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Singapore Daily Bulletin – 18/12/12

79 Anson Acquisition Lifts United Engineers T o Over 4-Year High
Shares of United Engineers rocketed 6.2 percent from its Friday close to close at $3.09 yesterday on news of its 79 Anson Road purchase. The $410 million acquisition from Singapore’s Central Provident Fund Board and German fund manager SEB will be United Engineers’ first commercial property in Singapore’s central business district. It will enhance the group’s strategy of building a stable base of rental income to help smoothen fluctuating development profits. Located near Tanjong Pagar MRT Station, the property is also situated within proximity to the port land in Tanjong Pagar, Keppel and Pulau Brani. “The area is envisioned to become a waterfront city once the leases for the ports expire in 2027. As announced by the Economic Strategies Committee in 2010, this new city will comprise office blocks, hotels, waterfront housing and a host of lifestyle and tourist attractions. The property is, therefore, well positioned to benefit from the upcoming Tanjong Pagar Waterfront City project,” the company said. United Engineers plans to rename the 23-storey freehold office tower to UE BizHub Tower.

Significance: With a strong tenant base and high occupancy, 79 Anson Road will provide United Engineers with stable rental income with upside potential in rental rates. The building is currently 99 percent tenanted and has Kellogg Brown & Root Asia Pacific as its anchor tenant until 2016.

COSCO Inks Deal To Build FPSO Unit
Mainboard-listed COSCO Corporation (S) bagged a contract valued over US$370 million from a European firm to construct a floating production, storage and offloading (FPSO) unit. Slated for delivery in June 2015, the order will have a storage capacity of up to 400,000 barrels of oil. A stream of orders has been flowing in for the leading ship repair, shipbuilding & marine engineering and dry bulk shipping group. So far, the fourth quarter saw two other deals worth over US$241 million being clinched by COSCO. These included the construction of two bulk carriers and a harsh environment semi-submersible accommodation rig. Deliveries range from the late half of 2014 to the first quarter of 2015. Shares of COSCO opened 1.7 percent higher at $0.885 from yesterday’s close of $0.87 in reaction to the news.

Significance: The latest contract will add to COSCO’s order book which stood at US$5.7 billion as at 30 September 2012. While the order book has lagged compared to that of last year, the pace at which new deals are coming in is picking up significantly.

China Paper’s Financial Records Destroyed By Fire Outbreak   
In a Singapore Exchange filing yesterday, China Paper Holdings announced that a fire outbreak at its Cangshan County’s office in Shandong Province destroyed the company’s most recent financial records. There were reportedly no casualties and no other damage to production facilities, except for some physical damage to the affected office. The paper manufacturer has taken measures such as communicating with its clients and suppliers in an effort to reconstruct the financial records. It is estimated that the reconstruction will take about four to six months. As such, there is a chance that the annual audit for FY12 would be delayed. Trading of China Paper’s shares has been halted pending the release of an announcement.

Significance: As the reconstruction of the financial records takes time, this may raise uncertainty among shareholders and may not bode well with shares of China Paper that have already declined 27.6 percent year-to-date.