock was significantly de-rated late last year due to a weak run of quarterly earnings. While its earnings profile has seemed to stabilise, we do not see any positive earnings drivers on the horizon. Hence, we maintain our HOLD rating and target price of $5.31.

Our View
Soft commodity prices have been on the slide over the past two months, in line with the broader economic climate, but are now showing signs of a pickup. On average, CPO and soybean prices are currently trending below our full-year assumptions, and this is a positive for Wilmar, as it is a net buyer of these commodities for its downstream production.

In the last reported quarter, soybean crushing margins had shown some improvement and we expect this trend to continue. However, the operating environment remains difficult with muted sales volumes. While average selling prices did show some improvement, price caps on cooking oil are still in place, thus limiting upside despite lower input costs.

On the acquisition front, Wilmar has also been uncharacteristically quiet, with only a small A$115m purchase in the past few months. Early last month, its Australian sugar subsidiary Sucrogen acquired Proserpine Mill to increase its sugar milling capacity from 15m tonnes to 17m tonnes, and raise overall raw sugar production by 10%, or 2.2m tonnes. Wilmar controls about half of Australia’s total raw sugar supply.

Wilmar’s plans to establish sugar plantations in West Papua are also progressing slower than our initial expectations, due to administrative issues. We have not yet factored any near-term contributions from this into our forecasts.

Action & Recommendation
We caution that the recovery in Wilmar’s oilseeds and grains business is still shaky. Using a 15x multiple on FY11 forecasts, our target price stands at $5.31. Although the US dollar has stabilised, the earnings multiple valuation also makes the stock susceptible to a depreciating greenback, as Wilmar reports in US$. Maintain HOLD.

Source/转贴/Extract/Excerpts: Kim Eng Research
Publish date:07/07/11

Asiatravel Patience needed (KE)

Dividend per share / yield: $0.006 / 1.5%
Net cash/(debt) per share: $0.012
Share price S$0.39
52-wk price range $0.36-0.49
Issued shares (m) 241.6
Market cap (S$m)94.2

Major shareholders
Boh Tuang Poh - 11.4%
Goh Khoon Lim - 9.4%
Vision Capital - 5.1%
Prudential Asset - 5.0%
Free float (%)69%

Up-to-date in 60 seconds
Background: is the best-known online travel and hotel reservation service provider in Singapore. However, its network extends well beyond Singapore to 79 countries in Asia, Europe, Americas, the Middle East, India and Africa. Its B2C website,, facilitates consumer reservations of hotels, flights and tour packages, including day tours of Singapore and sale of theme park tickets.
In a nutshell: Asiatravel is transforming from a niche online hotel reservation site into a total travel reservation service provider. However, aggressive promotional and start-up costs will hurt margins in the short term although in the long run, the transformation should be positive.

Our view Recent results poor... Since our last update, Asiatravel has announced two quarters that were bottomline-poor but not entirely surprising given its current emphasis on driving topline growth at the expense of margins. A&P expenses as well as staff salaries increased substantially due to the aggressive expansion in new products and new sales channels, including a new group-buying website,, for products such as tour tickets, meal vouchers, hotel and flight packages and spa products.

…but topline growth strong. Still, the transformation has generated quite robust topline growth. For example, although Asiatravel suffered a $0.8m net loss in 2QFY Mar11, topline growth jumped 35% YoY, a surprisingly strong result given that the March quarter is a traditionally weak period. In addition, weakness this year would have been exacerbated by external events such as political turmoil in the Middle East and natural disasters in Japan.

Patience needed.
Asiatravel’s current revenue growth strategies should help to drive faster growth in business volume and margins in the long term. For instance, it receives a higher service fee for sale of airfares compared to hotel and package sales. But the need to spend on advertising and promotions will still weigh on the bottomline in the next few quarters before positive returns are possible. Meanwhile, Asiatravel is considering M&A or other strategic alternatives to enhance value for shareholders.

Source/转贴/Extract/Excerpts: Kim Eng Research
Publish date:07/07/11

Tightening bias, with greater caution…(MIB)

Global Benchmark Interest Rates
Tightening bias, with greater caution…
Continued monetary policy tightening cycle in 1H 2011… Our inhouse global benchmark interest rate action diffusion index which gauge the monetary policy bias globally stood at “+9” in Jun 2011, down slightly from “+11” in the preceding month (i.e. a net total of 9 central banks of the 45 we monitored globally raised interest rates last month. Positive index figure denotes “tightening bias”, negative index figure denotes “easing bias”). In 1H 2011, the index averaged higher at “+9” compared with the “+2” average in 2010.

Led by the emerging and developing economies… Our calculation on the global weighted benchmark interest rate showed it inched up further for the 17th month in a row to 2.68% p.a. so far this month (end- 2009: 1.95% p.a.). The average for the emerging markets economies rose by +135 bps to 7.20% p.a. since the low back in Mar ’10 while the developed economies component was up by just +24 bps from its low to 0.87% p.a. The overall weighted global interest rate stood at 2.68% p.a. (Jun ’11: 2.65% p.a.).

• The emerging economies component of our global benchmark interest rate action diffusion index was “+7” in Jun 2011, led by interest rate hikes in Brazil, India, Columbia and other developing nation that are grappling with rising inflationary pressures. Into this month, China was the latest on the emerging markets’ interest rate hike bandwagon as it pushed up the key 12-month lending rate for the third time this year by 25bps to 6.56% on 7 July 2011. However, the recent surprise was Vietnam’s central bank who bucked the trend with its decision to lower the repurchase rate to 14% from 15% even when inflation hit 20.1% YoY in Jun 2011.

