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Stocks In Focus (Oversea-Chinese Banking Corporation, Yongnam Holdings, Lian Beng Group) – 30/04/13
OCBC’s Profit Above Estimates Despite Fall
In a filing with the Singapore Exchange earlier today, Oversea-Chinese Banking Corporation reported a 16.3 percent decline in earnings for the first quarter ended 31 March to $696 million from $832 million in the year-ago period. Despite the drop, the headline figure came in higher than average projection of $641 million. Lower net interest margin continued to be a drag as it slid 6 basis points quarter-on-quarter and 22 basis points year-on-year to 1.64 percent owing to the low interest-rate environment and a “re- pricing” of existing housing loans. This led to a 4.1 percent fall in net interest income to $912 million. On a positive note, net fee and commission income rose 15.3 percent to $316 million, from $274 million in 1Q12, boosted by growth in wealth management, loan-related and fund management income. OCBC’s loan book grew 10.3 percent year-on-year to $148.5 billion.
Significance: Asset quality and coverage ratios at the Southeast Asia’s second-largest lender remained strong. As at end-1Q13, non-performing loan ratio was 0.7 percent, an improvement as compared to 0.8 percent in 4Q12 and 1 percent a year ago.
Yongnam-Led Consortium Submits Proposal For Myanmar Airport Concession
A consortium comprising Yongnam Holdings, Changi Airport Planners and Engineers and JGC Corporation submitted a proposal to the Myanmar Department of Civil Aviation in a bid to clinch a Myanmar airport project. The group passed an earlier pre-qualification stage and was subsequently invited to submit a proposal in February 2013. The agreement will come in the form of a public-private partnership that will see the group work on the design, construction, operation and maintenance of Yangon International Airport and its facilities. The agreement will cover a 30-year concession period. The consortium said that it believes that it has submitted a strong and competitive proposal. Should the bid pan out, a joint venture will be formed to deliver the requirements under the concession agreement.
Significance: Shares of Yongnam opened 1.7 percent or 0.5 cents higher in this morning session on the back of the development. According to industry sources, the build-operate-transfer project is worth around US$850 million in investment value.
Lian Beng’s Order Book Reaches New High
Continuing its momentum in securing construction projects since its successful tenders earlier this year, Lian Beng Group bagged three new contracts worth a total of about $211 million. The deals involve the construction of Oxley Tower @ Robinson, a hotel at 122 Middle Road and Goodwood Residence. Spanning from a six-month period to a three-year period, construction works are scheduled to commence in April and May this year. Commenting on the contract wins, Ong Pang Aik, Lian Beng’s chairman and managing director, said, “We are delighted that within the first four months of 2013, we have already secured six construction projects amounting to about $750 million.” Counting Skies Miltonia, Bartley Ridge, and two industrial projects at Sunview Road and Tampines Crescent clinched since February, the latest contracts will bring the company’s order book to a record high of $1.2 billion.
Significance: With these new contracts, Lian Beng’s order book will provide the company with steady and substantial construction revenue flow through FY16.
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