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Stocks In Focus SG (Ezra, Keppel Land, Sembcorp) – 16/04/15
Ezra Holdings announced that it has clinched US$55 million worth of new contracts through its subsea division. Work has begun for several projects, with the others slated for offshore execution from the third quarter of this year. Ezra continues to show resilience with contract wins across the globe amidst the volatile oil price environment and current headwinds faced by the oil and gas industry. Its order book stands at approximately US$2.3 billion, with most of the contracts expected to be executed over the next 24 months.
Keppel Land reported a 17.2 percent drop in net profit to $72.6 million in the first quarter due to the group clocking in lower property sales and no longer recognising contributions from Equity Plaza and Marina Bay Financial Centre (MBFC) Tower 3 after divestments. Revenue fell 2.3 percent to $278.4 million for the quarter ended 31 March 2015, where the absence of revenue from The Lakefront Residences and lower revenue from Plot 2-2 of The Springdale in Shanghai caused lower revenue from its property trading segment. The group will remain focused on Asia, with Singapore and China as its core markets and Indonesia and Vietnam as its growth markets, while seeking opportunities in key global cities with good growth potential.
Sembcorp Industries announced on 15 April 2015 the expansion of its renewable energy business in China through the development of a 150-megawatt wind farm in Huanghua, Hebei Province. Through its 49 percent owned joint venture with Guohua Energy Investment, Sembcorp’s share of the equity investment will be about 200 million yuan and will be funded through a mix of internal and external borrowings. The 1.3 billion yuan ($300 million) farm in Laoshibeihe has received approval and will commence construction this year, expecting completion by the second half of 2017.
SIA Engineering (SIAEC) announced on 15 April 2015 that it is renewing its comprehensive Services Agreement with Singapore Airlines (SIA), which supports SIA fleet with a spectrum of maintenance, repair and overhaul as well as fleet management support services. The new agreement commencing 1 April 2015 is a three year term, with options to renew for three yeras and a further period of two years. Expected to yield $2.6 billion to $2.9 billion in labour revenue over the eight year term, it is not expected to have any material impact in SIAEC’s financial results for financial year of 2016 as it is a re-establishment of an existing arrangement. SIAEC is still facing the issue of deferred aircraft checks in the near-term based on the third quarter of 2015 and analysts believe that the issue could persist until the end of financial year 2015 (FY2015). SIAEC is likely to announce its FY2015 results on 12 May 2015.
SMRT announced that it was entering an agreement with OMGTel to work exclusively in connection with OMG’s bid for the fourth telco license in Singapore. The collaboration agreement will be for the provision of such services and will seek to leverage on synergies that can be derived from SMRT’s extensive media presence and commuter reach. Some of the key hurdles worth attention is that a new entrant face is the ability to scale up coverage and offer product differentiation from the existing three incumbents, especially in a highly saturated market like Singapore. MyRepublic has also expressed interest in bidding for the fourth telco license.
Tee International‘s real estate subsidiary has recently acquired another hotel in Sydney, Australia and a property in Christchurch, New Zealand. The management is cautious on the muted property market in Singapore and Malaysia, confident of the long term prospects of the real estate in Thailand, New Zealand and Australia. Tee International is expecting the competitive operating environment to remain challenging and will take a prudent stance in evaluating growth prospects in Singapore and the region.
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