-1- BIZ DAILY Friday, 22 / Saturday, 23 October 2010 Singapore’s Largest Daily Online Business Publication New Programme to Help Boost Jared Heng, Assistant Editor E-mail: firstname.lastname@example.org Singapore Companies’ Innovation Ernie Calucag, Assistant Editor E-mail: email@example.com and Productivity by Jared Heng In this issue Baidu’s Net Profit Soars to RMB1.05 billion Page 2 in Third Quarter Insurer AIA's Share Sale Sets Hong Kong Page 3 Record Tender for Singapore’s Largest Desalination Page 4 Plant Attracts Competitive Bids ListCo News Page 5 & 6 First Real Estate Investment Trust CapitaMall Trust Ezra Holdings Limited Mermaid Maritime Public Company Limited Dapai International Holdings Co Ltd Lian Beng Group Singapore’s government has launched the Innovation Improve- Samudera Shipping Line Ltd ment Initiative Programme, or i3 in short, to help enhance local First Ship Lease Trust companies’ capabilities in innovation and productivity. i3 is a project-based programme designed to jumpstart produc- tivity improvement through a series of initiatives. Stock Picks Page 7 by OCBC Investment Research Such initiatives include coaching corporate participants on inno- vation and productivity concepts, the use of diagnostic tools and intuitive hands-on projects. Announcing the programme Friday at a conference, Mr Gan Kim Biz Property: Page 8 Yong, Minister for Manpower, said that each company will send HDB Resale Flat Prices Up 4 Per cent a team, comprising top management and line operators, to be in 3Q2010 coached and mentored by productivity experts from Motorola University. Biz Lifestyle: Page 9 Based in the US, Motorola University developed the established Childhood Obesity Presents Opportunity Six Sigma methodology and is a leader in corporate education. for Retailers Companies that participate in the i3 programme will be guided to facilitate problem-solving and put in place best practices to improve productivity and innovation. Highlighting the national effort to boost productivity, Minister Gan said: “Making this significant leap in productivity will require a holistic and coordinated approach at all levels: at the industry-, enterprise- and worker-levels.” “At the industry level, we will have to fundamentally re-look the structure and operations of our key sectors, to review if we have the right industry set-up and the right value chain to capitalise on growth opportunities and build up capabilities for higher produc- tivity,” the manpower minister added. The Singapore Workforce Development Agency will fund up to 70 per cent of the course fees, and is expected to invest up to S$1 million over two years for this programme. “The launch of the i3 programme signifies a strong commitment by the government to reach out to the business community in our productivity drive, through strategic partners such as the SBF (Singapore Business Federation),” Minister Gan said. SBF will actively reach out to companies and encourage them to improve productivity through skills and innovation. SGX Cooperates with NASDAQ, Reportedly in Takeover Bid for ASX by Jared Heng Singapore Exchange (SGX) and NASDAQ OMX plan to offer com- panies opportunities for listing on both exchanges, SGX said Friday. The listing cooperation includes offering a cross listing opportunity to On a separate note, SGX is reportedly expected to make a currently listed companies on both the NASDAQ stock market and full takeover bid for Australia’s ASX Ltd on Monday. SGX, as well as dual listing opportunities for new IPOs. The Australian newspaper said that UBS is acting on behalf This initiative allows better price discovery and trading opportunities of ASX in the talks, while Morgan Stanley is advising SGX. in the Asian and US time zones. Both sides are reportedly still working out the final details of According to SGX, NASDAQ-listed companies with strong brand the deal, which needs to be cleared by the Australian govern- awareness and active business endeavours in Asia will benefit from ment. a secondary listing on SGX. SGX-listed companies interested in reaching US investors will also be able to list their American Deposi- With SGX and ASX having a market value of about US$8 tary Receipts on the NASDAQ stock market. billion and US$6 billion respectively, the deal, if successful, could create one of the world’s largest bourses. Produced in association with Biz Daily Pte Ltd 52-C Club Street Singapore 069429 Tel: 6325-5560/61 /62 /63 /64 Fax: 6222 5378 Visit us at www.bizdaily.sg For advertising sales, please contact: firstname.lastname@example.org For editorial enquiries, please contact: email@example.com or firstname.lastname@example.org For technical and e-mail support, contact: email@example.com -2- BIZ DAILY Friday, 22 / Saturday, 23 October 2010 Singapore’s Largest Daily Online Business Publication Baidu’s Net Profit Soars to RMB1.05 billion in Third Quarter Source: AFP Chinese search engine Baidu said Friday its net profit more than doubled in the third quarter, as rival Google continued to lose market share following its public spat with Beijing over censorship. The results came as a Chinese research report showed Baidu increased its dominance of the world’s biggest online market at the expense of Google, which has seen its share dwindle throughout the year. Baidu said its net profit soared 112.4 per cent year-on-year to RMB1.05 billion (about US$157.80 