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Stocks In Focus SG (Yoma, SMRT, Blumont) – 02/10/13
Yoma Signs Business Alliance With Japan’s Mitsubishi Corp; Enters MOU For Landmark Project
Yoma Strategic Holdings announced that it has signed a memorandum of understanding (MOU) with Japan’s largest general trading company, Mitsubishi Corporation (MC) to be each other’s preferred working partners to jointly explore business opportunities in Myanmar. Currently, Yoma already works with MC and Mitsubishi Motors to operate its first after sales service centre in Yangon. Following the agreement, both parties have entered another MOU with MC and Mitsubishi Estate (ME) to invest in the prestigious landmark project (excluding the Peninsula Yangon) in Yangon, Myanmar’s capital. The centrally-located 10-acre development will comprise of residential, office, retail and hospitality property and become an iconic centrepiece, which will become the focal point of Yangon’s downtown business district. Yoma believes that the experience and expertise of MC and ME in developing large scale mixed-use developments worldwide will help achieve the highest global standards for this landmark project.
Significance: The non-exclusive MOU for strategic business alliance will deepen both parties’ existing business relationship and clear the way for potential joint opportunities in future to ride on Myanmar’s economic developments as well as enable the parties to leverage and tap on each other’s expertise and network.
Fine Of $1.1m To Be Issued To SMRT And SBST
SMRT and SBS Transit (SBST) will be fined a total sum of $1.1 million. Breaking down the fines, the Land Transport Authority has said that it intends to impose total financial penalties of $860,000 on SMRT for four separate incidents on the North South and East West Lines, the Circle Line and the Bukit Panjang LRT. On the other hand, a financial penalty of $250,000 will be imposed on SBST for the service disruption on the North East Line. According to the Rapid Transit Systems Act under section 19, a licensed public transport operator can be penalised up to $1 million per incident if the operator fails to comply with the Operating Performance Standards and other regulatory requirements.
Significance: The fine of $860,000 will need to be recognised as a provision on SMRT’s financial statements. This financial pressure is coupled with their huge undertaking of maintenance expenditures, and increased operating costs. It is likely to see SMRT’s margins continue to be strained.
Attention Drawn To Blumont’s Unusual Price Action; SIAS Calls For Speedy Investigation
Investor lobby group Securities Investors Association (Singapore) (SIAS), has called for a speedy investigation into the unusual rise in share price in Blumont Group. This was despite Blumont’s reply to Singapore Exchange’s query that it was not aware of any unannounced reasons that accounted for such trading activity. Blumont has charged to a historical high of $2.45 on 30 September, 2013, and just one year ago, it was trading at around six cents. Blumont’s current market capitalisation stands at $6.3 billion, which is as valuable as Singapore Press Holdings, and three times as valuable as SMRT. Although since the end of last year, Blumont has been expanding into the mineral and energy resources sector, which consists of a string of investments, including a small number of deals under US$10 million, SGX said that the various announcements of acquisitions may not be sufficient to explain the steep increase in the price of Blumont’s shares.
Significance: SIAS emphasised that shareholders need to know the reason behind this move, on whether it is supported by fundamentals as the company is now effectively trading at close to 500 times its earnings over the last 12 months, and about 60 times the value of its net assets.
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