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Singapore Daily Bulletin – 30/01/13

Trouble Lies Ahead For Noble In Argentina
Noble Group, Asia’s biggest listed commodity supplier, was suspended from Argentina’s Grains Register for an investigation into unpaid taxes, according to a local tax agency official. Noble, based in Hong Kong, was removed from the register because of an undisclosed amount of false invoices and potential use of third-party accounts. “We are in business as usual,” Noble Argentina unit President Alfonso Romero said in a telephone interview with Bloomberg from Buenos Aires. “We read about the suspension in the official gazette and we have no comments to make as we are buying grains and exporting grains as we do in any other business day.” Romero declined to say if Noble will appeal or if there are any additional implications for the company. Noble exports between 4 and 5 million metric tons of grain from Argentina annually, Romero said. The country’s total grain production was 90.9 million metric tons for the 2011/2012 season, according to the latest Agricultural Ministry report.

Significance: According to DBS Vickers, exclusion from the registry means the income tax withheld on domestic grain trading rises to 15 percent from 2 percent, as well as the withholding of a 10.5 percent sales tax. Companies not on the registry also face new burdensome approval requirements for domestic shipping permits.

Starhill Global REIT FY12 DPU Rose 6.6% To 4.39 cents
Starhill Global Real Estate Investment Trust (REIT) posted a 6 percent increase in its income available for distribution for FY12 to $96.2 million, from $90.8 million a year ago. FY12 distribution per unit (DPU) is 4.39 percents, 6.6 percent higher than 4.12 cents in FY11. For the full year 2012, net property income (NPI) of the group was 3.4 percent higher at $148.5 million, helped by the Singapore portfolio. This portfolio, consisting of interests in Ngee Ann City and Wisma Atria, grew 6.8 percent to $90.7 million from a year ago and remains its strongest revenue contributor, accounting for 62.7 percent of its total revenue. Ho Sing, YTL Starhill Global chief executive officer said: “Wisma Atria retail mall has achieved strong rental reversion since the completion of the asset redevelopment in September 2012 and the positive momentum is evidenced by the 23.5 percent rise in NPI for 4Q12. Healthy demand for office space in Orchard Road has also lifted the revenue for our office portfolio by 6 percent in 4Q12.”

Significance: On the acquisition front to increase shareholders value, Starhill Global REIT proposed to buy Plaza Arcade in Perth, Australia, for $61.8 million last Thursday. The purchase is expected to be 1.9 percent accretive to Starhill’s DPU and the property is project to complete in the first quarter of the year.

SMRT 3Q13 Earnings Falls 31.2% To $25.5m
SMRT Corp’s net profit for 3Q13 ended 31 December 2012, slumped 31.2 percent year-on-year to $25.5 million despite a 5 percent rise in revenue to $281.7 million. The rail operator, which also runs buses and taxis, blamed higher operating expenses and significantly higher bus losses for the drop in profit. The revenue increase was mainly due to higher train and bus ridership, contribution from the full operation of the Circle Line, and higher taxi and rental revenue. 3Q13 operating expenses rose 12.7 percent to $256.7 million on higher staff costs, depreciation and repair and maintenance costs. The biggest component, staff costs, rose 18.2 percent to $98.5 million with increased hiring for trains and buses, higher basic salaries for bus drivers, higher CPF contributions and salary adjustments. But there was some good news on the energy front. Energy costs remained stable – up 1.2 percent to $40.9 million – despite higher consumption with increased train runs and a larger bus fleet.

Significance: SMRT is expected to commit heavy capital expenditure in 4Q13 for accelerated work on improving train reliability and additional buses and taxis. Hence, profitability for 4Q13 and the next 12 months will deteriorate due to higher operating costs.