million) in the third quarter. Total revenue ballooned to RMB2.26 billion, up 76.4 per cent from the same period last year, the company said. “During the third quarter, both (average revenue per user) and customer base increased healthily, which directly contributed to the robust top-line increase,” Baidu’s chief executive Robin The US internet titan had boasted a 31 per cent share in the Li said in a teleconference, according to Dow Jones News- first three months of the year, before its protracted tussle with wires. the Chinese authorities. China has at least 420 million web users, accounting for almost In March, Google said it would no longer bow to government a third of the country’s population, official data show. censors and effectively shut down its Chinese search engine, automatically re-routing mainland users to its uncensored site Baidu’s share of the Chinese search engine market increased in Hong Kong. to 73 per cent in the third quarter from 70 per cent in the second quarter, according to Beijing-based research firm The web giant has since tweaked the way it re-routes users in Analysys International. order to gain the renewal of its business licence in China, creating a new landing page with a link to the Hong Kong site, Over the same period, Google’s share shrank to 21.6 per cent which users must click on themselves. from 24.2 per cent, Analysys said. SGX Signs MOU with China’s Jiangsu Province Singapore Exchange (SGX) has signed a Listing Memoran- dum of Understanding (MOU) with the Financial Affairs Office (“FAO”) of the Jiangsu government in China. The MOU aims to further promote the listing of Jiangsu compa- nies on the Singapore Exchange. Under this MOU, Jiangsu’s FAO will assist in SGX’s efforts to profile Jiangsu enterprises, and provide guidance to potential listing aspirants. It will also facilitate regulatory processes and approvals from relevant Chinese authorities. “We will actively support and encourage enterprises from Jiangsu to obtain additional capital by listing at the SGX,” Wang Quan, Deputy Secretary General of Jiangsu Provincial Government and Director of the Provincial Finance Office, said. vibrant province to explore listing on our venue to support their In addition, the FAO will lend support to SGX in its supervision business growth,” Lawrence Wong, SGX’s executive vice of Jiangsu companies listed on its bourse. president and head of listings, said. “There are currently 20 companies from Jiangsu listed on our In 2009, the GDP of Jiangsu province rose 12.4 per cent year- exchange, and we can expect more companies from this on-year to RMB3.41 trillion (about US$512 billion). Hyundai Taps into China Market Source: AFP South Korea’s Hyundai Motor Co on Friday announced a tie-up with a Chinese company to produce commercial vehicles in China as it seeks to build on its reputation for passenger cars in the world’s largest auto market. The largest South Korean automaker on Friday signed a memorandum of understanding with Ziyang Nanjun Automo- bile Co that will see a joint investment of KRW500 billion (US$440 million). Hyundai and Nanjun will establish several joint projects to produce and sell trucks, buses and engines, as well as to develop new models and provide follow-up services, Hyundai Motor said in a press statement. Through the joint venture, Hyundai hopes to sell about 90,000 commercial vehicles in 2011, rising to 300,000 by 2015, repre- senting a five per cent share of China’s commercial vehicle tion capacity of 300,000 cars each. market, it said. The company sold 510,000 vehicles in the first nine months of Hyundai Motor has two plants in Beijing with an annual produc- this year, up 24 per cent from the same period last year. -3- BIZ DAILY Friday, 22 / Saturday, 23 October 2010 Singapore’s Largest Daily Online Business Publication Insurer AIA's Share Sale Sets Hong Kong Record Source: AFP Industrial and Commercial Bank of China, which raised US$21.9 billion in 2006. However, Agbank's IPO was split and it raised US$12 billion in Hong Kong and the rest in Shanghai. Shares in the highly-anticipated offering were priced at almost 16 times AIA's forecast earnings this year, Dow Jones News- wires cited an unnamed source as saying. AIA said on Sunday it would initially offer 5.86 billion shares at between HK$18.38 and HK$19.68, adding that it could issue additional shares if it exercised a so-called greenshoe option. That may bring the total raised to around US$20.5 billion and leave AIG with a stake of just 32.9 per cent in the firm. The Asian unit of troubled US insurer AIG has set a Hong Kong AIG, which is looking to repay US taxpayers after a govern- record, raising US$17.8 billion in its initial public offering and ment bailout in 2008, won approval last month for the sale. could make more than US$20 billion, a report said Friday. The US insurer was forced to look at publicly floating AIA in AIA priced its shares at HK$19.68 (US$2.53) ahead of its Hong Kong after the collapse in June of a proposed US$35.5 debut on the Hong Kong stock exchange next week, the Wall billion sale to the British insurer Prudential. Street Journal said, citing unnamed sources. Among confirmed cornerstone investors are the Kuwait Invest- The offering could be the world's second-largest this year. ment Authority, the oil-rich Gulf emirate's sovereign wealth fund, and a number of Hong Kong tycoons. Agricultural