Friday, 31 March 2017

Stock Market Today:Bumitama Agri upgraded to buy on strong FFB output growth and attractive valuation

RHB is upgrading Bumitama Agri to "buy" from neutral despite falling CPO prices ahead on strong double-digit FFB output growth over the next few years plus attractive valuations at current levels.

In a Friday report, RHB believes CPO prices are on a downtrend given the abundant supply of CPO coming into the market in 2H17, as well as the fourth bumper crop of soybean coming out of South America from April.

As the market is forward looking, RHB advises investors to lock in profits. The price gap between CPO spot and futures prices widened to MYR200/tonne ($63/tonne) while the price gap between CPO and soybean oil prices widened back to around USD60/tonne ($84/tonne) currently. While the price premium between soybean oil and CPO is still far from historical averages of US$100-150/tonne, RHB believes there is still room for the premium to widen.

In addition, RHB says demand is not likely to recover in 2017, with the global economy still struggling to grow and domestic consumption still at sluggish levels. Therefore, despite the fact that inventories of CPO at the importing countries of India and China are at low levels currently, the house does not expect restocking to occur in a significant manner in the coming months.

Given the height CPO prices had achieved in the first two months of this year, RHB is raising its CPO price forecast for 2017 to MYR2,600/tonne ($821/tonne). However, it is lowering its price assumption for FY18 to MYR2,400 to account for its expectation that prices would continue to be weak.

We raise our target price slightly to 89 cents, based on 13x 2017 P/E , which implies an EV/ha of US$9,000/ha, below its peers of US$10,000-15,000/ha, says RHB.Shares of Bumitama are trading flat at 80 cents.

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Thursday, 30 March 2017

Stock Market Today:This well established industrial group has grabbed the attention of CIMB

SINGAPORE CIMB Research has issued a non-rated report on NSL Limited following the release of the industrial group's FY16 annual report last Wednesday.

NSL's key business segments comprise precast and prefabricated bathrooms (PBU) and environmental services.

The SGX-listed group has a majority 72.1% stake in marina club Raffles Marina, as well as a 33.33% stake in an associate in Germany, PEINER SMAG Lifting Technologies GmbH.

As at FY16A, NSL's net cash stood at $430.3 million. It declared a final dividend per share (DPS) of 5 cents in addition to a special DPS of 20 cents for the period.

In a note on Thursday, analyst William Tng highlights NSL's precast and PBU division as a market leader in manufacturing precast concrete components in Singapore, Malaysia and Dubai, with the business being a dominant producer in Scandinavia.

"Management guided that the precast business in Singapore and Malaysia remains very competitive, with downward pressure on project margins. However, management notes that the precast operation in Dubai and the PBU business in Finland are expected to perform satisfactorily, underpinned by a healthy order book," he recalls.

Meanwhile, Tng also notes the environmental services division as a key player in integrated environmental services in Singapore, in addition to being a major distributor of automotive diesel oil and other petroleum products in Singapore.

Management guided that business for this segment is likely to remain stable in light of the recovery of the manufacturing sector, adds the analyst.As at 11.14am, shares of NSL are trading flat at $1.74.

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Wednesday, 29 March 2017

Stock Market Today:Why UOB is upgrading Wilmar to hold

UOB KayHian is upgrading Wilmar to "hold" from "sell" with a $3.50 target price after its recent share price correction as core businesses are still operating as usual and the house expects better 2017 earnings on the back of steady growth from all three key divisions on higher sales volumes.

Our SOTP-based target price remains at $3.50. Entry price: $3.20, says UOB. As at 10.31am, shares of Wilmar are trading 6 cents higher at $3.58.

Wilmar share price has fallen 11.6% from a high of $3.98 on Jan 2 to $3.52 on Tuesday. The drop might be due to weakening commodity prices. Sugar prices dropped the most, followed by CPO spot prices and soybean prices which dropped 11.6% and 6.1% respectively in the same period.

In a Wednesday note, UOB says sugar prices were weighed down by ample supply but weaker demand while weakening CPO prices were mainly due to the market expecting a strong production recovery but demand growth is lagging.

The dip in soybean prices was largely due to better-than-expected production in South America and expected higher soybean planting in the US.

We think Wilmar's recent share price correction was driven by poor sentiment on weakening commodity prices. However, Wilmar's core businesses are still operating as usual and we expect all three key divisions to grow steadily in 2017, supported by higher sales volumes," says UOB.

However, UOB expects 1Q17 to be Wilmar's weakest quarter for the year due to weaker demand for consumer products post-Chinese New Year, lower soybean crushing margin due to slowdown in demand, weaker q-o-q FFB production due to seasonality and weaker contribution from the sugar division as sugar milling activity should only start contributing from 2H17 as the sugar cane crushing season in Australia only starts in 2H.

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Tuesday, 28 March 2017

Stock Market Today:Ezion acquires existing JVs & assets in efforts to improve earnings

SINGAPORE In a bid to improve its long-term earnings and reduce costs, Ezion Holdings has acquired its remaining 50% equity stakes in existing joint venture (JV) companies Strategic Offshore (SOL) and Strategic Excellence (SEL) for $3.5 million and $1.5 million respectively.

