Singapore Daily Bulletin – 06/12/12

Fixation On Profit Led To SMRT’s Problems
SMRT’s focus on profit is one of the many factors why the transport operator has been facing problems, according to its chief executive officer Desmond Kuek. Barely two months after filling the hot seat vacated by Saw Phaik Hwa whom quit in January 2012 following the massive train breakdowns in December last year, 171 bus drivers from China went on protest over alleged pay and living conditions dispute. Kuek acknowledged that SMRT could have done better in its communication with the drivers and said that the contract terms were fair. He added that in the coming months, SMRT’s corporate culture, structure and processes will be strengthened across “the breadth and depth of the organisation” to enable the company to better meet new challenges and improve service standards. And he believes that the planned restructuring will restore SMRT’s pride and regain public confidence.

Significance: SMRT is likely to be impinged on profitability in the near future as it deals with these deep-seated issues, and concurrently, start its railway network maintenance project.

Simon Cheong Launches $745m Cash Offer For SC Global Development
Simon Cheong, who already owns 55.1 percent stake in SC Global Development, announced that he has made a voluntary unconditional cash offer for all the issued ordinary share of SC Global development at a cash consideration of $1.80 per share. Cheong does not intend to preserve the listing status of SC Global if the free float falls below the minimum threshold of 10 percent. Noticeably, SC Global’s trading liquidity has generally been thin with an average daily trading volume of about 243,282 shares over the 12-month period prior to 30 November 2012, which represents around 0.06 percent of the issued share capital of the firm. In addition, SC Global has not raised any funds from the capital markets for at least the last six years. As such, it is reported that the firm’s public listing status no longer serves a material purpose.

Significance: The offer represents an opportunity for SC Global Development’s shareholders to exit and realise their investment.

Pacific Andes Resources And China Fishery In Talks With Russian Firm
In a joint announcement filed with the Singapore Exchange, China Fishery Group and Pacific Andes Resources Development said that they are in discussions with Russian Sea Catching of the Russian Federation. The involved parties will be exploring various opportunities of possible future cooperation with Russian Sea Catching in the fishery industry of the Russian Federation. The new development came following repetitive media publications reporting allegation by the Federal Antimonopoly Service of Russia that Pacific Andes International Holdings has gained control of Russian fishing assets without approval and in violation of local regulations on control of foreign investment. Furthermore, it has also been reported that the Russian government has offered Pacific Andes International Holdings to consider conducting business in the fishery industry in some other form.

Significance: While China Fishery and Pacific Andes Resources have dismissed the allegation and have taken a step further in seeking collaboration with a Russian firm to boost earnings visibility, the operations of both firms face regulatory risk. According to Fitch Ratings, there may be indications that the fishing industry in Russia may undergo restructuring, increasing the uncertainty for companies operating in that region.