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Stocks In Focus SG (Del Monte Pacific, CapitaLand, Lian Beng) – 11/10/13
Del Monte Pacific Buys Del Monte Foods For US$1.7b
Del Monte Pacific announced that it has entered into a definitive agreement to acquire the consumer food business of Del Monte Foods (DMF), a privately-owned US Corporation, for US$1.7 billion. DMF owns Del Monte brand rights for processed food products in the United States and South America. The consumer business has a strong portfolio of leading brands, with seasoned employees, healthy cash flows and US$1.8 billion of sales and US$178 million of adjusted EBITDA for the year ended 28 April 2013. Notably, the company has leading positions with branded market share positions in major canned fruit and vegetable as well as canned tomato and broth categories. This transaction will reunite a substantial portion of the Del Monte brand family and it is expected to help Del Monte Pacific generate significant value creation opportunities in the US market.
Significance: The landmark transaction offers Del Monte Pacific greater access to a well-established, attractive and profitable branded consumer food business in the US, where the company did not have a direct presence before.
CapitaLand’s Ascott Extends Footprint To Thailand’s Eastern Seaboard
The Ascott, wholly-owned serviced residence business unit of CapitaLand, has extended its footprint to Thailand’s Eastern Seaboard economic region. A contract to manage a 133-unit serviced residence in Sri Racha district, Chonburi province has been won by Ascott. The new Citadines Grand Central Sri Racha is slated to open in 2014, which will enhance Ascott’s position as the largest international serviced residence owner-operator in Thailand, with over 1,800 apartment units across 10 properties. Other than having a strong presence in Bangkok, Ascott sees significant potential in expanding to Thailand’s Eastern Seaboard where many multinational companies are based. By bringing Citadines to Sri Racha, Ascott will have 76 Citadines-branded properties in 45 cities globally.
Significance: Ascott will enjoy first-mover advantage in catering to the strong demand for quality accommodation from expatriates and business travellers working in the region as Citadines Grand Central Sri Racha will be the first international branded serviced residence to open in Sri Racha. This will very likely see it contributing very well to CapitaLand’s consolidated results for 2014 and onwards.
Lian Beng Reports 44.2% Rise In 1Q14 Revenue
Construction group Lian Beng Group reported a 44.2 percent increase in its revenue for 1Q14. Although revenue was reportedly higher, 1Q14 profits of $7.3 million represented a 30.9 percent slip. The fall in its profits position was mainly due to substantially higher distribution expenses, and a recognised loss from its associates, compared to a positive position in that of 1Q13. The improved revenue was largely attributable to higher revenue recognition from its construction, property development and ready-mixed concrete segments, on top of revenue contributions from its relatively new dormitory business. Lian Beng’s executive chairman, Ong Pang Aik said that the strong revenue growth in Lian Beng’s first quarter augurs well as the company enters the new financial year. The Building and Construction Authority has revised upwards the local construction demand forecast. Construction demand forecast for 2014 and 2015 has also been revised upward from between $20 billion and $28 billion, to $22 billion and $30 billion per annum.
Significance: The upward revision for the local construction demand indicates a robust construction sector for the next few years. Lian Beng’s construction order book stood at a strong $1.2 billion as at 31 August 2013, which provides it with constant flow of activities through FY16.
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