Bank of China in July raised a total of US$22.1 billion from an IPO, exceeding the previous record set by the Chinese sovereign-wealth fund China Investment Corp is also among the buyers, according to reports. US Pushes FX and Trade Target Plan to Reluctant G20 Source: Reuters Geithner's overtures have already been rejected by countries as diverse as India and Japan and markets are sceptical of a universal deal that would address global economic imbalances and tackle attempts by many emerging economies and others to weaken their currencies. While the G20 won praise for coordination of stimulus pack- ages during the global financial crisis, its sense of unity has gradually evaporated in the face of strains resulting from unprecedented efforts to revive global growth. "There is an action plan, but there is an awful lot of complaints, proposals," Russian finance official Andrey Bokarev said ahead of the meetings. A financial source who met with Geithner in South Korea said The United States sought to corral reluctant finance leaders that the US official had asked countries to limit their current into a deal that would commit emerging markets to cut their account surpluses or deficits to 4 per cent of gross domestic current account surpluses and allow their currencies to rise at product, something that few G20 members felt able to accept. a meeting on Friday. China, India, Saudi Arabia and Russia are all running substan- G20 finance officials started their formal meetings on Friday tial surpluses while the US is in deficit. with nations from the developing world and Japan dismissing the US proposals which it says are aimed at defusing tensions "We need to talk about it first, but numerical targets are unreal- that economists fear could trigger trade wars. istic," Japanese Finance Minister Yoshihiko Noda said. US Treasury Secretary Timothy Geithner, in a letter to finance The issue of addressing "undervalued" currencies will also tax leaders that was seen by Reuters, said "countries with persis- leaders, although Canadian policymakers said that China had tent surpluses should undertake structural, fiscal and agreed in principle to move toward more foreign exchange exchange rate policies to boost domestic sources of growth." flexibility. In return, countries such as the United States that are running The US dollar was down 0.27 per cent against a basket of six big budget and trade deficits would adopt "sustainable major currencies, near a low for the year struck last Friday and medium-term fiscal targets." currency strategists said there would be further weakness if the G20 disappointed. EU Banks May Be Pushed to Hold Extra Capital in Credit Booms Source: Bloomberg paying dividends and bonuses if they fail to meet the targets to stem the flow of cheap money, under plans to be published Friday. “A vital lesson from the financial crisis is that banks must hold sufficient levels of capital,” said Hughes. The European Com- mission will seek views on the proposals for banks in the 27-nation EU, she said. The Basel Committee on Banking Supervision gave regulators the option of introducing an additional capital buffer to curb the excessive lending that led to the financial crisis. The buffer would also help lenders absorb losses in a recession. The Basel proposals are the strictest since nations began regulat- ing the global banking system together in 1974. The European Banking Federation, an industry lobby group, Banks may be pushed by the European Union to hoard extra said it already signalled its “serious concerns at the imposition capital buffers beyond minimum requirements proposed by of yet another layer of buffers” to the Basel committee. “New global regulators last month. European measures would only make the matter worse,” it said in an e-mailed statement. Lenders may be expected to hold the extra capital during boom times in a bid to prevent another financial crisis, said The Basel group agreed that the so-called countercyclical Chantal Hughes, a spokeswoman for EU Financial Services capital buffer could be as large as 2.5 per cent of a bank’s Commissioner Michel Barnier. Banks may be banned from assets, and that it should be made up of common equity “or other fully loss absorbing capital.” -4- BIZ DAILY Friday, 22 / Saturday, 23 October 2010 Singapore’s Largest Daily Online Business Publication Tender for Singapore’s Largest Desalination Plant Attracts Competitive Bids To be built at Tuas and completed by 2013, the plant will be constructed under a Design, Build, Own and Operate (DBOO) arrangement and will supply 70 imperial million gallons (or 318,500 cubic metres) of desalinated water a day over a 25-year period from 2013 to 2038. A total of 10 companies participated in the tender, which closed on Thursday. The Public Utilities Board (PUB) said that the first-year price varies from S$0.45 to S$1.67 per cubic metre of desalinated water. In evaluating the bids, PUB said that it will mainly look at the robustness of the process design, operational strength based on the bidders’ track records in delivering similar projects, and financial strength. The tender for the second and largest desalination plant in Singapore attracted competitive bids from established local This desalination plant project is PUB’s fourth DBOO project, and international companies with good track records in the and the tender is expected to