• The developed economies also see some tendency towards monetary policy tightening bias as its diffusion index recorded positive number for the third month in a row with “+2” reading in Jun 2011. This was despite the worsening Eurozone sovereign debt crisis underpinned by the risk of default by Greece, on top of the uncertainty over the US economic outlook post-QE2. And the biggest irony is that the main index mover was the European Central Bank (ECB) which lifted further its benchmark interest rate yesterday by 25bps to 1.50% p.a. after the 25bps hike in back in Apr.

Amid rising inflationary pressures globally… We estimated that global inflation rate averaged +3.1% YoY in the first five months of this year versus +2.3% in 2010, with May 2011’s figure of 3.3% YoY. This is in spite of the easing in global commodity prices in recent months, led by crude oil prices. However, in our opinion, the overall picture is that commodity prices remain high and still pose an upside risk. Moreover, the continued rise in headline inflation rates is now being accompanied by the uptrend in core inflation rates, indicating secondary effect on prices on broader goods and services after the primary effect from the earlier surge in commodity prices.

But central banks are likely to proceed more cautiously with their interest rate calls in 2H 2011 amid downside risks to growth… Overall, we see the monetary policy tightening bias to continue into 2H 2011, underpinned by countries where the actual inflation rates are above the central banks’ targets and the nominal interest rates. However, we expect policymakers to also keep one eye on the performance of the real economy amid the heightened downside risks to growth in recent months, especially the fiscal stress in the major developed economies – notably in the Eurozone amid the sovereign debt crisis there. US data will also be watched closely to gauge on the post-QE effects on growth of the world’s largest economy. At the same, another key factor is China, amid signs of slowdown in the world’s second largest economy.

Source/转贴/Extract/Excerpts: Maybank IB Research
Publish date:08/07/11

Tiger Airways New heads, new directions? (CIMB)

Tiger Airways Holdings Limited
S$1.04 Target: S$0.71
New heads, new directions?
Australian suspension may be extended

Lowering target price to S$0.71 (from S$0.92). CASA announced in a statement last night that it will seek an extension to Tiger Australia’s suspension until 1 Aug 11. This would hurt Tiger’s bottom line by S$8m, with a potential longer-term financial impact. Our FY12-13 earnings forecasts have been cut by 27.3-21.9% while our FY14 estimate is intact. Accordingly, we slash our target price by 22.8% to S$0.71, still based on 6x CY12 P/E. We expect losses in the coming quarters to provide further derating catalysts. On the other hand, Tiger has appointed Chin Yau Seng as Acting Group CEO while Tony Davis has replaced Crawford Rix as Tiger Australia’s MD, possibly in a move to appease Australian regulators. We are positive on this development. Execution of a turnaround after the recent shake-up in senior management could potentially reverse our Trading Sell rating.

The news
Suspension may last the whole of July. CASA has announced that it will seek an extension to Tiger Australia’s suspension until 1 Aug 11 as investigations into Tiger Australia’s operations will not be completed by 9 Jul. However, Tiger Australia could resume operations earlier if CASA completes its investigations before 1 Aug and is satisfied with Tiger Australia’s operations.

Key appointments. In a more positive announcement, Tiger Airways has appointed veteran civil servant and entrepreneur, JY Pillay, as an Independent Director. Mr Pillay will replace Gerard Ee as non-executive Chairman. Mr Ee will remain an Independent Director. In addition, existing CEO Tony Davis will replace Crawford Rix as Tiger Australia’s MD while newly appointed Executive Director Chin Yau Seng will be the group’s Acting CEO.

Suspension-related losses could hit S$8m... In a previous statement, Tiger Airways estimated losses of S$2m per week of suspension. CASA’s request for extension will prolong its suffering by another three weeks, and Tiger could face suspension-related losses of up to S$8m.

…but the recovery could take longer. In our estimation, losses from its suspension could exceed the estimated S$8m. We believe Tiger will continue to suffer whether or not CASA pulls the plug on its Australian operations. Under both scenarios, Tiger will have to transfer capacity back to Asia. We think that even if CASA allows Tiger Australia to resume operations, Tiger may have to return to service progressively, which means it may not be allowed to resume operations of all of 11 planes in Australia immediately. This could lengthen the recovery period for the Australian operations. It will also be hard for Tiger Australia to lay off its idle crew, due to strong union pressures. Tiger may then have to park additional capacity back in Singapore, until Tiger Australia is allowed to resume full operations. This comes at a time when AirAsia and Jetstar Asia have decided to increase their capacity at Changi. The additional capacity in Singapore would only aggravate competition at Changi Airport and could drive down passenger yields, potentially eroding Tiger Airways’ profitable operations in Singapore.

At the moment, we do not expect Tiger to defer its new aircraft deliveries planned for the second half of the financial year. However, if the suspension is extended for a lengthy period, Tiger may have no choice delay its fleet expansion until: 1) Tiger Australia is able to absorb additional capacity; or 2) Tiger Airways is able to secure a new low-cost base in Thailand, Indonesia or/and Vietnam.

