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Stocks In Focus SG (Asia Economics, City Developments, United Envirotech) – 11/09/13
PM Lee Takes A Sanguine View Of Asia
Prime Minister Lee Hsien Loong is confident that Asia is not headed towards a repeat of the financial crisis that hit the region in the late 90’s – after recent events leading to concerns of the US Federal Reserve’s decision over the tapering of quantitative easing (QE) measures. PM Lee substantiates the statement by mentioning the fact that Asian economies have instituted stronger safeguards over the last decade and a half since the crisis and that Americans would take a cautious approach over the tapering of its QE. He also added that the strong economic data from China and Japan, where output and growth remains stable instills confidence in the market. Further to his views on the economy, PM Lee also mentioned that Singapore will derive great benefit with China’s success and that he is confident of China’s leadership to carry on its liberalisation of the economy and to introduce agricultural reforms in the rural sector.
Significance: PM Lee’s speech comes in time to address concerns of Asia’s economy in view of the imminent tapering of the QE measures. With positive views and confidence on the economic stability of the region, foreign businesses and investments would be more assured of more opportunities that would be present in the near future, especially given the goal to achieve an Asean economic community by 2015.
City Developments To Acquire Freehold Property In UK
City Developments (CD) announced that Beaumont Properties (Jersey), an indirect wholly-owned subsidiary of the company, has entered into a sale and purchase contract for the acquisition of a freehold property located in close proximity to Harrods at Pavilion Road in Knightsbridge London, United Kingdom from an unrelated party, for a consideration of GBP80 million (or approximately $159.6 million). The consideration was arrived at on a willing buyer and willing seller basis, after taking into account prevailing market values in the surrounding area within the heart of Knightsbridge and the company’s assessment of the property’s redevelopment potential. Following the completion of the acquisition, the CD will evaluate the best redevelopment potential for the property.
Significance: The proposed acquisition is in line with CD’s goal to develop its overseas engines for a balanced and diversified portfolio in Singapore and abroad, as this is the first acquisition for the CD real estate platform in the United Kingdom.
United Envirotech Seals Rmb286m Contract Wastewater Treatment Contracts
United Envirotech (UE) announced that it has signed a Rmb286 million ($59 million) 30-year transfer operate-transfer cum build-operate-transfer (BOT) agreement with the municipal government of Hong Wei District, Liaoyang City, Liaoning Province, China. UE has been providing operation and maintenance service to the wastewater treatment plant in Hong Wei since 2010. Under the terms of the new agreement, UE will acquire the existing 15,000 cubic metres per day (m 3 /day) treatment plant for a consideration of Rmb25 million. It will upgrade the plant using its advance membrane bioreactor technology. The BOT project involves adding an additional 45,000 m 3 /day of treatment capacity to cater to the increase in demand. Upon completion, the plant will have a total treatment capacity of 60,000 m 3 /day and will treat 30,000 m 3 /day of municipal wastewater and 30,000 m 3 /day of industrial wastewater. The upgrading work will commence immediately and is expected to be completed by September 2014. The expansion work is expected to commence in early 2014 and will take 12 months to complete. The project will be funded by the proceeds from the last convertible bond issue and share placement to KKR and bank financing.
Significance: The project win signified UE’s first major industrial wastewater treatment asset in the city. The group has indicated the macro environment of China’s water industry to be very favourable for its business, given the commitment of the government to clean up the environment and the strong enforcement of more stringent discharge standards.
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