be awarded by the end of the water business. year. German Business Sees Ever Rosier Prospects: Survey Source: AFP The widely-watched reading of sentiment had been expected to slip to 106.4 points according to analysts polled by Dow Jones Newswires. But “the firms have once again given more positive assess- ments of their current business situation and their business expectations have improved,” an Ifo statement quoted presi- dent Hans-Werner Sinn as saying. Ifo’s report contrasted with gloomy news on Thursday when data showed that activity across the 16-nation Eurozone slumped to a 12-month low in October in both the manufactur- ing and services sectors. Ifo’s measure of business expectations for the next six months also rose to 105.1 points in October from 103.9 points in September, defying an average analyst forecast for a drop to German business managers are riding a wave of confidence, 103 points. as a key survey released on Friday showed another surprise jump in October to the highest level since May 2007. The Ifo institute surveys some 7,000 German manufacturing, construction, wholesale and retail companies each month to The findings are in line with recent data, which show that the establish the widely-followed index of business sentiment. German economy, the biggest in Europe, is on a roll thanks to boosts from exports and growing domestic support. Germany now forecasts full-year growth of 3.4 per cent, prob- ably surpassing advances elsewhere in the Eurozone, Japan A string of strong figures has even revived talk of a new and the United States. German economic miracle. “The German economy did not suffer from any imbalances The Ifo economic research institute said its business confi- prior to the crisis, the government’s crisis measures were well dence index climbed to 107.6 points from 106.8 points in timed and targeted and the industry is benefiting from the September. global investment-led recovery,” ING senior economist Carsten Brzeski noted. -5- BIZ DAILY Friday, 22 / Saturday, 23 October 2010 Singapore’s Largest Daily Online Business Publication ListCo News First REIT 3Q2010 Distributable Income CapitaMall Trust DPU Rises 6.8 Per cent in Up 2.5 Per cent January to September Period Bowsprit Capital Corporation Limited, manager of First Real CapitaMall Trust Management Limited (CMTML) announced Estate Investment Trust (First REIT), reported continued that Capital Mall Trust (CMT) has achieved a distribution per growth in distributable income for the third quarter ending 30 unit (DPU) of S$0.0688 for the period 1 January to 30 September 2010 (3Q2010). September 2010 (9M2010), 6.8 per cent higher than the DPU of S$0.0645 in the same period a year ago. Distributable income rose 2.5 per cent year-on-year to S$5.4 million, translating to a 2.1 per cent jump in distribution per For the third quarter alone, CMT’s DPU rose 0.3 per cent to unit (DPU) to S$0.0194. Based on its annualised DPU of S$0.0236, exceeding the forecast DPU of S$0.0230. S$0.077 and the closing price of S$0.95 on 20 October 2010, First REIT achieved a distribution yield of 8.1 per cent for During the January to September period, the Trust raked in 3Q2010. S$219.35 million in distribution income, which includes the release of S$1.2 million of taxable income retained in the first Including its S$0.3 million in deferred rental income from the half of this year. This amount, together with the tax-exempt Pacific Cancer Centre @ Adam Road, which is currently under income of S$5.0 million retained in the first quarter of this year, development, gross revenue increased 4.6 per cent to S$7.9 will be distributed to unitholders in FY2011. million, while net property income rose 3.7 per cent to S$7.8 million. The Trust’s improved performance was due mainly to higher rental rates for new and renewed leases, lower operating In a bid to drive growth and improve the quality of healthcare expenses and a maiden contribution by Clarke Quay, which at its properties, First REIT has focused on enhancing its was acquired on 1 July 2010. assets, undertaking a S$18.6 million investment in transform- ing the Pacific Cancer Centre @ Adam Road into a modern “CMT has delivered a good set of financial results in 3Q2010. boutique cancer specialist hospital, and sinking in an With the increase in tourists, higher domestic demand and the estimated S$4.5 million for a new extension block at Lentor resultant pick-up in consumer confidence, the retail market Residence. will remain positive throughout the year,” said James Koh Cher Siang, Chairman of CMTML. He added that the Trust is Looking ahead, First REIT expects its acquisition growth to well-positioned to benefit from the anticipated retail sales gain momentum as it continues to be on the lookout for new growth in Singapore. yield-accretive, healthcare-related properties. First Real Estate Investment Trust closed on Friday at S$0.950. CapitaMall Trust closed on Friday at S$2.020. www.first-reit.com www.capitamall.com Ezra FY2010 Net Profit Up 9 Per cent Mermaid Maritime to Build Two Jack-up Rigs with Keppel FELS Ezra Holdings Limited reported a 9 per cent jump in its net Mermaid Maritime Public Company Limited entered into a attributable profit to US$76.1 million for the full year ending 31 Letter of Intent (LOI) to build two jack-up rigs with options for August 2010 (FY2010) despite the challenging operating another two