For the purpose of acquiring certain assets from the subsidiaries of SOL, the group has also established three wholly-owned subsidiaries in Labuan, Malaysia, for US$2 ($2.80) each, namely Teras Atlas (TAL), Teras Fortuna(TFL) and Teras Orizont (TOL) - all three of which are principally engaged in rig owning and the provision of rig services.

Through the three new subsidiaries, Ezion will be acquiring a vessel, charter contract and receivables each from SOL's subsidiaries GSP Atlas Limited (GAL), Strategic Fortuna (SFL) and GSP Orizont (GOL) for the respective sums of US$18.7 million, US $24.5 million and US$18.7 million, in addition to charter and payment guarantees from GAL and GOL.

In a Tuesday premarket announcement, Ezion says it intends to utilise the assets owned by the JV companies by working closely with their existing customers - in addition to improving the group's earnings in the long-term by, amongst other things, working towards cost-reduction through the realisation of economies of scale with its own fleet of assets.

While the Malta-incorporated SOL is an investment holding company and does not have an estimated carrying value of Ezion's 50% equity, SEL is incorporated in the Bahamas and its remaining 50% equity interest has an approximate carrying value of $5.2 million as at Dec 31, and is principally engaged in rig owning and chartering.

Both companies are JVs between Scott and English Energy (S&E), a wholly-owned subsidiary of Swissco Holdings, as well as Ezion Holding's subsidiary, Ezion Investments (EIPL).

Ezion explains that as SOL and SEL were not able to meet their obligations partially due to the "financial situation" faced by EIPL's joint venture partner S&E, the JV companies have not been able to operate effectively and therefore its purchase was necessary to ensure their continued operations and engagement with their existing customers.

The transactions will be funded through bank loans and international resources of Ezion, says the group, and are expected to have an impact on the company's financial statement in FY17.

Assuming that the acquisitions had been effected on Dec 31, Ezion's net asset value (NAV) per share would increase from 63.43 cents to 63.60 cents. Should they have been effected from Jan 1, 2016, Ezion's basic loss per share for the year ended Dec 31 would narrow from 2.30 cents to 1.40 cents.Shares of Ezion closed flat at 33 cents on Monday.

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Monday, 27 March 2017

Stock Market Today:Singapore telco sector's likely return to 3-player oligopoly viewed as favourable

UOB Kay Hian is reiterating its "buy" call on Singtel with a target price of $4.53, while keeping its overweight view on telecommunications sector after assessing the impact of increased competition with the entry of the fourth mobile operator, TPG Telecom.

In a Monday report, analyst Jonathan Koh says although TPG will bring about an increase in competitive intensity within the mobile space, this risk is offset by potential consolidation of Singapore's mobile industry within the next 3-5 years.

Although the industry is unlikely to consolidate in the near-term, Koh nevertheless sees prospects of a return to a three-player oligopoly as favourable.

The research house has, however, kept its "hold" recommendation on StarHub with a target price of $2.50, noting that the telco's share price has bottomed.

Competition will intensify with TPG Telecom entering the mobile market as the 4th mobile operator in 2018. The dire outlook has forced StarHub into exploring network sharing as a means to reduce capex and opex, says Koh.

Conversely, the analyst believes the overall impact on Singtel is likely to be marginal as its mobile business in Singapore accounted for only 7% of revenue, considering its proportionate share of revenue from tis regional mobile associates.

He also notes how shareholders of Singtel will be able to receive up to 17.5 cents per share in the form of a special dividend resulting from the initial public offering (IPO) proceeds of NetLink Trust, which it is to reduce its stake in to below 25% by April 18.

Highlighting TPG's recent set of good 1H17 results with all business units registering growth, the analyst observes that the new mobile entrant's recruitment and network planning activities are "progressing well", having already set up its local office as well as hired network engineers and project managers to oversee the rollout of its mobile network in Singapore.

As at 12.16pm, shares of Singtel, StarHub and M1 are trading at $3.89, $2.88 and $2.16 respectively.

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Friday, 24 March 2017

Stock Market Today:Who would buy the smallest of Singapore's 3 telcos

When news broke a week ago that M1's top three shareholders were conducting a strategic review of their respective stakes in the mobile network operator To many market watcher, this means Malaysia's Axiata Group, Keppel Telecommunications & Transportation and Singapore Press Holdings, which collectively hold more than 61% of M1, were shopping their stakes to potential buyers.

The big question is Who would buy a control ling interest in the smallest of Singapore's three telecoms operators when a fourth player is just about to enter the market?

On the face of it, the two other incumbents and the new entrant itself are likely to be the only parties interested in M1 at this point.

But that would be assuming that nothing more can be done to expand the local telecoms market. In fact, if M1 were to be acquired by Singapore Telecommunications (Singtel), StarHub or new entrant, TPG Telecom, it would leave the Infocomm Media Development Authority with egg on its face.

