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Singapore Daily Bulletin – 07/01/13

Derivatives Achieve Record Highs, Securities Trading Down For 2012
Singapore Exchange’s (SGX) monthly market statistics report released earlier this morning, indicated that SGX’s derivatives and commodities markets achieved several new record highs in both December and the full year 2012. Volume for derivatives, a segment which generates 25.9 percent of SGX’s FY12 revenue, grew 11 percent year-on-year to reach a new high of 80.2 million contracts in 2012. Meanwhile, volume of agri-commodity futures rose 56 percent in 2012 to 255,815 contracts. Still, turnover and volumes for the equities market continued to disappoint. Although these indicators were up in December due to the low base of a year ago, turnover declined 12 percent in 2012 to $321.5 billion while securities average daily value was 12 percent down at $1.3 billion. Other notable items include volume of iron ore swaps cleared in 2012 which more than doubled to 217,803 contracts, a new record high, and bond listings reaching a three-year high of $183.1 billion, up 49 percent.

Significance: With the SGX deriving 37.7 percent of its revenue from the securities market, the continued quietness may hurt SGX. Turnover for Catalist-listed stocks, though, did provide a bright spot as it more than doubled from $3.5 billion to $7.9 billion in 2012.

Ocean Sky Sells Apparel Business; Plans To Pay Special Dividend
Mainboard-listed Ocean Sky International said in a filing with SGX yesterday that it will dispose of its main apparel business to a subsidiary of Luen Thai Holdings for US$55 million. The transaction will see Ocean Sky sell its subsidiary Ocean Sky Global (OSG) to Luen Thai, an apparel provider listed in Hong Kong. The purchase consideration of US$55 million represents a premium of about 37.5 percent to OSG’s net tangible assets of US$40 million. Upon completion of the disposal, Ocean Sky plans to, subject to market conditions, pay a tax-exempt special dividend of $0.016 per share, amounting to US$5.8 million. The sale will mark the end of a journey into the textile business and the beginning of a foray into another unspecified one for the company.

Significance: According to Ocean Sky, the disposal will unlock the value of the firm’s apparel operations business at a good price, providing the company with resources to expand and invest in new opportunities, which could potentially generate higher returns to its shareholders on a more sustained basis.

CDL Hospitality Acquires Angsana Velavaru Resort For US$71m
In a sale and leaseback agreement with Banyan Tree Holdings, CDL Hospitality Trust is acquiring the Angsana Velavaru resort in the Maldives from Banyan Tree Holdings for US$71 million ($86.8 million). Upon the completion of the acquisition, a lease for the resort will be granted to Banyan Tree Holdings for 10 years. CDL Hospitality Trust will be entitled to receive rent payments equivalent to the resort’s gross operating profit less management fees to be paid to Banyan Tree Holdings. A minimum rent has been set at US$6 million. The upmarket resort will continue to be operated under the Angsana brand name after the acquisition. Comprising 79 beachfront villas and 34 water villas, the property is located in the southern part of the Maldives archipelago. The remaining leasehold period for the property is about 35 years.

Significance: The purchase marks the trust’s first resort acquisition. Besides a defensive rent payment structure, the acquisition will provide CDL Hospitality Trust the chance to participate in the buoyant hospitality sector of the exclusive Maldives market, which is one of the highest revenue per available room markets in the world.