STATS ChipPAC Hopes To Resume Thai Plant’s Operations In First Quarter
STATS ChipPAC is hopeful that operations at its flooded Thai plant would resume partially in the first quarter next year. Operations at the plant have ceased since 17 October and productions were channelled to other units to avoid disruption to customers. The company noted that suspension of the plant is likely to stay till January 2012, adding that water levels have receded and it is able to start assessing damages, evaluating recoverability of assets and planning restoration. It has further activated a global support and recovery management team as well as hired equipment restoration specialists to hasten the plant’s restoration.
Significance: The suspension of the Thai plant is estimated to pulled down STATS ChipPAC’s fourth quarter revenue by about 7% compared to the previous quarter. Adjusted EBITDA (earning before interest, tax, depreciation and amortisation) for the quarter will likely come in 20-25% of revenue and capital expenditure is estimated to be between US$50-60 million.
ComfortDelGro’s Fare Hikes To Have Muted Earnings Effect
ComfortDelGro is unlikely to receive a significant boost in earnings following its latest fare hikes. Despite taxi passengers widely expected to pay more overall from the mix of increases and decreases, analysts do not see this translating into an immediate positive in terms of earnings. DBS Group noted that the revision will only affect taxi passengers’ travelling costs and hirers’ income, thus ‘we don’t expect an immediate change to hire-out rates and lease-out rates so we keep our earnings estimates for now.’ Likewise, Kim Eng noted ‘no direct impact on the operator’s profitability’ and did a check with the company’s management which ‘suggests that there is currently no intention to raise its cab rental charges in the near term’.
Significance: Though immediate effects on earnings are deemed to be muted, some analysts reckoned that the new structure would give ComfortDelGro more leeway to adjust cab rentals. DMG & Partners Research worked out that, based on its assumption, its average rental rates could rise by about 2%, which would bring forth a 4% increase in its FY13 profit (after tax and minority interests).
Credit Suisse: Resilient 2012 Outlook For Offshore Industry
Credit Suisse has projected a resilient outlook for the Singapore offshore industry in 2012. In its research report released yesterday, the bank noted that oil prices are likely to stay firm against a ‘backdrop of supply constraints and a weak (although not collapsing) demand environment’. This would see Brent crude averaging US$105 a barrel next year, providing support to the industry’s underlying demand. In particular, it expects rig utilisation rates in the shallow and deepwater segments ‘to improve further in 2012, with particular strength in the ultra-deepwater market’. Such positives are underpinned by the limited supply of ultra-deepwater rigs as well as strong demand from Brazil, West Africa and the United States Gulf of Mexico. The bank’s top sector pick is Keppel Corporation as it has ‘the best order book coverage, with a significant catalyst coming from the potential Petrobras contract and an attractive valuation’.
Significance: Credit Suisse projected 2012 to be a ‘slowing order environment’. Favourable light was also shone on Sembcorp Industries as its shares ‘looks attractive on a risk-reward perspective, as it is trading closest to the 2008-2009 trough valuation levels’. On the cautious side were Sembcorp Marine and STX OSV Holdings, as they will be ‘more impacted from a slowdown in orders’.
Parkson Retail Asia Looks Poised For Further Expansion
Parkson Retail Asia, whose parent is the Kuala Lumpur-based department store operator Parkson Holdings, looks poised for further expansion in South-East Asia as Parkson Holdings sets its eyes on new markets in the region. At present, the parent counts China for close to 70% of its revenue while the remaining balance are collectively contributed by Indonesia, Malaysia and Vietnam. In total, the parents’ portfolio comprises of 102 outlets across Asia – 49 in China, 37 in Malaysia, 8 each in Indonesia and Vietnam – and plans are underway to open 24 more by the end of 2012. Importantly, the parent aims to grow the non-China revenue to mirror those from China in the future.
Significance: The increasing focus on South-East Asia bodes well for Parkson Retail Asia, which manages its parents’ portfolio of malls in the region. The aggressive expansion shows no sign of abating with the first outlet in Cambodia targeted to open in the first half of 2013. Notably, the main draw of the region lies in the growing affluence of its populace, other potential markets on the radar include Myanmar, Thailand and the Philippines.