M1's financial performance remains uninspiring, though. And, many analysts expect things to get worse when TPG Telecom launches its services in April 2018.

So, who would buy M1 now?To find out, read the full story in this week's issue of The Edge Singapore (Issue 772, week of March 27), available at newsstands today.

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Thursday, 23 March 2017

Stock Market Today:Here's why CityDev is still RHB's preferred pick

SINGAPORE RHB is keeping City Developments (CDL) at buy with a higher target price of $11.30, from $10.50 previously, despite the property developer's share price having already climbed 23.6% year-to-date.

Despite a share price outperformance, CDL remains our preferred pick for its asset monetisation ability, nimble capital management and acquisition potential," says RHB analyst Vijay Natarajan in a Thursday report.

In addition, CDL's residential projects in Singapore have seen a pick-up in sales momentum following a policy relaxation in the city-state.The government earlier this month announced minor tweaks to the property cooling measures by way of a reduction of Seller's Stamp Duties (SSD) and changes to the Total Debt Servicing Ratio (TDSR).

Singapore also aligned the stamp duties for transactions by residential property-holding entities (PHEs).Significant owners of PHEs will now be subject to the usual stamp duties when they transfer equity interest in such entities, similar to if they were to buy or sell the properties directly.

According to Natarajan, CDL saw a healthy take-up of residential units across its Singapore projects over the weekend, with the majority of the 20 units sold coming from its mass to mid-range projects.

This is in line with our view that residential volumes are to see a near-term pick-up as more marginal buyers enter the market, says Natarajan.CDL is expected to launch two more projects - New Futura and South Beach Residences - in the second half of this year.

In addition, CDL could have more room for acquisitions ahead due to its strong balance sheet.According to Natarajan, CDL's net gearing has improved to 16% as at FY16, compared to 26% a year ago. Assuming a comfortable gearing level of 50%, this would give CDL debt headroom of over $3 billion.

In 2017, CDL has so far deployed a total of $304 million for the acquisition of a 24% equity stake in China's co-working space operator Distrii, a UK residential site, and a commercial project in Shanghai, says Natarajan.

We expect management to continue this acquisition spree (likely in Singapore, Japan and UK markets), capitalising on current market opportunities, he adds.As at 12.07pm, shares of CDL are trading 4 cents lower at $10.19.

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Genting Sing

Wednesday, 22 March 2017

Stock Market Today:Billionaire developer rides Vietnam gambling trend with casino

FLC Group Joint-stock Co., co-founded by billionaire Trinh Van Quyet, has joined a growing number of foreign and local investors betting on cashing in on Vietnam's decision to allow locals to roll the dice in casinos for the first time.

FLC Faros Van Don, a unit of FLC Group, received permission from the northern provincial government of Quang Ninh to invest about US$2 billion ($2.8 billion) in a casino resort, the company said in an email statement. The project will include a five-star hotel, convention center and golf course in the Van Don Special Economic Zone on the islands of Ngoc Vung and Van Canh. 

The company hopes its complex on a total of 4,000 hectares will tap tourists and possibly domestic gamblers.FLC's shares surged as much as 5.1% during Tuesday's trading after news of the casino project was released.

Vietnam's communist leaders, who are grappling with growing budget deficits, are hatching gambling initiatives to retain millions of dollars in the country that middle-class and wealthy Vietnamese otherwise spend in casinos abroad. Prime Minister Nguyen Xuan Phuc has issued two decrees this year to raise Vietnam's game in the regional competition for gambling revenue. A pilot plan to take effect this month will allow Vietnamese to gamble in the country's casinos for the first time.

Another will allow bets nationwide on horse and dog races, as well as international soccer matches. This follows what officials call an "American-style" lottery started last year by the finance ministry in partnership with Malaysia's Berjaya Corp Bhd.

Overseas gaming companies have long eyed Vietnam for expansion. Las Vegas Sands Corp. has for years considered a resort in Ho Chi Minh City and Hanoi according to George Tanasijevich, the company's managing director for global development. Hong Kong's Chow Tai Fook Enterprises and VinaCapital Investment Management are investing in a US$4 billion project in the prime minister's home province of Quang Nam along the central coast. In January, former hedge-fund manager Phil Falcone, the largest investor in the Grand Ho Tram Strip casino resort a two-hour drive from Ho Chi Minh City, met with the prime minister in Hanoi.

Vietnamese going abroad to such gambling locales as Macau, Singapore -- and just across the border in Cambodia spend an estimated US$800 million on gambling every year, according to Augustine Ha Ton Vinh, an adviser to the Van Don Special Economic Zone where a casino funded by local investor Sun Group is planned about 175 kilometers (110 miles) northeast of Hanoi.

Shares of FLC have rallied 54% this year, heading for the biggest yearly advance since 2012. Co-founder Quyet said late last year that the company is in talks with a consortium of investors for its first overseas bond sale, which may raise as much as US$200 million to fund projects.
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Ascott Reit

Tuesday, 21 March 2017

Stock Market Today:EMAS Offshore faces uncertainty as ongoing concern on Ezra's US Chapter 11 filing

Singapore EMAS Offshore says it will be negatively impacted by the United States' Chapter 11 filing by the company's ultimate holding company Ezra Holdings to facilitate the restructuring of the group.

