Singapore Daily Bulletin – 26/11/12

Inflation Eases To 4%; Price Pressures Remain Elevated
Moderate increases in accommodation and private road transport costs, which make up close to two-thirds of overall inflation in October, slowed the pace at which inflation rose. For the month of October, Singapore’s consumer price index (CPI) came in at 4 percent year-on-year, compared to a 4.7 percent increase in September. The reading was below market’s average estimate of 4.5 percent. MAS Core Inflation, which excludes the costs of accommodation and private road transport, fell to 2.2 percent from 2.4 percent in September. Meanwhile, CPI declined 0.2% in October on a month-on-month basis, after increasing by 0.6 percent in September. However, the government warned that inflation “will remain elevated” in the next two quarters. Echoing such thoughts are market watchers too. According to analysts, the new highs in car certificate of entitlement premiums reached this week and the tight labour market will continue to keep price pressures elevated.

Significance: Inflation is likely to stay above historical averages, with expectations of CPI to reach 4.5 percent for 2012, and 3.5 to 4.5 percent in 2013. This places a hurdle on monetary policy decision should a loose policy be needed in the face of weaknesses in the global economy.

Boustead Bags $26m Aerospace Project
Boustead Singapore’s wholly-owned unit, Boustead Projects, awarded a $26 million contract from Denmark’s Satair. Under the deal, the leading specialist in industrial real estate solutions will undertake works for the design and construction of an integrated service repair, distribution and office facility which will be located at the world-class Seletar Aerospace Park in Singapore. Known as the Aircraft Service Centre, the facility which spans 16,500 square metres of gross floor area, will house integrated areas for service repair, distribution and administrative functions of Satair. The Aircraft Service Centre is earmarked to be awarded Green Mark Gold, with completion expected in calendar year 3Q13. With the addition of the latest contract, Boustead Singapore’s order book backlog currently stands at $314 million.

Significance: The new facility for Satair represents Boustead Projects’ sixth project undertaken in the Seletar Aerospace Park and the fifteen aerospace facility in Singapore. The award of this contract affirms the company’s leading capabilities in meeting the specialised requirements of clients in the aerospace sector.

Etika Posts Decline In Full-Year Profit
For the financial year ended 30 September 2012, Etika International raked in RM22 million in net profit, a 23.8 percent decline year-on-year. This was largely attributed to the absence of the one-off negative goodwill of RM10.5 million which arose from the acquisition of PT Sentrafood Indonusa and PT Sentraboga Intiselera in the previous corresponding financial year. The bottom line was also weighed down by losses incurred by certain subsidiaries. Revenue for the 12 months grew 12 percent to RM984.8 million from RM879.6 million in FY11. Underpinning the rise was a better performing Dairies division which saw a 15.9 percent rise in contribution. Geographically, Malaysia remains the bulk contributor for the company, accounting for 56.7 percent of total revenue. A dividend per share of $0.003 has been declared for the period under review.

Significance: The group is cautiously optimistic that it will be able to achieve reasonable growth. This is on the back of the expected additional sales of UHT milk and sweetened condensed milk following the commencement of the two products’ respective new product lines. In addition, its 10-year exclusive agreement with US-based Cajun Global LLC to develop “Texas Chicken” restaurants in Malaysia and Brunei will add another boost to results.