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Singapore Daily Bulletin – 14/02/13

Olam’s New Largest Shareholder; Temasek
Sovereign investment firm Temasek Holdings (Temasek) has become the largest shareholder of Olam International (Olam). Temasek added a further 0.01 percent to its stake in the agricultural commodities trader, which brought its total stake in the firm to 21 percent, topping Kelwaram Singapore’s stake of 20.23 percent. Temasek has been progressively increasing its stake from an initial 16.3 percent. It had earlier mentioned that Olam’s share price reflected an attractive opportunity. This was prior to the Muddy Waters debacle which saw Olam’s stock price taking a hit. On the Olam rights issue which happened not too long ago, Temasek also committed to fully sub-underwrite Olam’s rights issue by absorbing any rights not taken up, on top of its pro rata entitlement. Olam announced a 19.9 percent increase in its net profit to $154.1 million and a 9.2 percent growth in revenue to $4.9 billion, in its second quarter.

Significance: It is unclear whether Temasek, or any other party intends to further increase their stake in Olam. However, it is clear that Temasek’s faith in Olam remains strong and that it will continue to show support for Olam.

Boustead Sees Five Fold Jump In Net Profit For 3Q
Mainboard listed diversified engineering conglomerate Boustead Singapore (Boustead) reflected a five-fold jump in its net profit in its third quarter. The stellar performance was mainly attributable to strong performance seen in its business units, sale of an asset and tax refund. Compared to 3Q12’s net profit of $5.5 million, Boustead’s net profit for 3Q13 was $26.2 million. This figure included $5.8 million on the disposal of an available-for-sale investment and $3.4 million in income tax refund. Its 3Q13 revenue also saw a 49 percent jump to $141.5 million, compared to the $95.3 million in 3Q12. Among the four main business divisions of Boustead, revenue more than doubled in its Real Estate Solutions unit. Its Energy Engineering division reflected a 13 percent increase in revenue while its Geo-Spatial Technology reflected a 9 percent revenue hike. Its Waste Water Engineering unit however saw a dip in profit as a result of fewer projects. Boustead’s focus will continue to be on building up its order backlog for FY14. With a strong cash position of some $179 million, Boustead will also be continuing to explore all available avenues for growth through M&A activities.

Significance: Boustead chairman and chief executive officer Wong Fong Fui said that given Boustead’s current growth and profit trajectory, Boustead’s full year net profit would “significantly surpass” its FY12 profit.

Casino Operator MBS Fined $475,000 By CRA
Casino Regulatory Authority of Singapore (CRA) has issued a fine of $475,000 to the casino operator Marina Bay Sands (MBS), for surveillance breaches. CRA said MBS had violated Regulation 3(2) of the Casino Control (Surveillance) Regulations 2009 when it failed to ensure that specified casino surveillance footage between September 2011 to April 2012 was retained, this warranted a fine of $150,000. The casino operator was then fined $100,000 for failure to ensure continuous recording of specified casino surveillance footage. MBS was also fined $225,000 for failing to have failure notification system which should provide audible as well as visible notification system of specific failures in the casino surveillance system. In January, Resorts World Sentosa was also fined alongside MBS for breaching social safeguard requirements. A total of 27 people who had either been banned from the casinos, did not pay an entry levy, stayed beyond the maximum time allowed of 24 hours, or were minors were let in by both casino operators.

Significance: Legislation risk remains apparent for the Casino operators as new rules which could have an impact on how the casinos run their operations could materialise unpredictably. Other than compliance breach which will result a fine, attracting more patrons within a possibly narrower boundary could hurt revenue inflow.