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Stocks In Focus SG (Global Invacom, Olam Int’l, Oxley Hldgs) – 14/11/13
Global Invacom Secures US$16m Repeat Order
Global Invacom Sdn Bhd, a subsidiary of Global Invacom Group (GIG), won a repeat contract, worth approximately US$16 million, from a major Asian Broadcaster. GIG will provide the broadcaster with the infrastructure for its subscribers to receive satellite signals and view High-Definition television. Majority of the revenue from the contract is expected to be recognised in FY14. The first contract, received from the broadcaster in 4Q12, was GIG’s single-largest deal in Asia. The previous contract, also valued at US$16 million, ran from December 2012 to August 2013 and contributed substantially to GIG’s turnover for 1H13. The transaction had been a significant boost to GIG’s Asia Pacific expansion plans.
Significance: As GIG improves the capability and capacity of its Malaysian operations, it will gain an alternative to its manufacturing activities in China and allow GIG to widen its value proposition to support larger orders.
Olam In A$200m Sale And Lease-Back Agreement
Olam International’s subsidiary, Olam Almonds Australia, has entered into an A$200 million agreement with Adveq Almond Trust for approximately 12,000 hectares of almond orchards. The transaction involves the sale and lease-back of almond orchard land and trees along with its related farming and irrigation infrastructure in Victoria, Australia for a period of 18 years. Adveq Almond Trust is owned by a blue-chip consortium led by Adveq Real Assets Harvested Resources, a leading asset manager investing in private equity and real asset funds globally with US$5 billion in assets under management. Olam will continue to own the 89,084 mega litres of Permanent Water Rights and the 40,000 metric tonne almond processing plant which it built and started running in March 2013. The transaction is expected to be completed by 1Q14.
Significance: Upon completion of the transaction, Olam will draw down its invested capital, improve its return on invested capital and is expected to record a one-time capital gain of approximately A$45 million.
Oxley Posts $250.8m Earnings In 1Q14
Driven by revenue recognition, based on the completion of construction method, from its 728-unit industrial development, Oxley Bizhub, Oxley Holdings’ top line ballooned to $686 million for the quarter, up from $50 million in 1Q13. Additionally, revenue recognised, using the percentage of completion method, from Oxley’s 10 mixed-residential projects lifted turnover. Consequently, net profit grew substantially from $6.6 million a year earlier to $250.8 million in 1Q14. Notably, administrative expenses for the quarter increased due to $15.6 million of incentive bonuses handed out. In view of its positive results, Oxley has declared an interim cash dividend of $0.03 per share, equivalent to a dividend payout ratio of approximately 35 percent.
Significance: In view of the property cooling measures softening overall demand in the Singapore residential market, Oxley has adopted a prudent approach towards its local land acquisition strategy for FY14 while awaiting an opportune time to launch its three remaining pipeline residential projects.
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