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Stocks In Focus SG (Global Logistic Properties, AusGroup, OUE H-Trust) – 11/07/13
GLP To Build State-Of-The-Art Distribution Center In Shanghai
Global Logistic Properties (GLP) has inked a contract with BMW Brilliance Automotive to build its largest distribution center in China. A 75,000 square meters (sqm) built-to-suit facility at GLP Park Lingang in Shanghai will be developed in phases, with the initial phase comprising of a 55,000 sqm gross floor area to commence construction this year. Commenting on the selection of the partner, BMW Brilliance gave recognition to the reliability and effective track record of GLP’s management. Furthermore, the GLP Park Lingang serves as an excellent choice with its supporting facilities such as the Yangshan Deep Water Port; and its accessibility to the Pudong International Airport, Hongqiao Airport and Shanghai CBD. In addition, the Lingang Highway is able to connect the park to Zhejiang Province in the south and to Jiangsu Province in the west.
Significance: The auto parts industry represents 9 percent of GLP’s total leased area in China, and is now a key driver of demand for GLP due to the strong domestic consumption in the market.
Ausgroup Secures A$14.5m Gain On Disposal
Ausgroup has signed an agreement with a buyer for its Singapore fabrication facility which allows Ausgroup to leaseback the facilities, with no stoppages on its day-to-day operations and to continue providing clients with high quality fabrication and machining services together with timely delivery. The agreement is still subjected to the approval of Jurong Town Corporation, before any contractual agreement is made. Completion of the sales is expected to be at the beginning of September 2013. The facility is located in a secure area of over 30,000 sqm, which consists of an enclosed fabrication facility, machine shop and staging areas with waterfront access. The purchase price offered was at A$33 million, significantly higher than its net book value. An estimation of the profit on disposal is stated to be A$14.5 million, including the one-off sale proceeds and the rest recognised over the period of the lease.
Significance: The net sale proceeds from the proposed sale will be utilised to repay bank borrowings, facilitate other corporate funding requirements and for general working capital requirements. The sale proceeds generated by the disposal would give an added stability in AusGroup’s day-to-day operations in the face of legal proceedings against Karara Mining for failing to make progress payments of approximately A$54.7 million for works carried out.
OUE H-Trust’s IPO To Raise Up To $613.6m
OUE Hospitality Trust (OUE H-Trust) is seeking to raise as much as $613.6 million from its initial public offering (IPO) of 681.8 million stapled securities at between the price of $0.88 and $0.90 each. Cornerstone investors will subscribe to 247.2 million stapled units, and include Credit Suisse, Splendid Asia Macro Fund, and Gordon Tang – a non-executive director of SingHaiyi Group. Based on the issue price range, the distribution yield for FY13 could range from 6.99 percent to 7.15 percent, according to the prospectus. “With a portfolio comprising both hospitality and retail asset classes, OUE H-Trust would be able to leverage the potential upside from the hospitality operations of Mandarin Orchard Singapore while enjoying the stability of retail rents from Mandarin Gallery,” OUE H-Trust said. Revenue per available room for Mandarin Orchard Singapore and rental rates for Mandarin Gallery is expected to grow by a compounded annual growth rate of 2.7 percent and 5.4 percent respectively from FY12 to FY14.
Significance: Looking ahead, the trust aims to maintain and grow an investment portfolio of hospitality and hospitality-related assets primarily in Singapore. It also intends to distribute at least 90 percent of its taxable income to unitholders for FY13 and FY14.
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