Singapore Daily Bulletin – 13/12/12

Keppel Bags US$420m Rig Order Deal
Orders from Mexico is currently flowing into Singapore at a rampant pace. Keppel Fels (KepF), subsidiary of Keppel Offshore and Marine has won an order for two proprietary KFELS B Class jack-up rigs worth US$420 million from Pemex, a Mexican oil company, which is also the world’s fourth largest crude producer. KepF will be building both the rigs in Singapore before delivering them to Pemex Exploracion y Produccion, subsidiary of Pemex, in 1Q15. The rigs, which are of top notch specification, were developed to operate in water depths of up to 400 feet and drill to depths of 30,000 feet. In addition to bagging this order, KepF had also delivered a KFELS B Class jack-up christened Primus to Oro Negro. Pemex estimates that it has invested up to US$2.4 billion in 2012 in exploration and expects to have 40 rigs eventually operating in Mexican waters. At present, some KFELS B Class jack-ups are already operating in Mexican waters.

Significance: At a time where more inquiries and orders are pouring in from Mexico, and the opportune complement of KFELS B Class jackup design which is well suited to meet the requirements of the Mexican market, KepF looks very well positioned to benefit from the Mexican jack up market.

Food Empire; Buy Call Initiated By DMG
Food Empire Holdings (Food Empire), a leading food and beverage company listed on the mainboard has been given a buy call status by DMG & Partners Research (DMG) with a target price at $0.72. Food Empire currently dominates Russia’s instant coffee market, a segment which constitutes 57 percent of its revenue and has been hitting double-digit growth post-2009. Higher growth is also expected in new markets, with seven percent in annual sales growth in Eastern Europe and Central Asia, and a stronger 15 percent growth in the Middle East. An analyst with DMG mentioned that Food Empire has set its sights on acquiring an existing Asian market player that could give it an “instant platform into the market”. As at 30 September, 2012, Food Empire has net cash of US$29.8 million.

Significance: Food Empire’s current gross margin (43.8%) is already higher than its peers like Super (34.1%) and VizBranz (32.2%). Lower raw material costs are also expected to help Food Empire expand further as Food Empire builds its own non-dairy creamer in its plant located in Malaysia.

Far East Orchard Expands Footprint Beyond Singapore; Signs MOU With Australia Toga
Far East Orchard has signed a non-binding memorandum of understanding (MOU) with Toga to explore the establishment of a joint venture (JV) company in Australia which will own the hospitality management business of the Toga Group and hospitality assets in Australia. Established in 1963, the Toga Group is one of the largest hospitality operators in Australia with hospitality management contracts to operate approximately 6,700 rooms across 50 hotels and serviced apartments in Australia, New Zealand, Germany and Denmark. Meanwhile, the JV Company will also explore the acquisition from the Toga Accommodation Fund of 100 percent interest in two hotels and three serviced apartments in Australia. These five properties, with a total inventory of more than 700 units, are located in Sydney, Adelaide, Brisbane and Darwin.

Significance: This move enables the firm to expand its footprint beyond Singapore and to manage third party hospitality assets. More importantly, this JV platform will bring together two leading hospitality operators with combined resources and synergies in the hospitality industry.