Making the right move with management shake-up. We are very positive on Tiger’s latest management changes. We believe they show Tiger’s determination to continue flying in Australia and possibly represent a move to address Australian regulators’ concerns. In addition, the appointment of Mr Pillay, a highly decorated civil servant who was instrumental in developing SIA into a world-class airline during his tenure as Chairman of SIA from 1972 to 1996, should lend credence to Tiger’s operations as a group. We see the appointments of JY Pillay and Chin Yau Seng as directors as a move by SIA to protect the value of its 33% stake in Tiger, which also signals a more active approach to managing Tiger. We believe the latest turn of events could bring some comfort to investors.

Changes to our assumptions
Lowering capacity, demand and base fare assumptions. We have assumed that Tiger Australia will be allowed to resume operations, under stricter operational requirements and a gradual return to service. A potential transfer of capacity to Asia will not be immediate and will have an impact on fleet utilisation. We have lowered our FY12-13 ASK and RPK assumptions by 3.5-1.9% but kept our FY14 assumptions unchanged. We have also kept our 84% PLF unchanged for all three forecast years. In view of a potential increase in capacity at its Singapore base, we lower our basefare assumptions by 0.6-1.5% to reflect the competition from AirAsia and Jetstar. We have yet to factor in any delays in fleet expansion.

Valuation and recommendation
Maintain Trading Sell; target price lowered to S$0.71. We see a longer-term impact on Tiger’s operations from Tiger Australia’s suspension. We could see Tiger transferring additional capacity to Asia, which could potentially stiffen competition, driving down yields. We could also see a delay in Tiger’s fleet-expansion plans, though we have yet to include such developments in our forecasts.

We believe the market could react negatively to Tiger Australia’s extended suspension. In addition, we expect losses in the coming quarters to provide further derating catalysts. Our target price has been lowered to S$0.71 after our FY12-13 earnings downgrades on the back of lower fleet-utilisation and base-fare assumptions. On the other hand, execution of a turnaround after the recent shake-up in senior management could potentially reverse our Trading Sell rating.

Publish date:

Hyflux: Takeaways from Singapore International Water Week (CIMB)

Hyflux Ltd
S$2.09 Target: S$2.76
Takeaways from Singapore International Water Week

Singapore International Water Week 2011
Hyflux: actionable stock idea from SIWW. We came away from the Singapore International Water Week (SIWW) 2011 excited. This year’s theme is “Sustainable Water Solutions for a Changing Urban Environment”, reinforcing the message from keynote speaker PM Lee about water self-sufficiency being Singapore’s strategic priority. More actionable is our bullish view on Hyflux. As a co-located event of SIWW, PUB and Hyflux marked the ground-breaking for Singapore’s second and largest water desalination project. Suffice to say that Hyflux stood out from the array of international companies participating in this year’s event. Our earnings estimates and target price of S$2.76 are intact, based on sum-of-the-parts valuation. We anticipate re-rating catalysts for Hyflux from fresh order wins and opportunities arising from its JV platform in China.

The news
SIWW is the global platform for water solutions that brings together policymakers, industry leaders, experts and practitioners to address the challenges of the water world, showcase technologies, discover opportunities and celebrate achievements.

Ground-breaking of Tuas seawater desalination plant. The national water agency, PUB, and Hyflux marked the ground-breaking for Singapore’s second and largest water desalination project, a co-located event of SIWW 2011. The ground-breaking ceremony took place at the Suntec International Convention and Exhibition Hall.

Prime Minister Lee Hsien Loong, who had delivered the inaugural Water Conversation earlier in the week, spoke about self-sufficiency as a strategic priority of the nation. Currently, NEWater meets 30% of Singapore's water needs. With ramped-up capacity, it will meet 50% of Singapore’s water demand by 2060. Desalinated water, with added capacity from the new TuaSpring Desalination Plant, is expected to supply 30% of the country’s water needs by 2060, up from the current 10%.

Operationally ready in 2013. The ground-breaking took place three months from the day PUB and Hyflux’s wholly-owned subsidiary, TuaSpring Pte Ltd, signed their water purchase agreement to supply PUB with 70m gallons of desalinated water a day for 25 years from 2013 to 2038. The plant will be constructed under Design, Build, Own and Operate (DBOO) and is expected to commence operations in 2013.

The plant will feature the world’s second-largest ultrafiltration pre-treatment membrane facility, incorporating Hyflux’s proprietary Kristal® ultrafiltration membranes. Following pre-treatment, salt water will undergo a 2-pass reverse osmosis treatment process to remove the salt from the water, leaving fresh pure water. This water then undergoes a post-treatment process for re-mineralisation before being delivered to PUB for distribution to households and industries in Singapore.

High-value contract. Hyflux has a desalination project portfolio of 936,000 m3/day globally before this project. Recall that the value of this project is S$890m (EPC portion S$750m). The water will be supplied to PUB at a first-year price of S$0.45 per m3, based on warranted capacity of 318,500 m3 per day. Hyflux will also be constructing a 411MW combined cycle gas turbine power plant to supply electricity to the desalination plant. Excess power will be sold to the power grid.

Clever funding options. From the many conversations we have had with clients and investors since the announcement of the TuaSpring Desalination Plant, we gathered that while most are excited about this project, many seem unsure how Hyflux would go about financing the S$890m plant, plus its ancillary 400-megawatt power plant.

Hyflux had raised S$400m through Class A Preference Shares in April. The bulk of the money will fund this project. With the preference shares already issued (non-dilutive), we suspect the rest of the equity portion could be raised from divestment income and internal cash flows.

Earlier this week, the group said it had secured a S$150m financial package for the desalination plant. The package was arranged by DBS Bank Ltd, Mizuho Corporate Bank, Ltd and Sumitomo Mitsui Banking Corporation. Hyflux also mentioned that it is on track to securing financing for the power plant that will be installed on site.