jack-up rigs for a new Mermaid-led joint venture environment during the year. (JV) named Asia Offshore Drilling (AOD) Limited. Turnover rose by 7 per cent to US$353.6 million in FY2010, Mermaid said that Keppel Offshore & Marine Limited’s mainly due to contributions from newly delivered vessels and subsidiary Singapore Keppel FELS Limited is the other party increased procurement, equipment supply and engineering in the LOI with a shared value of approximately US$360 activities from the Group’s Vietnam yard. million. Prudent working capital management resulted in Ezra obtain- Both jack-up rigs are scheduled for delivery on 1 December ing a net inflow from operating activities of US$50.4 million, a 2012 and subsequently on 1 March 2013 respectively if the strong turnaround from a net outflow of US$26.2 million in deal should proceed. They will be built based on Keppel FY2009. FELS’s proprietary design, the Mod V – B Class. In view of its strong cashflow generation, Ezra has proposed The premium jack-up rigs will be capable of operating in to reward shareholders with a S$0.015 tax-exempt dividend waters of 350 feet. The rigs will also be able to accommodate per share. 150 people, and fully equipped with offline handling features. To support its growth plans going forward, the Group said it For its new JV, AOD, Mermaid said that apart from its invest- successfully secured new funds of US$206.9 million through ment, it plans to engage other interested parties who will the issue of US$100 million in convertible bonds. It also man- jointly invest with the company for the funding of the rigs. aged to get a three-year unsecured financing, comprising S$50 million in guaranteed notes and a syndicated term loan Upon completion of the equity placement, it is expected that facility of US$70 million. the rig construction and the contracts between AOD and Keppel will be formally executed. Another announcement will Separately, Ezra announced the acquisition of Norway-based be made by Mermaid in due course, when this is achieved. Aker Marine Contractors AS from Oslo Bors-listed Aker Solu- tions ASA, a leading global provider of subsea products and engineering services, with a market capitalisation of more than US$3.5 billion. Mermaid Maritime Public Company Limited closed on Friday at S$0.480. www.ezraholdings.com www.mermaid-maritime.com -6- BIZ DAILY Friday, 22 / Saturday, 23 October 2010 Singapore’s Largest Daily Online Business Publication ListCo News Dapai International Acquires Manufacturing Lian Beng Acquires Light Industrial Building Site in China from SGX for S$23.6 million Building construction firm Lian Beng Group has signed an Dapai International Holdings Co Ltd announced that it has option with the Singapore Exchange (SGX) to acquire a light entered into an agreement with the Wuhe county government industrial building along New Industrial Road for S$23.6 to acquire approximately 200 acres of land in Mohekou Indus- million. trial Zone, Anhui province, China, for a consideration of RMB110 million (about S$21.47 million) with a land use right The six-storey building occupies a 30,221 square feet land of 50 years. parcel, with a gross floor area of 75,477 square feet. This works out to an average price of about S$313 per square foot. The acquisition consideration will be funded by internal resources. Currently utilised by SGX as a disaster recovery centre, the building, which stands amidst a mixture of new high tech The Group said it will build a new manufacturing facility on the buildings and traditional multi-storey industrial units, is site specifically for its luggage products. The new luggage situated near the Bartley MRT station and directly connected manufacturing plant has an estimated capacity to produce to the main Upper Paya Lebar Road, which leads to both the four million pieces of luggage each year. It added the new PIE and CTE. facility will be completed around 4Q2011 to 1Q2012. The property is situated at a good location and is accessible, The Group said it had decided on the current location after said Ong Pang Aik, Managing Director of Lian Beng Group. considering the ready availability of suitable labour in the He added that this acquisition is a good opportunity for both area, the cost of setting up operations there, and the transpor- long-term capital appreciation and rental yield. tation network. Lian Beng’s current portfolio of investment property includes an office unit in Suntec City, as well as units at some residen- tial developments such as The Ritz Carlton Residences, The Laurels, and Waterbank @ Dakota. Dapai International Holdings Co Ltd closed on Lian Beng Group closed on Friday at S$0.310. Friday at S$0.205. www.lianbeng.com.sg First Ship Lease Trust 3Q2010 DPU Stays Samudera Shipping Line Back to Black with at US$0.0095 3Q2010 Net Profit of US$6.3 million First Ship Lease Trust announced it will distribute US$5.7 Samudera Shipping Line, the regional container shipping line, million (about S$7.4 million) or US$0.0095 per unit to its has reported a turnaround in net profit of US$6.3 million unitholders for the third quarter ending 30 September 2010 (about S$8.2 million) for the three months ending 30 Septem- (3QFY2010). ber 2010 (3Q2010), compared with a net loss of US$4.0 million in 3Q2009. The distribution per unit (DPU) of US$0.0095 for 3QFY2010, unchanged from 2QFY2010, represents an annualised