EMAS Offshore is therefore currently seeking advice on the US bankruptcy filing, as well as assessing the impact of such filing on the group and on the group's ongoing initiatives to refinance its financial obligations and liabilities and the procurement of additional working capital facilities.

Ezra owns 75.25% of EMAS Offshore as well as 60.91% of Triyards Holdings. The contagion effects from Ezra's bankruptcy could also have negative implications for other financially weak offshore marine & engineering players such as Ezion, Nam Cheong, Pacific Radiance as well as Ausgroup, according to Lim & Tan in its Tuesday daily review note.

In a Monday filing, EMAS Offshore says Ezra's Chapter 11 filing constitutes events of default under the relevant facilities, bank facilities and charterparty agreements. In addition, the moratorium afforded under the filing does not stay claims against the group in relation to the facilities and agreements guaranteed or secured by Ezra.

However, the group is not aware of any demand made by financial institutions in relation to any of the bank facilities as a result of the Ezra Chapter 11 filing, added EMAS Offshore.

As at Nov 30 2016, the group had an aggregate amount of US$170 million ($238 million) owing to Ezra, of which US$125 million was subject to a deferred payment over a period of three years. In addition, the group has an aggregate of US$566 million of loans owing to financial institutions of which an aggregate of US$242 million of loans are guaranteed or secured by securities provided by Ezra and an aggregate of US$193 million of loans are jointly guaranteed or secured by securities provided by Ezra and the group.

The group also has substantial charter hire liabilities valued at US$231 million as at Nov 30 2016, relating to charterparty agreements entered into by the group of which an aggregate of US$119 million are guaranteed solely by Ezra and an aggregate of US$58 million are jointly guaranteed by Ezra and the group.EMAS Offshore says the group will work closely with its principal bankers to review all options to continue its ongoing initiatives.

But as previously disclosed by EMAS Offshore in its unaudited financial information for the first quarter of financial year ended Nov 30 2016 and the announcement made on March 2, in the event that these efforts do not achieve a favourable and timely outcome, the group will be faced with a going concern issue.Shares of EMAS Offshore last traded at 5 cents before they were suspended for trading.

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GSS Energy

Monday, 20 March 2017

Stock Market Today:Rex International subsidiary commences drilling of new exploration well in Oman

Oil company Rex International Holdings says Masirah Oil, its indirect wholly-owned subsidiary, has commenced the drilling of exploration well Karamah 1 in Oman's Block 50.

Referring to a press release issued last Friday by Masirah, Rex International recalls that the prospect, Karamah, is targeted for a depth of about 3 km, and is located on a structural closure approximately 13 km away from the earlier GAS-1 discovery well at a water depth of 23 metres.

The well objective is to explore multiple target horizons of the Early Tertiary and Late Cretaceous formations. Its location was selected by integrating mainly the geological understanding and the proprietary multi-attribute Rex Virtual Drilling technology.

The group adds that the well is being drilled using the independent leg cantilever jack-up drilling rig Aban VII, which was also used in Masirah's earlier drilling campaigns.

Rex International has stakes in exploration assets in the Oman, Norway, the US and Trinidad & Tobago covering an aggregate area of over 19,000 sq km in total.

This includes the group's 85.15% interest in Masirah - where Schroder & Co Banque S.A., Lime Petroleum and Petroci Holdings own a 5%, 1.45% and 8.39% stake respectively.Shares of Rex International closed 1.5% lower at 7 cents on Friday.

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Ascott Reit

Friday, 17 March 2017

Stock Market Today:USP seeking advice on EGM requisition letter advised to obtain documentary evidence of shareholders stake

USP Group says it is still seeking legal advice on the validity of an extraordinary general meeting (EGM) request made by substantial minority shareholders Joshua Huang Thien En and Teng Choon Fong, from over a month ago.

In a Thursday evening filing to the SGX, USP says it has also been advised to obtain "documentary evidence" of their shareholding in the company from the two parties concerned.

To recap, Huang and Teng, who collectively own more than 11% of the company, last month via a Feb 10 letter called for an EGM to oust USP's chairman Li Hua and executive director Raphael Tham.

The pair has accused USP's board of not acting soundly in relation to the company's investment in loss-making contract manufacturer Huan Hsin Holdings as well as privately held company SG Support Services.

Additionally, they questioned the divestment of two Chinese subsidiaries at less than their book value and queried the independence of one of USP's two independent directors.

USP had previously acknowledged the receipt of the requisition letter in a Feb 13 filing to the SGX, and said it was verifying the shareholdings of the two men, while also seeking legal advice on the validity of the request.

The counter last traded at 18 cents on March 14.

This week in print, we detail how Huang and Teng were preparing to organise the EGM themselves after having received no response from the company. As of late, lawyers for Huang and Teng sent a letter dated March 15 which presented several questions, including on USP's provisional appointment of auditors, as well as the possible relations between a director at USP and Chairman Li.