World's cheapest desalinated water. Notably, the Tuas II desalination plant is Hyflux’s second-largest ultra-filtration membrane installation project after its Magtaa desalination plant in Algeria (world’s largest membrane-based desalination plant). The new Tuas plant will be located on the same site as Hyflux’s existing SingSpring desalination plant. Hyflux would be able to leverage such proximity to deliver higher operating efficiencies.

As the group aims to incorporate technology which will 'revolutionise' the energy efficiency of its desalination process, to further lower water tariffs, management is confident that this desalination plant will also produce the world's cheapest desalinated water at 45cts per m3 when completed. We believe the eventual success of the desalination project (not to mention the track record of the Magtaa desalination plant) could open more doors for Hyflux in the international arena.

It’s not all about Singapore. Thanks to its flexibility, the group managed to secure S$850m worth of projects (both in China and Singapore) in 1Q11, with the biggest (S$750m) being the Tuas II desalination plant. It is now looking at how to mobilize more resources to China to boost its order book of S$2.25bn (S$1.25bn EPC, S$959m O&M). The biggest tailwind for Hyflux in China remains the country’s relentless efforts to tackle its water-security issues.

Valuation and recommendation
We are keeping our earnings estimates and target price of S$2.76, still based on sumof- the-parts valuation. With prospects of further margin improvements and order-book momentum (particularly in China and O&M segment), we remain upbeat. We anticipate re-rating catalysts from fresh order wins and opportunities arising from its JV platform in China.

Source/转贴/Extract/Excerpts: CIMB Research
Publish date:07/07/11

Senior GM Francis quits MAS after 6 years

The Star Online > Business
Friday July 8, 2011

Senior GM Francis quits MAS after 6 years


PETALING JAYA: Malaysia Airlines (MAS) senior general manager (sales and marketing) Datuk Bernard Francis has called it quits about five months ahead of the expiry of his contract.

Francis, who had been at the carrier for nearly six years, handed in his resignation letter on July 3, and on July 5 MAS managing director Tengku Datuk Azmil Zahruddin, who is also now the commercial director, sent an e-mail to the management team informing them about Francis' departure and that a restructuring was on the cards.

Azmil's letter did not explain why Francis quit and he also did not offer a reason. However, Francis did say that “the months ahead will give me enough time to look at new opportunities. For now I want to take a short break.”

Asked if he had to pay the company for giving the 24-hour notice, Francis said: “We are working out an amicable solution.''

Due to his departure, and as part of the restructuring, all the regional senior vice presidents, who were relocated to the Subang office, will now report to the commercial director.

Other than the six, there is speculation that the head of MASKargo and Enrich may be re-designated to take on a bigger role following Francis' departure, but this could not be verified at press time.

The move to bring back the six regional heads was “done to ensure better coordination and cooperation among sales, revenue management, network and distribution.'' However, it is too early to see the impact of this on MAS bottomline.

In a recent interview with StarBiz, Francis said the airline had recorded 18% and 10% higher international and domestic pre-loads respectively for the second half of this year compared with the same period in 2010.

He had also been instrumental in changing the way the front end of the cabin was marketed and that in a short time span he managed to bring in the results by hitting 23% against the 25% target set for revenue contribution for the year. The 25% target would translate to MAS earning RM650mil in revenue from the front end.

Francis joined MAS in December 2005 as executive vice president of network & revenue management from rival AirAsia Bhd after being cajoled by the then-MD of MAS, Datuk Seri Idris Jala.

As head of network and revenue management, Francis had instituted the dynamics of pricing management and precise inventory management practices that led to the highest yield and operating profit ever achieved in the 40 years of history of MAS in the year 2007.

He also played a big role in the rationalisation and optimisation of the international and domestic route networks to provide the optimum aircraft utilisation and the highest return on asset.

In November 2008 Francis took on a new post as executive vice president of global sales and marketing to bring in revenue management and pricing capabilities to transform MAS sales organisation. He was also the regional manager for Malaysia/Asean.

As the EVP of global sales and marketing, he had lead the sales team in the most difficult times of the aviation history where the industry was plagued with many challenges.

With the changes he instituted the airline in 2009 and 2010 achieved its highest seat factor in the last 10 years and it also managed to achieve operational profit despite challenging times.

In the last two years, he made more than 50 changes by rotating, removing and bringing in the right people for the right job in the sales organisation and in 2011 MAS should achieve the highest seat factor ever in the history of the company.

At AirAsia he was one of the founding team members and responsible for strategic and commercial planning to restructure the company's revenue and cashflow management, debt restructuring, overall business profitability and viability options, pricing and routes, sourcing and setting up of a new reservation system that best suited the low-fare airline's distribution platform.

Source/转贴/Extract/Excerpts: The Star Online
Publish date:08/07/11

Major Tiger shareholder dumps 11.1 million shares

Major Tiger shareholder dumps 11.1 million shares
by Travis Teo
04:45 AM Jul 08, 2011
SINGAPORE - As troubled carrier Tiger Airways reiterated yesterday its long-term commitment to Australia, it revealed that one of its major shareholders has dumped about 11.1 million shares on the open market.

In a filing to the Singapore Exchange, Tiger said the transaction - which took place between June 27 and July 4 - reduced the stake held by United States fund manager Capital Group Companies to 5.93 per cent from 7.97 per cent.

