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Stocks In Focus (Jubilee, MapleTree Logistics Trust, OUE) – 20/06/13
Jubilee To Raise $14.9m From Issuance Of New Shares
Jubilee Industries Holdings has entered into a conditional subscription agreement with 17 subscribers to allot and issue 97.5 million new subscription shares at $0.1543 each. Upon completion of the issuance, the subscription shares represent approximately 41.5 percent of the enlarged share capital. The net proceeds, approximately $14.9 million, will be used to fund the firm’s proposed business diversification from its current core business in precision plastic injection moulding. In addition, Jubilee will re-designate its non-executive director, Toh Soon Huat, as an executive director of the firm who will helm the investment committee the firm intends to set up. Toh is presently a substantial shareholder of the company and was formerly the chief executive officer of Novena Holdings. Following the placement, Toh’s stake in the enlarged capital base will rise to 10.8 percent from 9 percent while Jubilee’s former chairman, Chua Kim Guan, will hold 10.7 percent, down from 18.3 percent.
Significance: Toh said: “The proposed placement will create a sizeable ‘war chest’ for Jubilee to embark on investment holding activities. The Group intends to acquire stakes in unlisted companies with growth potential as well as shares in listed corporations which can offer meaningful returns in the medium to long term to Jubilee.”
MLT Expands In South Korea
Mapletree Logistics Trust (MLT) announced the purchase of The Box Centre, a modern warehouse facility located in Gyeonggi-do, South Korea (60 kilometre from Seoul), from Oakline for KRW28.75 billion (approximately $32 million). Gyeonggi-do has the largest logistics cluster in South Korea (around 70 percent) of its warehouses and distribution centres are sited and is sought after by third party logistics providers and distributors due to its good accessibility. The vendor of the property, Oakline will lease back the property for a period of six years with built-in rental escalation from the second year onwards. At the purchase consideration of KRW28.75 billion, the DPU-accretive property will provide an initial net property income yield of 8.4 percent. The acquisition will be funded by debt and is expected to be completed by July 2013. Commenting on the expansion, Ng Kiat, chief executive officer of MLT said this acquisition is in line with MLT’s strategy to rebalance its portfolio towards the higher growth markets.
Significance: This acquisition will be MLT’s eighth property in South Korea as the trust look to further scale up MLT’s presence and strengthen its market position in this growing sector. Upon completion, MLT’s aggregate leverage ratio is expected to increase to 34.6 percent from 34.1 percent as at 31 March 2013, while the book value will increase to $4.08 billion with 111 properties.
OUE In View Of Special Dividend For Its Shareholders
Overseas Union Enterprise’s (OUE) shareholders can look forward to a special dividend following the listing of its hospitality and retail real estate investment trust, which is expected to be priced and launched in July 2013. Chief executive officer of OUE, Stephen Riady, said: “The first thing we must think of is our shareholders, and reward them. Then, of course, you will also look at the extra money you’ve got and think of expansion.” Riady shared his expansion plans for the recently acquired US Bank Tower, in a deal worth US$367.5 million, located in downtown Los Angeles. Presently, it comprises of 72 floors of office space, of which approximately 56.3 percent is occupied. OUE has no plans to increase office tenancy in the building but will explore hospitality, food and beverage, observatory, hotel or service apartment options instead. This acquisition comes on the back of OUE’s purchase of DBS Tower One, DBS Tower Two and Crowne Plaza Changi Airport hotel in recent years.
Significance: As OUE seeks to strengthen its foothold in the local property scene, it unveiled a new corporate identity, in the form of a new company logo that removes the coin that has represented the firm, which will represent its desire to move strategically and transform Singapore’s urban landscape.
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