The Group’s revenue for the period rose 14.2 per cent to tax-exempt yield of 10.3 per cent, based on the Trust’s closing US$97.2 million from US$85.1 million a year ago. price of S$0.48 on 22 October 2010. For the nine months ending September 30 (9M2010), the The distribution will be paid on 26 November 2010 to all Group registered a net profit of US$5.5 million on a 9.1 per unitholders on record as at 1 November 2010. cent increase in revenue to US$270.1 million, compared with a net loss of US$4.9 million and revenue of US$247.5 million Revenue for the period declined 4.9 per cent to US$23.4 in the previous corresponding period (9M2009). million from US$24.6 million in 3QFY2009. The 3QFY2010 revenue includes freight revenue of US$2.5 million earned by The quarterly growth was largely due to better vessel utilisa- the vessels FSL Hamburg and FSL Singapore deployed in the tion and improved freight rates for the Group’s container product tanker spot market during the period. shipping business. Accordingly, gross profit increased 13 times to US$12.0 million in 3Q2010, from US$0.9 million in This mitigated the loss of bareboat charter lease rentals of 3Q2009. US$3.8 million for the quarter due to the premature termina- tion of bareboat leases for FSL Hamburg and FSL Singapore. Separately, Samudera Shipping said it is scheduled to deliver two Supramax bulk carriers with a carrying capacity of 57,700 The Trust incurred a total of US$2.1 million in voyage dwt each in 2011. Upon delivery, Samudera plans to deploy expenses and vessel operating expenses in 3QFY2010. these vessels on time-charter contracts. These vessels are These expenses were attributed to the operations of the expected to start contributing to the Group from the second vessels FSL Hamburg and FSL Singapore deployed in the quarter of 2011. product tanker spot market. The Trust did not incur these expenses previously as they were borne by the charterers In line with the Group’s continued effort to participate in the under the bareboat charters. Indonesian shipping market, Samudera re-flagged another chemical tanker, Sinar Jogya, into an Indonesia-flagged The Trust generated net cash from operations (before loan vessel, and secured for the latter, a two-year extension of its amortisation) of US$14.1 million in the July to September existing time-charter contract. period, which is 20.1 per cent lower compared with US$17.6 million in 3QFY2009. After deducting the loan amortisation of Samudera Shipping Line Ltd closed on Friday at S$0.230. US$8.0 million and cash retention of US$0.4 million, the net www.samudera.com amount available for distribution was US$5.7 million or US$0.0095 per unit. FSL Trust’s vessel portfolio presently includes 23 vessels of panies. As at 30 September 2010, the leases of the 21 vessels different types comprising containerships, chemical tankers, have an aggregate remaining contracted revenue of product tankers, crude oil tankers and dry bulk carriers. US$618.8 million and an average remaining lease term of 7.4 years. The remaining two vessels, both 47,000 dwt product Of these, 21 vessels are chartered on a long-term bareboat tankers, are presently deployed in the product tanker spot charter basis to seven reputable international shipping com- market. First Ship Lease Trust closed on Friday at S$0.480. www.firstshipleasetrust.com -7- BIZ DAILY Friday, 22 / Saturday, 23 October 2010 Singapore’s Largest Daily Online Business Publication Stock Picks by OCBC Investment Research SATS Ltd: Robust Operating Data Reaffirms Mapletree Logistics Trust: 3Q2010 in Line; 2QFY2011 Performance Still a Compelling Play Robust aviation operating data. SATS Ltd’s recent 3Q2010 in line. Mapletree Logistics Trust (MLT) reported 2QFY2011 aviation operating data had lent support to our 3Q2010 gross revenue of S$54.5 million, up 7.4 per cent view that the group is poised to deliver another positive set YoY and 4.9 per cent QoQ. Net property income of S$47.6 of quarterly results on November 2. As a note, the group million rose 8.1 per cent YoY and 4.0 per cent QoQ. Distrib- registered improvement across all operating indices in the utable income of S$31.5 million was up 9.5 per cent YoY and quarter, thanks to the recovery in the aviation industry. In 2.2 per cent QoQ. Results were boosted by positive contri- particular, unit services grew 5.9 per cent YoY as a result of butions from recent acquisitions and lower vacancy rates. increased flights from full-service and low-cost carriers. Unit Distributable income was just 2 per cent shy of our S$32.3 meals also increased by 7.8 per cent YoY on the back of a million estimate. 