Tiger said in a separate statement that it is optimistic about returning its Australian fleet to normal service. It added that it is committed to resolving its issues and it is confident of doing so in "the coming days and weeks". The carrier was grounded by Australia's safety regulator on July 2. The flights were to resume tomorrow but the regulator has applied for a court order to extend the suspension to Aug 1.

When contacted, Singapore Airlines (SIA) said in a statement that it has no plans to reduce its 32.9 per cent stake in Tiger "at this point". An SIA spokesman added: "Tiger is a separately listed entity ... We have no involvement in day-to-day management and that is not changing."

Following the suspension, Tiger implemented several top management changes, including the appointment of former Silkair chief executive Chin Yau Seng as acting CEO and SIA founding chairman J Y Pillay as non-executive chairman.

Standard & Poor's aviation analyst Shukor Yusof said: "The change in CEO indicates that SIA wants to have control over how this pans out. But what's important to note is that Mr Chin is a seasoned executive from SIA, he's a veteran. He also got the mandate from Singapore to help this out and with Mr Pillay also involved, I think it's a positive sign."

Apart from Tiger's problems in Australia, analysts noted that the fate of a joint venture between Tiger and Thai Airways hangs in the balance.

They said that the change of government in Thailand could result in leadership changes at Thai Airways, which is majority-owned by the government.

Aviation Week Asia editor Leithen Francis said: "We don't know whether the new Transport Minister is going to be pre-disposed to allowing Thai Tiger to start."

In response, Tiger told MediaCorp that the deal is still on the table and while there has been no discussions yet following the recent Thai election, meetings have been scheduled.

Source/转贴/Extract/Excerpts: TODAYonline
Publish date:08/07/11

Ringgit set to appreciate to 2.95 in Q4


KUALA LUMPUR: The ringgit is expected to appreciate to 2.95 against the US dollar in the fourth quarter of this year from 3.00 now and rise further to 2.88 by the first quarter of next year owing to risk aversion to the dollar, an economist said yesterday.
Standard Chartered Bank chief investment strategist Steve Brice said as the market was taking risk aversion positions, investors were now turning away from risky assets like the dollar, making gold more attractive as a long-term commodity.

Looking ahead, he said the ringgit would moderate to 2.95 in the second quarter of 2012.

The gold price is expected to increase to US$1,650 (RM4,966) an ounce by next year compared with US$1,460 (RM4,394) this year and further strengthen to US$2,100 (RM6,321) in 2014, he told the media on StanChart's second half investment 2011 outlook.

Brice said the gross domestic product was expected to expand by 5.1 per cent this year and 6 per cent in 2012.

"The growth will be cushioned by a healthy fiscal account despite uncertainties in the global outlook," he said.

He said Malaysia would stand to benefit from positive crude palm oil (CPO) prices despite bearishness in other agricultural commodity prices and projected prices, averaging RM3,600 a tonne this year, to move up to RM3,700 a tonne next year.

"Although the CPO demand from China was down, it is expected to pick up in the third and fourth quarters of this year," he added. - Bernama

Publish date:09/07/11

Thursday, July 7, 2011

Tiger Airways: Tiger Australia grounded till Aug 1 (DMG)

Tiger Airways: Tiger Australia grounded till Aug 1
(SELL, S$1.045, TP S$0.76)

CASA is applying to extend Tiger’s grounding till Aug 1 to which the latter says it will not oppose. Tiger Australia’s CEO will step down on July 31 with current Group CEO Tony Davis taking over. We estimate direct losses of S$32m (ie. S$23m in loss of ticket sales and S$9m in costs) arising from the ban. We believe recent events will have negative repercussions on demand hence cut our capacity assumptions by -2%/-6% for FY12/13, reduce our load factor by 4ppts to 81% which in turn reduces our traffic by -5%/-10% for FY12/13 respectively. Our earnings are cut by -66%/-50% for FY12/13. We are setting a fair value of S$0.76 for Tiger, based on 2x its FY12 price to book, which is the average that its LCC peers are trading at. This translates into 24x/14x FY12/13F P/E. Re-iterate SELL.

CASA seeks to extend grounding till Aug 1. Australia’s Civil Aviation Safety Authority (CASA) is applying to the Federal Court to seek an extension to Tiger’s grounding till Aug 1 to which Tiger says it will not oppose. The extension is to facilitate investigations over two incidents in June where pilots flew too low approaching Melbourne airports. Following this announcement, Tiger Australia’s CEO Mr. Crawford Rix will step down on July 31 with current Group CEO Mr. Tony Davis taking over. Meanwhile newly appointed Mr. Chin Yau Seng (ex-CEO of SilkAIr) will take the helm at Tiger Singapore. We view these management changes positively as it reflects Tiger’s commitment to resolve its current problems.

Impact on operating stats. We believe recent events will have negative repercussions on demand and hence prompt Tiger to delay delivery of two A320s in FY12 & FY13. We are cutting our capacity assumptions by -2%/-6% in FY12/13, reducing our load factor by 4ppts to 81%, which in turn reduces our traffic by -5%/-10% in FY12/13.

Financial impact. We estimate direct financial losses of S$32m arising from its prolonged grounding (S$23m in loss ticket sales & S$9m in costs). Our revenue is lowered by -5%/- 7% and net profit lowered by -66%/-50% for FY12 & FY13 respectively. There could be further downside risks to earnings from higher operational costs in terms of staff costs and higher marketing costs in an attempt to repair its reputation.

