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Stocks In Focus SG (BRC Asia, CapitaMalls Asia, Westminster Travel) – 20/11/13
BRC Asia Doubles Full Year Profits
In its latest fiscal year ended 30 September 2013, BRC Asia posted a 9.4 percent hike in turnover due to higher quantities of steel delivered, bolstered by buoyant construction activities, particularly in the HDB (Housing and Development Board) sector. Declining steel prices softened BRC’s cost of sales while better prices secured for its sales orders lifted BRC’s gross profit margin from 9.7 percent a year earlier to 15.2 percent. Additionally, BRC recorded a $2.6 million foreign exchange gain for FY13, as compared to a $1.5 million loss last year, which reduced other operating expenses by 30 percent to $3.5 million. Consequently, BRC’s bottom line rose 116.1 percent. The firm has proposed a final dividend of $0.012 per share.
Significance: The outlook for local construction demand, which drives the local reinforcing steel market, remains solid with the number of both residential and non-residential units due for completion in the next two years exceeding the average of the preceding four years.
CapitaMalls Asia To Acquire Eighth South China Mall
CapitaMalls Asia’s (CMA) subsidiary, CMA Asset Investment, has established an agreement with Greenland Real Estate to purchase the second phase of the retail component of Baiyun Greenland Centre (BGC). BGC is an integrated development located within the core commercial centre of Baiyun New Town in Baiyun District, Guangzhou, China. The retail component comprises of an eight-storey shopping mall with a total gross floor area, excluding car park, of approximately 86,000 square metres and shoppers will have access to approximately 1,620 car park spaces in total at BGC’s car park. Targeted to open in phases in 2014, the mall will serve a population catchment of 1.1 million people within a 3-kilometre radius. On a completed basis, the total investment cost is estimated to be Rmb2.6 billion ($534.1 million).
Significance: The acquisition marks CMA’s strategic entry into a first-tier city in South China and brings CMA’s number of malls in the region to eight.
Westminster Travel To Turn Into Cash Company
Westminster Travel has entered into two separate agreements to dispose its entire stake in its subsidiary, Wealthy Aim Investments (WAI), through which Westminster conducts all of its existing businesses. The first agreement with Corporate Travel Management (UK) (CTM) will see CTM purchasing 75.1 percent of WAI for HK$354.1 million ($57 million). The second agreement, worth HK$117.4 million, involves the sale of the remaining 24.9 percent stake to Ever Prestige Investments. Based on the adjusted net asset value of WAI of HK$225.9 million as of 30 June 2013, Westminster is estimated to gain HK$243.3 million from the disposal. Upon completion of the proposed disposal, WAI will cease to be a subsidiary of Westminster and the latter will be deemed a cash company.
Significance: The management of Westminster has considered both the thin trading liquidity of its shares on the Singapore Exchange as well as the timing of the proposed disposal and believes that the agreements will offer its existing shareholders an opportunity to realise an attractive return on their investments.
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