10.8 per cent YoY growth in passenger traffic, while cargo throughput rose 7.9 per cent YoY. This is largely consistent Occupancy improves. As at September 30, MLT recorded with our September 17 report that SATS may potentially gain portfolio occupancy of 98 per cent, up from 97 per cent three from the continued expansion in industry demand, hence months ago. This was due to lower vacancies in Hong Kong turning in better financial performance for 2QFY2011. (+500 basis points) and Malaysia (+300 bps). Recall that in 2Q2010, the manager had chosen not to renew leases of Improvements expected to continue, albeit at slower certain single-tenanted buildings because of unsatisfactory pace. According to the International Air Transport Associa- rent negotiations. Instead it increased its weighting to multi- tion (IATA)’s October survey, aviation business conditions tenanted buildings with three assets converted from single- had continued to show improvements. While some airlines user assets to multi-tenanted buildings in 2Q2010 (two in are starting to turn cautious in view of a modest economic Malaysia and one in Singapore). growth in 2011, we note that a still-high 60 per cent of the airlines being surveyed expect further improvement in profit- Still in acquisition mode. MLT recently raised S$305 ability over the next 12 months. On the passenger and cargo million through a non-renounceable preferential offering to business front, expectations for further improvements in existing unitholders as well as a private placement. Exclud- demand similarly appear to be moderating in light of the ing the S$145 million of assets acquired on the back of the economic outlook and the end of restocking activity, but are November 9 private placement, MLT has announced still high at 62.5-68.4 per cent. As such, we still expect to see approximately S$447 million worth of acquisitions this year. further improvements in SATS’ operating performance going The gross proceeds from the equity issue are intended to forward, albeit at a slower pace (in line with our FY2011- partially finance these purchases, and are also expected to 2012F forecasts). take MLT’s leverage down from about 46 per cent (assuming all acquisitions were debt-funded) to approximately 38 per Maintain BUY with S$3.30 fair value. We continue to like cent. This is lower than MLT’s 45 per cent medium-term SATS for its growth opportunities, consistently strong oper- leverage strategy and will allow it to continue to acquire ating cashflows and excellent management. The recent third-party and sponsor-owned assets. launch of the first-ever city check-in and baggage accept- ance service with Marina Bay Sands and contract win to DPU mechanics. Because of the recent private placement, provide ground handling services for SIA in Hong Kong are MLT has already declared a “cumulative distribution” testaments to the group’s ability to innovate quality services estimated at around 1.73 S cents for the period from July 1 and expand its market presence, in our view. We are keep- to October 14 (the day immediately prior to the issue of the ing our DCF-based fair value of S$3.30 pending the release private placement units). This cumulative distribution will be of its 2QFY2011 results (cost of equity: 8.5 per cent, terminal paid on or around November 29. The next DPU payout will growth rate: 1 per cent). At current level, we see an attrac- be for the period from October 15 to December 31 (the tive 17.0 per cent upside potential in the stock. As such, our “adjusted 4Q2010 distribution”). buy rating on SATS remains. Still compelling. 4Q2010 income is likely to be boosted (in our opinion) by contributions from recent acquisitions, offset by an increased equity base post-equity fund raising. MLT has a proven track record in executing a virtuous cycle of accretive acquisitions and competitive fund-raising; we believe more accretive acquisitions are likely in the coming months. After adjusting our valuation inputs to price in a higher possibility of positive rental reversions over FY2011 (as per more optimistic guidance from manager), our fair value estimate increases from S$0.90 to S$0.97. Maintain BUY (14 per cent estimated total return). (S$ m) FY09 FY10 FY11F FY12F Revenue 1062.1 1538.9 1615.4 1690.6 EBIT 170.9 184.4 190.4 208.8 P/NTA (x) 3.3 3.0 2.9 2.8 EPS (cts) 13.6 16.6 18.2 20.0 PER (x) 20.7 17.0 15.5 14.1 -8- BIZ DAILY Friday, 22 / Saturday, 23 October 2010 Singapore’s Largest Daily Online Business Publication Biz Property HDB Resale Flat Prices Up 4 Per cent in 3Q2010 by Ernie Calucag measures the Government introduced on August 30 as most of the transactions for the third quarter were submitted before the announcement. The Housing Board added it will continue to monitor the prices and volume of resale transactions and come up with an update at the end of the fourth quarter this year. Meanwhile, HDB said it 'will continue to ramp up its new flat supply significantly to meet the demand from first-timer house- holds'. It will launch 1,320 flats under the Build-to-Order (BTO) Scheme in Bukit Panjang and Sengkang on October 26. HDB will also launch about 2,200 more in Yishun and Punggol in November and December. This will bring the total BTO flat supply for this year to about 16,100, compared to the 9,000 BTO flats in 2009. Prices of Housing Board resale flats continued to rise in the third quarter, with prices going up by 4 per cent during the Together with the August 2010 Sale of Balance Flats, the total period compared with 4.1 per cent increase from the second new flat supply for 2010 will reach 17,700. quarter. For the first quarter of 2011, HDB said it will launch about Resale transactions, however, showed dampened demand as 5,000 BTO flats, as part of the 22,000 new flats planned for it fell by about 10 per cent, from 9,114 cases in the second next year. quarter to 8,205 in the third. HDB said this was largely due to the 25 per cent decline in monthly sale volume from August to HDB will also release more land for the development of September. Design, Build and Sell Scheme (DBSS) flats and Executive Condominiums (EC) units to provide