Re-iterate SELL. At last close, Tiger is trading at 34x/19x FY12/13F earnings and 2.8x/2.4x FY12/13F P/BV. We are setting a fair value of S$0.76 for Tiger based on 2x its FY12 P/BV, the current multiple that its LCC peers are trading at. This translates into 24x/14x FY12/13F P/E. Re-iterate SELL.

Source/转贴/Extract/Excerpts: DMG & Partners Research
Publish date:07/07/11

2011-0705-57金錢爆(拾荒老人 養地方怪獸)

Source/转贴/Extract/Excerpts: youtube
Publish date:05/07/11

19配套激活建筑领域 200亿捷运工程发酵

19配套激活建筑领域 200亿捷运工程发酵
2011/07/07 7:20:57 PM
●南洋商报 报道:陈子莹















Source/转贴/Extract/Excerpts: 南洋商报
Publish date:07/07/11


Created 07/07/2011 - 18:30

















● 中國:維持“加碼”



● 台灣:從“中和”調至“加碼”



● 新加坡:從“減碼”調至“加碼”



● 澳洲:從“中和”調至“加碼”


● 香港:維持“中和”


● 印度:維持“中和”


● 菲律賓:維持“中和”


● 印尼:從“加碼”調至“中和”


● 泰國:維持“減碼”


● 韓國:維持“減碼”


● 日本:維持“減碼”




Source/转贴/Extract/Excerpts: 星洲日報
Publish date:07/07/11

Tiger fights fire in Australia with sweeping exec changes

Business Times - 07 Jul 2011

Tiger fights fire in Australia with sweeping exec changes

Australia chief quits, group CEO moved Down Under


(SINGAPORE) Tiger Airways has made sweeping changes to its management team in response to a brewing safety debacle which threatens to ground its entire Australian fleet until August 1.

The head of its Australian subsidiary is leaving the company, while the Group CEO has relinquished his current job to handle the Australian operations.

Meanwhile, JY Pillay, the founding chairman of Singapore Airlines, has been drafted into the board of Tiger Airways Holdings as non-executive chairman.

SIA owns a 33 per cent stake in Tiger and has recently stepped in to help it weather the storm in Australia.

In a statement, Tiger said that Crawford Rix, CEO of the Australian subsidiary, will leave the firm at the end of the month and his post is to be filled by Tony Davis, the current group president and CEO of Tiger Airways Holdings.

Mr Davis, in turn, will hand his duties at the parent company to the firm's executive director Chin Yau Seng, Tiger added.

Tony Davis flew to Australia earlier this week to spearhead talks with the country's aviation safety regulator after the latter made the landmark decision of grounding all its domestic flights as a result of safety concerns on July 2.

Although services were initially slated to resume on July 9, Australia's Civil Aviation Safety Authority (CASA) is now appealing to extend the ban to Aug 1 to give it more time to complete its investigations.

'Tiger Airways has been working constructively with CASA for the past five days to establish a plan for the resumption of our services and will not oppose the period of extension,' the airline said in a statement

The carrier had previously said the grounding of its Australian fleet, which is made up of 10 Airbus SAS A320, will cost it $2 million a week.

However, its Singapore flights are not affected by the Australian ban.

A former permanent secretary and civil servant of more than three decades, Mr Pillay will assume the role of non-executive chairman with immediate effect.

However, former chairman Gerard Ee will continue to be an independent director with the firm, Tiger said.

Mr Pillay stepped down as SGX chairman at the end of last year, a post he held since the incorporation of the exchange in 1999.

Tiger has slumped 13 per cent in Singapore trading this week and closed little changed at $1.045 yesterday.

Publish date:07/07/11

Genting Malaysia NFO Rumours Hit High Pitch (OSK)

Genting Malaysia
NFO Rumours Hit High Pitch

News of Genting Malaysia bidding for Tanjong Plc’s Pan Malaysia Pools Sdn Bhd (PMP) have resurfaced, with Star Biz reporting that the group may even sign the deal to acquire PMP at an estimated acquisition cost of RM2.5bn tomorrow. We view such an acquisition as NEUTRAL at best and have listed down three potential routes for such a transaction.
Neutral at best if acquisition materializes. If the rumor turned out to be true and Genting Malaysia succeeds in winning the bid to acquire PMP, we would view the development as NEUTRAL at best. The acquisition will not come cheap at an estimated 16x to 18x PER (RM2.3bn to RM2.5bn) for a business with low single-digit growth and the fact that the purchaser would “inherit’’ the loss-making RTO division (annual operating loss of ~RM60m). Assuming a RM2.5bn acquisition price (18x PER), 5% borrowing cost and 3% fixed deposit rate on interest income forgone, we estimate that the acquisition would only enhance Genting Malaysia’s FY11 earnings by 1%, assuming a 50:50 Debt:Equity financing structure, and only a +2.5% earnings enhancement assuming zero debt financing. The excess cash of RM2.3bn to RM2.5bn would generate far better returns and hold more growth potential if invested in high-growth regional or global casino opportunities. Even the group’s recently acquired and relatively low yielding UK casino operation commands a more superior acquisition earnings yield of 8.4% vs PMP’s 6.4% (assuming a RM2.5bn acquisition price). To compare further, the group’s Singapore integrated resort chalks up a significantly higher internal rate of return despite its high initial CAPEX.