For more background on Huang and Teng's dissent against USP, pick up the latest copy of The Edge Singapore (Issue 771, week of March 20), available at newsstands today.

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Ascott Reit

Thursday, 16 March 2017

Stock Market Today:SPH REIT upgraded to buy on potential mall acquisition

DBS Group Research has upgraded SPH REIT to buy, from hold previously, and raised its target price by 3% to $1.03.In a report on Thursday, DBS lead analyst Derek Tan says it is "very likely" that SPH REIT could acquire The Seletar Mall from its sponsor "in the next 12 months."

While the timing and price of the potential acquisition are uncertain, Tan says the transaction is likely to be at a price "marginally higher than the current appraised value of $495 million."

We believe that it is an opportune time for SPH REIT to consider acquiring The Seletar Mall from its Sponsor, most ideally within the next six months prior to the asset undergoing its first renewal cycle at the end of 2017, says Tan.We believe there is room for rental uplift, and hence SPH REIT can benefit from this if it acquires The Seletar Mall before the renewal period, he adds.

Assuming an optimal funding scenario which involves partial equity funding of $200 million and debt financing of $300 million, Tan estimates a 3-4% rise in SPH REIT's distribution per unit (DPU).

Post the acquisition, gearing will be increased to 31%, from 26% currently. However, Tan says this is still conservative compared to peers' average of 34%.

SPH REIT in 1Q posted a 0.8% increase in DPU to 1.34 cents on the back of positive rental reversions from both of its mall properties.Income available for distribution to unitholders in the quarter ended Nov 30 increased 3% to $36.4 million, compared to $35.3 million a year ago.

Most importantly, we see improved liquidity in the stock, which will be positive for stock prices," Tan says, adding that upside from this potential acquisition is not yet priced in.

In addition, Tan believes SPH REIT will enjoy higher diversity and resilience as The Seletar Mall, located in the west of the Sengkang subzone in the north-east region of Singapore, will allow it to derive a higher proportion of its income from necessity shopping.

There are no large or mega malls in the Sengkang subzone, Tan notes. With Seletar Mall, we are positive that SPH REIT's portfolio will see stronger performance in the medium term.As at 12.25pm, units of SPH REIT are trading 1 cent higher at 97.5 cents.

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Wednesday, 15 March 2017

Stock Market Today:Cathay Pacific seen reporting worst results in 8 years on rivals

SINGAPORE In the three years Ivan Chu has been the chief executive officer at Cathay Pacific Airways Ltd., he has seen the marquee carrier's stock become Asia's worst performer on the Bloomberg World Airlines Index. He may have little to reassure investors at the company's earnings conference Wednesday.

Asia's biggest international airline is set to post its worst full-year performance for 2016 since a loss eight years ago as Chinese carriers and rising costs erode earnings. The median forecast in a Bloomberg News survey of nine analysts is for a profit of HK$450 million ($82 million). The Hong Kong-based company is scheduled to report the results around noon.

Chu, appointed in March 2014, is executing a business revamp to stem the slide as shrinking business travel, pressure from budget operators and more direct routes offered by mainland carriers weigh on Cathay's yields -- the money earned from flying a passenger for one kilometer and a key measure of profitability.

Among the analysts tracked by Bloomberg, not a single one recommends buying the shares. Since Cathay gave little specifics of the review in January, investors will be seeking more information on the plan, including any possible management reshuffle at the airline, whose last two CEOs held the role for about three years each. Changes will start at the top" and the carrier will eliminate some positions as part of the revamp, with key changes taking effect by mid-year, Cathay said in January.

In the survey, four projected losses ranging between HK$377 million and HK$1.5 billion, while profit estimates spanned HK$450 million to HK$1.49 billion. The disparity in the figures reflects differing estimates of charges due to fuel-hedging losses.

I don't see 2017 being a whole lot better for Cathay," said Mohshin Aziz, an analyst at Maybank Investment Bank Bhd. in Kuala Lumpur. "Cathay is becoming collateral damage of the Chinese airlines' expansion." A representative for Cathay didn't respond to an email seeking comments.

Maybank, which downgraded Cathay's stock to sell from hold last week, is among 15 brokerages tracked by Bloomberg that recommend selling the shares, with the rest advising a hold. Shares have declined 16% in the past year in Hong Kong, compared with a 17% gain in the benchmark Hang Seng Index.

Yields have also been hit as the carrier widened its discounts to premium offerings.Cathay scrapped its second-half outlook in October following an 82% plunge in first-half profit.

Chinese carriers, including Hainan Airlines Co. and China Eastern Airlines Corp., have added non-stop flights to the US and Europe in the past year, challenging the prominence of Cathay's Hong Kong base as a transit center.

