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Stocks In Focus (Nam Cheong, Croesus Retail Trust, Olam) – 13/05/13
Nam Cheong Sells 5 Vessels; Reports 8% Jump In 1Q13 Earnings
Nam Cheong announced that it has sold five vessels worth a total of US$110 million. One 12,000 brakehorsepower (bhp) anchor handling towing supply vessel is sold to a new customer based in Indonesia and the other four platform supply vessels are sold to a subsidiary of a leading oilfield services company based in Asia. Separately, Nam Cheong reported the eighth consecutive quarter of profitability since its May 2011 listing. Its 1Q13 net profit was up 8 percent to RM35.8 million on the back of a 14 percent increase in revenue to RM234.7 million, largely due to improved performance in its core shipbuilding segment, offset by a decline in its vessel chartering segment. Nonetheless, overall gross profit margin remained consistent at 19 percent and its net gearing ratio of 0.25 times is at its lowest, ensuring sufficient headroom for growth.
Significance: Nam Cheong’s positive performance despite the cyclical nature of the shipbuilding business shows that it is able to ride on the up-cycle of the booming industry. Its strong sales of 13 vessels so far this year brings its order book to RM1.7 billion, and would also contribute positively to its FY13 and FY14 financial performance.
Croesus Makes Strong Debut On SGX, Up 23.1% On First Trading Day
Croesus Retail Trust made its debut last Friday on the Singapore Exchange, opening at $1.12, 20.4 percent above its offering price of $0.93. The stock was amongst the most active counters traded for the day and closed at $1.145, up 23.1 percent. A total of 425.3 million shares were issued, including 229.1 million through its initial public offering (IPO), 5.4 million to its sponsor Croesus Merchants International, 27.1 million to strategic partners, and 163.7 million to cornerstone investors. The IPO, which was 22.4 times subscribed, raised approximately $356.2 million in net proceeds that will be mostly used to part finance the acquisition of Aeon Town Moriya, Aeon Town Suzuka, Luz Shinsaibashi and Mallage Shobu, making up its initial portfolio. Croesus Merchants International’s group managing director, Jeremy Yong, said a Japanese retail trust listing on the SGX is long overdue, adding that the listing of Croesus is at a perfect timing with Japan going through a revival. Croesus opened flat at $1.145 this morning.
Significance: As the first Asia-Pacific retail business trust with an initial portfolio located in Japan, the listing provides the Singaporean investor a unique platform to gain exposure to Japan that is currently seeing renewed optimism.
Olam And Sanyo Sets Up Joint Venture In Nigeria
International integrated supplier Olam International agreed to set up a joint venture with Japanese food maker Sanyo Foods in Nigeria. The joint venture will involve both companies in manufacturing and distribution of instant noodles in Nigeria and sub-Saharan Africa. Sanyo Foods will invest US$20 million (approximately $24.7 million) in cash for a 25.5 percent stake while Olam will hold the remaining 74.5 percent. Olam will have management control of the joint venture that will house its instant noodles asset and business in Nigeria. Olam is now amongst the top four players in instant noodles in Nigeria with an extensive distribution network and marketing infrastructure across the country. The joint venture will allow both companies to expand into sub-Saharan Africa by tapping on Olam’s marketing and distribution network across Nigeria and Africa, and Sanyo Foods’ product development and technical capabilities.
Significance: Analysts are positive on the news believing that value affirmation from third party investors/partners, especially those with industry knowledge, would offer the best guide of the value of Olam’s acquisitions.
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