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Stocks In Focus SG (Boustead, Fraser & Neave, Wing Tai Hldgs) – 28/10/13
Boustead Enters Joint Venture for Developments in Iskandar
Boustead Singapore (Boustead) via its subsidiary, BP Lands, has entered into a joint venture (JV) with three partners, Tat Hong International, AME Land and L&M Ground Engineering to jointly develop mixed property development projects in Iskandar, Malaysia. The JV company will be known as Tat Hong Industrial Properties (THIP) and plans to develop six parcels of vacant industrial land, measuring 29.5 acres, in Nusajaya, part of a flagship zone in Iskandar that houses several key developments. Tat Hong Industrial Properties will issue 9 million new shares at RM1 per share resulting in a paid up capital of RM10 million where BP Lands will subscribe for 3.5 million new shares, representing a 35 percent stake in THIP.
Signifiance: Compared to overseas markets like Vietnam and China, Boustead views Iskandar as the most optimal avenue for international expansion of its projects and the JV is a timely opportunity for the company to do so. Furthermore, Boustead views that the JV could realise more efficient land use, given that the six land plots are strategically located in Nusajaya and the only remaining vacant industrial plots in that location.
F&N Receives Approval For Listing Frasers Centrepoint
Fraser & Neave (F&N) received the green light from Singapore Exchange for the listing of Frasers Centrepoint on the Main Board by way of an introduction. The proposed transaction, announced on 27 August 2013, will result in a demerger of the property business of F&N, following which the latter will remain listed without holding any interest in Frasers Centrepoint. F&N will also focus on growing its food and beverage business, as well as strengthening its position and extending its reach as a leading consumer group in Southeast Asia. Frasers Centrepoint, on the other hand, will be a full-fledged international real estate company with a diversified portfolio of properties and will be one of the largest listed property companies in Singapore. Frasers Centrepoint will also enjoy greater corporate visibility and have direct access to capital markets to pursue its growth strategies. TCC Assets, which owns approximately 61.67 percent in F&N intends to vote in favour of the dividend in specie distribution.
Significance: The demerger of the F&N conglomerate would enable the entities to have greater focus in their area of business. Notably, F&N is looking to tap into Southeast Asia’s growth potential and penetrate this market by continuing to enhance its product development capabilities, while leveraging on strategic alliances with leading international brands.
Wing Tai 1Q14 Performance In Line With Company’s Expectations
Wing Tai Holdings reported its results for 1Q14 last Friday (25 October 2013) after trading hours. Revenue came in at $222.8 million, a decrease of 9.8 percent from $247.1 million on a year-on-year basis. Operating profit also slipped from $65.1 million (1Q13) to $43.2 million (1Q14) as a result of lesser contributions from development properties. The company’s net profit attributable to shareholders fell $47.6 million to $24.5 million, amounting to a 66 percent reduction compared to the same period last year. The reduction in net profit attributable to shareholders was contributed significantly from one-off gains on the disposal of an apparel brand business in Hong Kong as well as office units in Singapore amounting to $64.6 million recorded in 1Q13.
Significance: Wing Tai’s turnover from the sale of residential units in Singapore accounts for more than 50 percent of its FY13 turnover. Consequently, in view of the adverse climate in the current real estate sector and Monetary Authority of Singapore’s commitments to cool off any further price increase in Singapore’s residential properties, the company is expected to report rocky performance ahead.
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