Singapore Daily Bulletin – 30/11/12

2Q12 Visitor Numbers, Tourism Receipts Up
Singapore pulled in close to 3.5 million visitors in 2Q12, 8 percent higher than the corresponding period last year. In total, these visitors brought in tourism receipts (TR) of $5.5 billion, a 4 percent increase from 2Q11. The numbers for 2Q12 mean that close to 7.1 million visitors came to Singapore for the first half of the year, while TR came in at $11.5 billion. These figures were largely in-line with the Singapore Tourism’s Board’s (STB) expectations of drawing in a total of 13.5 to 14.5 million visitors and $23 to $24 billion in TR for 2012. In terms of TR growth among the top ten markets, Malaysia saw the largest jump in TR growth in 2Q12 at 29 percent, driven by an increase in business traffic and higher shopping expenditure. Indonesia, China and Thailand similarly saw a sharp growth in TR. In terms of visitor numbers, the top visitor generating markets for 2Q12 were Indonesia, China, Malaysia, India and Australia. Together, they accounted for over half, or 55 percent, of total visitor arrivals in 2Q12.

Significance: According to STB, average room rate came in at $262 for 2Q12, rising 7 percent from 2Q11, while average occupancy rate hit 86 percent. Hoteliers were in for a bonanza in 2Q12, especially those operating in the upscale segment as they posted average room rates which grew the highest at 12 percent while economy hotels registered a 1 percent drop in rates.

Sembcorp Marine Surprises With US$806m Order From Sete Brasil
Sembcorp Marine, the local rigbuilder, said that it had clinched its seventh drillship order worth US$806.4 million from Sete Brasil, an entity affiliated to Brazil national oil company Petrobras, Brazilian pension funds and other financial investors. With the win, Sembcorp Marine has hauled in a record $10.5 billion of contracts this year. This Brazilian surprise yesterday drove shares in Sembcorp Marine to close at $4.56, a three-week high, up $0.18 or 4.1 percent. Like the previous six drillships secured since February 2012, Sembcorp Marine will build it based on its own Jurong Espadon design. Upon completion, the drillship will be chartered to Petrobras for 15 years. However, the seventh unit has a relatively early delivery date of 3Q16, leading analysts to say that it was originally slated to be built at another Brazilian shipyard, EAS. Deliveries for the seven drillships range from 2Q15 to 4Q19.

Significance: Industry sources say that Sembcorp Marine will secure more such “stop-gap” orders from Sete Brasil by year-end or early next year. Given Sembcorp Marine’s higher understanding of their proprietary design, operational efficiencies should be higher and delays or cost overruns minimised.

Asia Water Begins New Life On Mainboard
Catalist-listed Asia Water Technology will start trading on the SGX-mainboard today, under its new name of SIIC Environment Holdings (SIIC). The news sent Asia Water Technology shares surging up 15 percent yesterday to $0.069. The name change would enable it to leverage on the goodwill of its parent company’s name Shanghai Industrial Holdings (SIHL). It also hopes that a mainboard listing would give it creditability, visibility and greater trading liquidity. SIIC said the choice of listing in Singapore was a strategic decision given Singapore’s status as a global water hub. Since Hong Kong-listed and China state-owned conglomerate SIHL took over in 2010, SIIC has built a sizable asset base around the coastal area of China and has become a top-tier player in the Chinese water sector through active acquisitions and organic growth.

Significance: SIIC will continue with its expansion plans in the short-term and dividend payouts which ceased since 2008 will resume once earnings have stabilised. As a gauge of its future dividend policy, its parent company SIHL has a policy of paying out 35 to 40 percent of its earnings as dividends each year.