Expanding overseas to diversify risk. Genting Malaysia has been expanding aggressively overseas and remains highly vigilant of potential casino opportunities globally. Despite the group’s robust free cash flow generation of more than RM700m p.a and existing net cash balance of RM1.2bn (after factoring in total cost of developing the Aqueduct and Miami land acquisition), we note that the group would still require to raise its gearing if and when such casino opportunities materialize. It has already indicated that it could spend close to USD3bn to develop its recently acquired land bank in Miami in Florida. As such, spending some RM2.5bn for PMP for its low single-digit growth and earnings yield certainly would not sit well with the group’s overall growth strategy.

Scenario 1:
Genting Bhd swaps power assets for PMP – Clarity on PPA renegotiation is key. There have been talk that Tanjong plc may swap its gaming assets (PMP) for Genting Bhd’s power assets (58.6% stake in 720MW Kuala Langat power plant in Malaysia; 100% stake in China’s 724MW Meizhou Wan power plant, and 30% of Lanco Kondapalli power plant in India). Such as deal makes sense as it would bring about a win-win situation for both parties, turning Genting Bhd into a pure gaming play while positioning Tanjong as a pure power player with a foothold in India via Genting’s power plant in India. However, uncertainty over the ongoing Power Purchase Agreement (PPA) renegotiations with the domestic Independent Power Producers (IPPs) remains a key stumbling block for now as nearly 60% of the value of the group’s power assets lies in its domestic power plants whose value could deteriorate significantly if Genting Sanyen did not agree to an extension of its PPAs, due to expire in 2016. We understand from our sources that there are two groups of 1st generation IPP players with differing views on the current PPA talks, with Genting Sanyen being in the group that is less agreeable to the proposed PPA extension terms and conditions.
Scenario 2:
May be better if power assets are separately listed. As shown in Figure 2 below, Genting Bhd’s combined portfolio of power assets generates stronger earnings compared to Tanjong’s PMP, even from the standpoint of operating cash flow, as Genting Bhd’s power assets generate cash in excess of RM400m vs PMP’s RM230m. As such, we believe that Genting Bhd may only consider an asset swap if Tanjong prices PMP at a relatively attractive level as the former would be foregoing a more superior portfolio of earnings and cash flow generating assets. Under such a scenario, we think that management may prefer to consider a public listing of its power assets to unlock the value of those assets as this would be more value accretive to shareholders, rather than make an asset SWAP for Tanjong’s PMP. Again, this will be subject to Genting Sanyen receiving greater clarity on its PPA renegotiation.

Scenario 3:
Buying PMP via private consortium led by Lim Kok Thay. There have been rumors that PMP would instead be acquired by Tan Sri Lim Kok Thay’s (LKT) in his private capacity (as a major shareholder of Genting Group) as the bid may involve allocating a certain portion of profits from PMP to charitable causes, which may further depress yields. This would certainly be viewed negatively if Genting Malaysia or Genting Bhd were to be used as the vehicle to acquire PMP.

Maintain BUY and Fair Value: RM4.10. We are maintaining our BUY recommendation and RM4.10 fair value on the stock. Assuming that the rumors were indeed true and Genting Malaysia won the bid to acquire PMP at an acquisition cost of RM2.5bn, we estimate that this would enhance Genting Malaysia’s fair value by 20 sen/share, which translates into a marginal value enhancement of just 4.8% for an investment sum of RM2.5bn.

Source/转贴/Extract/Excerpts: OSK Research
Publish date:06/07/11

CitySpring Recent Developments (S&P)

CitySpring Infrastructure Trust
Price: SGD0.51
Recent Developments
• CitySpring is proposing a renounceable rights issue at SGD0.39 per rights unit on the basis of 11 rights units for every 20 exiting units (total of 539.0 mln units will be offered) to raise gross proceeds of about SGD210.2 mln. The theoretical ex-rights price for CitySpring is SGD0.4835 per unit and its unit base will be enlarged by 55% to 1.52 bln units.

• Temasek Holdings (Private) Limited (Temasek), CitySpring's largest unitholder, has committed to subscribe for 85% of all the rights units. Temasek will hold 48.1% of CitySpring if the subscription is fully allotted. Nonetheless, Temasek will be waived from making a mandatory offer, subject to approval by the unitholders.

• The net proceeds of the rights issue (approximately SGD204.8 mln) will be mainly used to reduce the debt at Basslink, as well as for the trust’s general corporate purposes. Following the rights issue, the trustee-manager believes that the negative outlook on Basslink’s bonds rating can be removed by Standard & Poor's Ratings Services, thereby ensuring that Basslink can continue to make distributions to CitySpring.

• The rights issue is still subject to approvals from the relevant authorities and unitholders, and is targeted to be completed by end September 2011.

• The trustee-manager does not expect other capital raising activities in the near term, unless there are opportunities for yield accretive acquisitions.

Earnings Outlook / Estimates Revision
• Our FY12 (Mar) cash earnings forecast is reduced by 4.3% to SGD80.2 mln, after taking into account the one-off fees incurred to refinance CitySpring and City Gas’s loans. Meanwhile, our FY13 cash earnings are unchanged at SGD88.0 mln. We have not factored in the effect of the rights issue into our earnings model, pending its completion.

• CitySpring will have annual net savings of approximately SGD8.5 mln, assuming that part of the net proceeds are used to buy back AUD159.0 mln of the AUD486.0 mln Basslink bonds due August 2015, after taking into account estimated interest savings and increase in base management fee payable.

• In addition, CitySpring’s dividend yield will potentially fall to 5.4% in FY13 due to the enlarged unit base after the rights issue, assuming that CitySpring will maintain its FY11 distribution of SGD41.2 mln to unitholders.