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Tuesday, 14 March 2017

Stock Market Today:IREIT Global subsidiaries granted extension for bank loan facility of over $35.6 mil

The manager of iREIT Global has announced that four of its indirectly wholly-owned subsidiaries - namely Laughing Rock 11 B.V., Laughing Rock 12 B.V., Laughing Rock 13 B.V. and Laughing Rock 14 B.V. have together been granted an extension of a bank loan facility amounting to over 23.6 million euros ($35.6 million).

The lender is HSH Nordbank AG, a commercial bank in northern Europe with headquarters in Hamburg as well as Kiel, Germany.

In a Monday filing to the SGX, iREIT Global says the term loan facility agreement, which was entered into by the borrowers and lender on Jul 24, 2015, comprises two facilities of 78.4 million euros and 23.6 million euros, which are maturing in August 2020 and August 2017 respectively.

An agreement was signed between the two parties on Monday to amend these terms, extending the maturity date of the latter facility to July 2018.

As part of the extension, the Laughing Rock group of borrowers will make partial loan repayments in four quarterly instalments of 1.3 million euros each beginning from August 2017, which will be funded internally through existing cash balance and future operating cash flows.

The extension brings iREIT Global's weighted average debt maturity from 2.8 years to 2.9 years, assuming the extension had been effected on Dec 31. Units of iREIT Global closed 1 cent higher at 73 cents on Monday.

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Friday, 10 March 2017

Stock Market Today:Ex-DBS trader pleads guilty to spoofing Singapore market

A former trader at DBS Group Holdings' brokerage unit on Friday was convicted by a Singapore court for spoofing the securities market in the first case brought jointly by the country's regulator and white-collar crime police.

Dennis Tey Thean Yang, 33, pleaded guilty to eight of the 23 charges he faced related to his attempt to artificially move prices through fraudulent securities orders.

A broker at DBS Vickers Securities when the offenses were committed in late 2012 and 2013, Tey was also charged with misusing other people's trading accounts without consent.

Tey's case is the first pursued jointly by the Monetary Authority of Singapore and the police's Commercial Affairs Department since they banded together in March 2015 to probe market misconduct as part of Singapore's efforts to step up policing of its financial industry.

Singapore Exchange last month said it would focus on cases that threaten market integrity.

According to court papers, Tey sought to manipulate prices by placing orders for contracts for differences in the underlying securities of a number of companies and then deleting the fraudulent orders after his trades.

The fraudulent trades, which involved underlying securities in companies such as GuocoLand and Asia Power Corp., had little or no market impact and Tey's orders were ultimately not filled, his lawyer Adrian Wee said.

The trading strategy was formulated through observation as well as trial and error and Tey stopped trading when he realised they might be unlawful, the lawyer added.

Tey, a Malaysian national, left DBS Vickers in March 2014 and was arrested in May 2015. He was charged in July last year. DBS could be not be reached for comment.

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Thursday, 9 March 2017

Stock Market Today:Rare earth dealmaker Rigoll quits ISR starts unloading shares

Singapore ISR Capital, under stress for links to penny stock saga mastermind John Soh Chee Wen, has lurched into yet another wave of troubles. In a filing on Wednesday night, ISR announced that David Rigoll, the company's largest shareholder, has resigned as an executive director with effect from Monday. He has also started dumping shares in the company.

Rigoll is accusing ISR of not paying him his salary for February this year. He is also planning not to honour a moratorium to sell or transfer his shares, said ISR.

Rigoll, 54, also accused ISR's board for failing to "act in accordance" to its duties. Specifically, he questioned the appropriateness of the appointment of ISR's previous legal adviser, whose appointment puts it in a conflict of interest. ISR did not say who the legal adviser is.

The Board has requested for Mr Rigoll to provide evidence to support his allegations. The Board has to-date, not received any such evidence to support Mr Rigoll's allegations, which the Board considers baseless, the company said.

For the avoidance of doubt, the Board and the Company deny all allegations made by Mr Rigoll and will be seeking legal advice if required, it added. In addition, Rigoll has alerted ISR he will withdraw a voluntary undertaking to not sell or transfer ISR shares held by him before November 2017.

ISR drew attention to itself last June by trying to acquire a stake in a rare earth concession in Madagascar for $40 million from an entity called REO Magnetic. The same concession was bought by REO Magnetic for just one-seventh this price just six months earlier from a company listed in Dusseldorf. Up until June 3, Rigoll was a director of that German company, Tantalus Rare Earths AG.

Trading of ISR shares resumed only this Monday following a suspension by SGX that began on Nov 27 last year. In a separate filing, ISR said Rigoll has sold nearly 21.3 million shares at an average of 4.7049 cents per share, with a total value of $ 1,000,859.

Rigoll first bought into ISR last year, paying Value Capital Asset Management (VCAM) 0.5 cent a share for VCAM's stake in ISR. VCAM has an on-going $35 million convertible bond programme with ISR and the shares Rigoll bought from VCAM came from a tranche of bonds which were converted by VCAM into new ISR shares.

According to ISR filings, even after Monday's sale, Rigoll is still the largest shareholder by far, with 407,840,300 shares, or 26.07% stake -- down from 27.43% before the sale.

