Singapore Daily Bulletin – 03/12/12

Bank Lending Up 17.9% On Consumer And Business Demand
Bank loans growth may have hit bottom in September as preliminary figures released by the Monetary Authority of Singapore (MAS) indicated that bank loans growth picked up in October to 17.9 percent. This came after 10 months of slowing year-on-year growth. The quicker pace of loan expansion than September’s 16.5 percent growth was driven by lending to both business and consumer. Loans to businesses grew 19.1 percent year-on-year, faster than September’s 17.5 percent. On a month-on-month basis, business loans rose 1.3 percent to $278.1 billion, picking up from 0.3 percent growth in September. Underpinning the growth were loans to the building and construction sector, financial institutions, the agriculture, mining and quarrying sector, manufacturing and business services segments. On the other hand, lending to the general commerce sector as well as transport, storage and communication firms shrank. Meanwhile, consumer loans growth accelerated to 16.3 percent year-on-year from September’s 15.1 percent, thanks largely to housing and bridging loan growth. On a month-on-month basis, consumer loans grew 1.8 percent over October to hit $201.4 billion, after expanding 1.4 percent over the month of September.

Significance: Despite the growth in lending, the MAS noted that “if economic conditions worsen or interest rates rise from current low levels, bank loan quality could deteriorate substantially, and show up with a lag in the form of increased non-performing loan amounts and NPL ratios”.

Religare Continues To Climb Following Upbeat Calls
Religare Health Trust opened $0.835 today, $0.005 higher than 30 November’s close of $0.83, extending its rally from last week’s 4.4 percent gain. Since listing on 19 October with an initial public offering price of $0.90, the units had remained underwater as overall weak market sentiment, investors’ unfamiliarity with the Indian healthcare market, and foreign exchange risks kept investors at bay. However, that changed last week as analysts initiated coverage on the business trust with “Outperform” and “Buy” ratings. With target prices ranging from $0.95 to $0.97, reasons such as Religare’s exposure to a fast-growing Indian healthcare market and strong growth potential were cited. According to market research firm Frost and Sullivan, the Indian healthcare market is estimated to grow at a compound annual growth rate of 15 percent from 2010 to 2015 to US$119.6 billion, driven by rising and ageing population, changing disease profile and growing affluence in the world’s second-most populous country. The backing by parent company Fortis Healthcare, India’s number two hospital operator by market share, also boosts the analysts’ confidence in the stock.

Significance: DBS Vickers deemed the trust is trading around an attractive 10 percent yield, compared to its peers trading at yields of 6.8 to 8.4 percent on the market. However, uncertainties such as regulations in India, given that Religare’s assets are concentrated there, as well as the volatility of the Indian rupee against the Singapore dollar should be noted as well.

Hanwell’s Stakeholders Gives Green Light For Sale Of Intraco Stake To TH Investments
Shareholders of Hanwell Holdings voted in favour of the proposed sale of its 29.9 percent stake in listed trading firm Intraco to TH Investments for $19.17 million, or $0.65 per share. At its extraordinary general meeting held on 30 November, a vote conducted by poll received 99.99 percent support for the stake disposal. TH Investments is the investment vehicle controlled by the family that runs crane equipment company Tat Hong Holdings. The transaction was inked following the lapse of another offer from businessman Oei Hong Leong who offered $0.63 per share, trumping TH Investments’ initial offer of $0.62 per share. Oei’s offer lapsed on 28 August after Hanwell was unable to resolve certain conditions. Oei said Hanwell did not approach him again.

Significance: With the disposal price per share higher than the original purchase price per share, Hanwell is of the view that the sale will enable the company to realise its investment in Intraco and to unlock the value thereof for its shareholders.