Stocks In Focus (Ascendas REIT, Keppel Corporation, Wilmar International) – 16/04/13

Wilmar Invests US$263m To Expand Sugar Business
Asia’s leading agribusiness group Wilmar International acquired a 27.5 percent equity interest in Cosumar S.A. from Societe Nationale d’Investissement for around US$263 million. In the filing with the Singapore Exchange, Wilmar said that following the transaction, Societe Nationale d’Investissement will sell up to a 26.5 percent stake to a consortium of Moroccan institutional investors, with whom Wilmar will control a 54 percent controlling block in Cosumar. Cosumar, a company listed on the Casablanca Stock Exchange, is the sole sugar supplier in Morocco. It is also the third largest sugar producer in Africa, with ownership of one of the largest refineries in the world, as well as seven beet and cane sugar mills situated in five regions in Morocco. Currently, Wilmar operates five sugar refineries across Australia, New Zealand and Indonesia with an annual production volume of over 1.8 million metric tonnes.

Significance: In line with its overall strategy to develop a world-class sugar business, Wilmar’s investment in Cosumar gives the company a significant presence in the Western hemisphere.

Keppel Lands New US$226m Deal From Falcon Energy
Keppel Corporation, through its offshore and marine unit, clinched a contract worth US$226 million from first-time client Falcon Energy Group. The deal involves the construction of a KFELS Super B Class jackup rig, which will be customised to Falcon Energy’s requirements. Commenting on the deal, Wong Kok Seng, managing director (Offshore) of Keppel Offshore & Marine and managing director of Keppel FELS said, “Falcon Energy entered the offshore oil drilling business when they ordered two jackup rigs from China in 2011. We are delighted that Falcon Energy has chosen the KFELS Super B Class design for their new high specification jackup rig, which will be built at our yard in Singapore.” Shares of Keppel Corporation opened $0.09 or 0.8 percent lower at $11.30 in this morning’s session.

Significance: The latest contract, which came on top of the US$225 million deal with Ensco inked earlier this month, boosts Keppel Offshore & Marine’s new orders for 2013 to-date to US$1.8 billion. While Keppel FELS has already delivered six rigs ahead of schedule and within budget year-to-date, the unit also faces the challenge of having a record number of rig deliveries this year.

Ascendas REIT’s DPU Down 12.6% In 4Q13
For the fourth quarter ended 31 March 2013, Ascendas REIT posted distribution per unit of 3.06 cents, down 12.6 percent from 3.5 cents in the previous corresponding period. The drop was largely due to a 15.4 percent rise in property operating expenses. For the fiscal year 2013, the trust recorded an 8.5 percent growth in income available for distribution of $305.6 million from $281.7 million in FY12. The aggregate distribution per unit for FY13 came in 1.3 percent higher at 13.74 cents, compared to 13.56 cents in FY12. Chief executive officer of Ascendas REIT, Tan Ser Ping said, “Ascendas REIT’s portfolio continues to achieve positive rental reversion averaging 14 percent for leases renewed during the financial year. We expect the trend to continue in FY14 albeit at a more modest rate. The multi-tenanted portion of Ascendas REIT’s portfolio has a vacancy of about 10 percent and this would provide significant potential net property income growth when these spaces are leased out in due course.”

Significance: With a well-spread lease expiry extending beyond 2025 and weighted average lease to expiry of 3.7 years providing stability and predictability in earnings, the industrial trust expects to maintain a stable level of distributable income for the financial year ending 31 March 2014.