ISR's board now sees Rigoll's sale of shares on Monday as a breach of agreement and will be seeking legal advice. When ISR shares resumed trading on Monday, it dropped by 80% from the pre-suspension price of 12.7 cents. On Wednesday, the shares closed 25% lower at 3 cents.

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Wednesday, 8 March 2017

Stock Market Today:Noble Group up for sale?

Singapore If you believe the bond documents, Noble Group Ltd really is for sale. The Singapore-listed commodities trader raised US$750mil selling dollar notes Monday that mature in five years.

A clause provides for immediate repayment if the company is acquired. But that would only be triggered if Noble were rated investment grade at the time.If the notes are rated investment grade by one or more rating agencies and a change of control triggering event occurs the issuer shall, at the option of the holder of any note, redeem such note on the change of control redemption date at its change of control redemption amount together with interest accrued to the date of redemption.

This condition shall not apply if the notes are not rated investment grade by one or more rating agencies. You may not understand all the legal jargon, but you don’t have to. Noble’s new securities are expected to be rated BB+ by Fitch and B2 by Moody’s Investors Service, one and two notches below investment grade respectively. So there’s effectively zero change of control protection for investors.

The language in Noble’s latest bond-sale document is similar to its previous ones, so it may be that the lawyers just forgot to update that clause. That’s unlikely, however.

What then motivated that particular wording? The company’s current financial situation means it would take a lot of work for it to recover its investment-grade status, and management has hinted this isn’t a huge priority, even exiting some businesses that required a high credit score to optimally operate.

Perhaps Noble wanted the money without burdening any potential suitor with extra debt. A more tightly written change of control clause would have effectively added US$750mil to the cash required upfront.

Given the recent rumblings about a potential strategic investor buying a large chunk of Noble, that sounds a more plausible explanation. If a suitor has a higher credit rating than Noble, investors wouldn’t care about such a technicality, since they probably wouldn’t want to redeem their bonds early anyway.

If, however, it happens the buyer is in worse shape than Noble – an unlikely but not impossible outcome – that tiny clause could turn into something quite painful.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Tuesday, 7 March 2017

Stock Market Today:Give SingPost time as it invests for the future, says OCBC

 OCBC Investment is maintaining its "hold" call on Singapore Post (SingPost) with a lower fair value of $1.39 from $1.42 previously, while noting a lack of catalysts for re-rating on the stock.

This comes after the group's Monday evening announcement of the resignation of its CEO (SP Commerce) Marcelo Wesseler - whom it says will be assisting the company to "ensure a transition of duties" during his period of notice until Jun 5.

Meanwhile, Paul Demirdjian, who is currently president and CEO of SingPost's US subsidiary Jagged Peak, has been appointed as interim CEO, US Business, with immediate effect to oversee the group's businesses in the US.

"SingPost is investing for the future, and time is required for the efforts to bear fruit. After correcting post its 3QFY17 results, the stock has been trading within a range of $1.37 and $1.40, likely due to lack of catalysts," comments lead analyst Low Pei Han in a Tuesday report.

She also notes that the group has been increasing its foothold in Indonesia, with its 66%-owned joint venture subsidiary Quantum Solutions International (QSI) having recently purchased shares in PT Rantai Bumi Laut (RBL) to acquire about 18% of PT Quantium Solutions Logistics Indonesia's (QSLI's) shares for about $0.8 million.

Upon completion of the share purchase agreement, QSI's interest in QSLI, which is in the business of ecommerce logistics fulfillment in Indonesia, will be 67%.

Recall that QSI set up QSLI with RBL in Jan 2014 with an initial paid-up capital of about $375k, of which 49% was subscribed by QSI. According to a study by Google and Temasek last year, 18 million people in Indonesia fell into the category of online buyers, representing about 7% of the population. By 2025, it is expected that Indonesia will dominate 52% of all ecommerce activity in SE Asia, due to its huge population island geography," says Low.

Meanwhile, the market will likely look forward to 1 Jun 2017, which is when the new CEO joins the group," she adds.As at 9.57am, shares of SingPost are down by 1 cent at $1.36.   

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Monday, 6 March 2017

Stock Market Today:Expect a pay increase of 5% at most for managers in Singapore

Singaporean managers and senior staff can prepare for 5% pay increases at most this year as the labour market stabilises.

About 93% of companies in Singapore say they will keep or raise headcount this year, according to a survey by recruitment consultancy Michael Page of almost 450 businesses in the city state. Only 36% said they will recruit new hires. Singapore's unemployment rate recently hit a six-year high of 2.2%, though the country still remains one of the easiest places in the world to find work.

Across Asia, 48% of the 3,400 companies in the survey said they plan to increase wages by 5% or less, compared with 58% of Singapore-based firms.

While employers have agreed that salaries are an important retention tool, other popular employee engagement initiatives include opportunities for career progression and learning and development, the consultancy said in a report. The hot jobs in Singapore are in the digital, technology and healthcare industries, which is where Singapore's government is pledging more investment.