choices for the higher- The median Cash-Over-Valuation (COV) amount among all income households. resale transactions also remained at $30,000 and the propor- tion of resale cases transacting above valuation also stayed at Based on the land sales scheduled for this year, there will be 96 per cent. about 3,000 units under DBSS and 4,000 units under the EC Housing Scheme. While the data showed a more stabilised resale market, HDB said it does not reflect yet the impact of the property cooling Developers will launch the EC and DBSS units for sale later this year or next year. -9- BIZ DAILY Friday, 22 / Saturday, 23 October 2010 Singapore’s Largest Daily Online Business Publication Biz Lifestyle Childhood Obesity Presents Opportunity for Retailers Source: Forbes US$47 billion industry, accounting for 27 per cent of all clothing sales and nearly 40 per cent of all women’s and girls’ apparel sales, according to Marketresearch.com. Though some manufacturers and retailers cut back on plus- size offerings during the recession, they have now realised that curvy girls are willing to spend, especially on well-made, fashion-forward pieces. From April 2009 to April 2010, the plus-size market increased 1.4 per cent, even as women’s apparel as a whole declined 0.8 per cent, according to market research firm NPD Group. More companies are looking to expand their plus-sized offer- ings. In 2009, Hanesbrands announced that it would create a plus-size women’s line for Wal-Mart Stores, and some design- Childhood obesity is on the rise, and no one is excited about ers sent plus-size models down the runway at London Fashion the prospects for affected children. But the public health crisis Week. may prove an opportunity for retailers: Plus-size kids clothing is one of the most promising niche markets in the fashion Meanwhile, overweight kids are starting to demand access to world. the same things their thinner counterparts have: cool, well- made, trendy clothing. And children are a growing market with As the waistlines of American adults have expanded, so have serious spending power. By 2020, population estimates those of their kids. According to the US Centers for Disease predict there will be 80 million children in the US, accounting Control and Prevention, an estimated 17 per cent of children for about 24 per cent of the population. and adolescents ages two to 19 years are obese. That number is far higher than it was just a few decades ago. Among Major retailers who already offer plus-size items for children preschool children aged two to five, obesity increased from 5 include Sears, Lands’ End, JCPenney and specialty tween per cent to 10.4 per cent between 1980 and 2008, from 6.5 per retailer Justice. But while plus-sized adults can shop at their cent to 19.6 per cent among those aged six to 11, and from 5 own stores, including Lane Bryant, Ashley Stewart, Avenue per cent to 18.1 per cent among adolescents aged 12 to 19. and Torrid, do not expect similar options for plus-sized kids. “The way to do it is to take a great children’s brand and extend Plus-size clothing is already a major segment of the fashion the size offerings,” said Oona McSweeney, vice president of business. Sales of women’s and girls’ plus-size apparel is a retail and special markets for StyleSight, a trend forecasting agency. Biz Sage “Better beggar woman and single than queen and married.” - Elizabeth I England’s Queen Elizabeth I was a powerful leader, but she was not perfect. She was sometimes seen as independent to a fault, relying on her own judgment rather than the counsel of others. Elizabeth fiercely desired freedom from any politi- cal alliances that might threaten her country’s sovereignty. But, in 1578, England watched in horror as Spain began a campaign to expand its empire. Rich from its exploration of the new world, Spain set out to conquer the Netherlands. For England, this was geographically too close for comfort. Queen Elizabeth began serious engagement negotiations with the French prince, Francis, Duke of Anjou, in hopes of forming an alliance with France. Elizabeth I Unexpectedly, she fell in love with him. Elizabeth continued the courtship, but her protestant subjects detested Francis, for he was a catholic. After much debate, a dejected Eliza- The Sage is the wise philosopher who provides thought- beth stopped the engagement and made a vow of chastity. In provoking and inspirational words for those on their business the end, her loyalty was to the sovereignty and the people of journey to success. Here is a perspective advice to all profes- England. sionals, business executives, and entrepreneurs. The daily entries in this section are organised according to a specific Sometimes, a leader must choose between personal feelings aspect of business life like people management, leadership, and what is best for the company. Whether it is firing a or entrepreneurial skills. Each entry will be provided by famous relative for poor performance or telling a friend that you business figures that can be applied to your life and business. These words of encouragement are also meant to be used as cannot do business anymore, a leader must always do the a guide. right thing, despite the pain. When it comes to the good of the company, consider your alliances and make them without compromise to your company or values.
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