Investment Risks
• As Basslink and SingSpring’s contracted revenues are based on availability, any operational disruptions will be detrimental to CitySpring’s earnings. Meanwhile, City Gas is also vulnerable to any disruptions at its production facility. CitySpring’s earnings may be negatively affected in a rising interest rate environment, as a portion of its debt is unhedged.

Source/转贴/Extract/Excerpts: S&P Equity Research
Publish date:05/07/11

Tiger Australia potentially grounded up to August 1

Tiger Airways
SELL; S$1.045;
Price Target: S$ 0.90

Tiger Australia potentially grounded up to August 1
According to press reports, the Civil Aviation Safety Authority of Australia (CASA) has announced that it will be applying to the Federal Court in Melbourne tomorrow morning to seek an order to extend the license suspension of Tiger Airways Australia further from July 9 up to August 1, at least. This is not unexpected, as we had highlighted the possibility of the fleet suspension being extended in our latest report. The possible extension was sought despite meetings between Tiger's top executives and CASA investigators during the week.

CASA has sought the order to seek extension, as it will not been able to complete its investigations within the initial 5-working day period. If the court allows the extension and CASA is able to complete investigations before Aug 1, and is satisfied with Tiger's safety mechanisms, it may be possible for Tiger Australia to resume operations earlier. However, Tiger Australia has already stopped selling tickets on its website, and given the lack of forward ticket sales, we do not foresee it to resume operations before Aug 1 even if the regulator is satisfied before then.

In terms of impact, this means at least S$8m in direct losses for the 4 weeks of suspension (S$2m per week as estimated earlier by management), which is within our earnings estimates cut earlier this week. However, there could be more losses that are harder to assess like the A$2.25m fine the South Australian government is seeking to impose on the airline for breaching some agreements. There is also complaint from the consumer watchdog over domestic ticket sales during the initial days of the grounding. There will be maintenance costs involved as well in getting the grounded fleet back in the air. Overall, we reckon there could be further downside to our earnings estimates as the crisis plays out over the following weeks and we maintain our SELL recommendation at a TP of S$0.90.

Source/转贴/Extract/Excerpts: DBDBS Vickers Research
Publish date:07/07/11

GLICs to pare down stakes in prominent companies

The Star Online > Business
Thursday July 7, 2011

GLICs to pare down stakes in prominent companies


PETALING JAYA: Government-linked investment companies (GLICs) are likely to pare down their stakes in the usual suspects such as Malaysia Airlines (MAS), Malaysia Airports Holdings Bhd (MAHB), Proton Holdings Bhd and Malaysia Building Society Bhd (MBSB).

While analysts and market observers said it was difficult to pinpoint which companies the GLICs would choose to divest, either by an outright sale or through a reduction of stake, the more prominent government-linked companies (GLCs) mentioned above have been ripe for divestment.

At the seventh Economic Transformation Programme update on Tuesday, the Government said it had identified 33 companies under its divestment plan it will pare down its stake in five companies, list seven companies and have an outright sale of 21 companies.

Of the 33 companies, 24 will see the exercise carried out between this year and 2012. This essentially means that there will be 19 outright sales and the paring down of five companies in this time frame.

OSK Investment Bank Bhd head of equity capital markets director Gan Kim Khoon said the manner an outright sale will be executed depends on whether the GLIC has a controlling stake in the GLC or not.

Gan said if a GLIC had a controlling stake, it would not be able to sell its stake into the open market directly as it had to search for suitable buyers. This can be done through a book-building exercise or direct placement of shares.

“The GLIC would also not be able to dump its shares into the open market as this would create a disorderly market,” he added.

A local research head said that MBSB was a key divestment candidate, considering that both the Employees Provident Fund (EPF) and Permodalan Nasional Bhd (PNB) have stakes in the company, at 65.5% and 13.81%, respectively. EPF and PNB are identified as GLICs, alongside Khazanah Nasional Bhd, Lembaga Tabung Haji, Kumpulan Wang Persaraan (KWAP) and Lembaga Tabung Angkatan Tentera (LTAT).

For FY10 ended Dec 31, MBSB posted a net profit of RM146mil on revenue of RM769.9mil, an increase of 155% and 43.1% respectively.

Meanwhile, analysts said that MAHB, Proton, MAS and SilTerra Malaysia Sdn Bhd are some of the companies under Khazanah's stable that could be part of the divestment plans.

A local aviation analyst said that Khazanah may look to further sell-down its stake in MAHB, considering that the latter was a mature asset and there was nothing much Khazanah could do to add value to this asset.

Khazanah has placed out MAHB shares three times since September 2009, with the first tranche being a 5% stake in September 2009, followed by the second tranche of 7.7% in March 2010 and the final stake sale of 6% late last year.

Khazanah's equity stake in MAHB now stands at 54%.

“The last divestment was done at RM6 per share, so we may see the next divestment take place at a target price of RM7. MAHB has drawn the interest of several institutional investors and since it will be difficult for the market to absorb one big lump sale, it will have to be done through a book building exercise,” he said.

While calls for Khazanah to reduce its stake in MAS have been made many times before, analysts say that it is unlikely that the airline would attract strategic investors with its unattractive market price and poor show of results for now.

Khazanah stake in MAS is some 69.37% while EPF owns a 10.71% stake.

Source/转贴/Extract/Excerpts: The Star Online
Publish date:07/07/11
Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)

乔治·索罗斯(George Soros)



高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo

There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
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