In the less buoyant financial services sector, financial technology jobs should be helped by a funding plan in place to support locally-based firms, according to Michael Page. The gig economy is also becoming a bigger feature in Singapore's economy: 68% of all companies surveyed are using contractors, especially in technology and business support industries.

More companies are adopting strategies such as annual leave, medical benefits and completion bonuses to attract more professional contract workers as well, added the consultancy.

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Friday, 3 March 2017

Stock Market Today:Sudden inflation hike puts Southeast Asian central banks on edge

After more than a year of disinflation, price pressures are quickly mounting across Southeast Asia as fuel costs rise, putting central banks on watch after years of policy easing. In Malaysia, consumer prices rose at the fastest pace in almost a year in January and economists see that as closing the door on another interest-rate cut this year even though the economy could do with more stimulus. From Singapore to Thailand, central banks are bracing for faster inflation.

The recent spike has been mainly caused by oil prices, which have surged 25% in the past six months. In a region where countries like Indonesia have been prone to high inflation in the past, and currencies are vulnerable - notably in Malaysia - central banks will need to monitor closely for any signs that rising fuel costs are spreading more broadly to prices in the economy.

The obvious risk is that complacency leads central banks to miss inflation pressure spreading to the spending-driven CPI components, forcing more aggressive rate hikes and greater growth slowdowns down the road, said Timothy Condon, head of Asian research at ING Group in Singapore.

The pick-up in inflation isn't unique to Southeast Asia as higher commodity prices drive up costs across Asia. China's factory prices have snapped years of deflation, with some analysts saying this is the hidden side of the global reflation trade. For now, core measures of inflation in Southeast Asia - which exclude volatile items such as energy and food costs - remain contained, taking the pressure off central banks to take immediate action to tighten policy.

In Malaysia, where inflation reached 3.2% in January, the core measure was at 2.3%. The government's projection is for headline inflation to average 2% to 3% this year. We've had a big swing from really depressed numbers," said Sean Callow, a senior strategist at Westpac Banking in Sydney. "Until there's evidence that core inflation is on the rise and wages up with it, I don't think we're going to have any inflation dynamic going on in the region."

Malaysia's central bank kept its benchmark interest rate unchanged at 3% on Thursday, in line with the forecasts of all but one of the 17 economists surveyed by Bloomberg. Bank Negara Malaysia said headline inflation will remain "relatively high" in the first half of the year and then moderate, while core inflation is expected to "increase modestly." The outlook for inflation is dependent on global oil prices, which remain uncertain, it said.

Inflation will probably accelerate to 4% in February, and average 3.5% this year, up from a previous forecast of 2.5%, according to Mohamed Faiz Nagutha, an economist with Merrill Lynch Asia Pacific in Hong Kong. After surprising the market with an interest-rate cut in July last year, Mohamed Faiz is predicting the central bank will be on hold for the rest of the year. We do not expect BNM to react to these spikes in headline CPI and rather focus on measures of core inflation," he said.

Malaysia's ringgit was little changed at 4.45/$US as of 5pm in Kuala Lumpur yesterday, taking its decline in the past month to 0.6%.The Philippines, which had the fastest economic expansion in Southeast Asia last year, may be the first country in the region to tighten monetary policy this year, according to economists surveyed by Bloomberg. Inflation is running at the fastest pace in two years and the currency is the worst performer in Asia this year, down 1.1% against the dollar. The Philippines has been seeing strong growth, so greater scope for inflation pass-through," said Khoon Goh, the Singapore-based head of Asia research at Australia & New Zealand Banking Group.

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Wednesday, 1 March 2017

Stock Market Today:Centurion's FY16 earnings fall 16% decline on investment properties fair value loss

Centurion Corp reported $28.7 million in earnings for the full year ended Dec 31, a 16% decline from its earnings of $34.1 million posted in the previous financial year. Centurion, the owner and operator of dorms for students and workers, said the full-year earnings decline stemmed from a fair valuation loss of $3.1 million compared to a fair valuation gain of $3.6 million of the group's investment properties as at end Dec 2016.

Group revenue grew 15% to $120.3 million in FY16 from $104.5 million in FY15, mainly from Centurion's accommodation business segment due to the occupancy growth from its newer workers accommodation assets such as Westlite Woodlands, and additional revenue contributions from its newly opened Aspri-Westlite Papan.

There was also higher revenue contributions from student accommodation assets including Dwell Selegie in Singapore, in addition to four newly-acquired student accommodation assets in UK, UK Braemar, in FY16.

The higher revenue from accommodation was however partially offset by Centurion's optical disc business, which experienced a decrease in revenue of 57% due to a continued weakening demand for physical optical disc media, and in addition to the cessation of its Indonesian unit.

Finance costs for the year increased by $5.4 million, mainly as a result of the additional interest costs for financing the expanded accommodation businesses such as ASPRI-Westlite Papan and Westlite Woodlands. These increase in costs were, however, offset by the interest cost saved from the redemption of the $100 million medium-term notes (MTN).

Centurion has recommended a final dividend of 1 cent per share. Shares of Centurion closed 1.2% lower at 42 cents on Tuesday.

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