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Stocks In Focus SG (F&N, Metech International, Sembcorp Industries) – 28/08/13
F&N To List Property Arm And Unlock Shareholder Value
In a move to break up one of Singapore’s largest conglomerate, Fraser and Neave (F&N) proposed to list its property arm, Frasers Centrepoint (FC) by undertaking a dividend in-specie distribution of FC’s shares to F&N shareholders. The group will distribute two shares of FC for every one F&N share held at zero cost and FC will be listed on the Main Board of the Singapore Exchange by introduction, targeted for November or December 2013. TCC Assets, holding 61.7 percent of F&N shares, intends to vote in favour of the in-specie distribution. Lim Ee Seng, chief executive officer of FC said that the listing will enhance the company’s profile and allow it to pursue independent strategies. He added that FC will continue to focus on the residential and commercial property development sectors and continue to grow fee-based management contracts. FC may also consider the establishment of a hospitality real estate investment trust to further unlock value.
Significance: The in-specie distribution and listing exercise is an effective way to release value to F&N shareholders and it provides a distinction between F&N’s food and beverage and properties businesses, thereby paving the way for a more focused growth approach for both sectors.
Metech’s FY13 Records Net Profit of $1.7m
Metech International announced its FY13 net profit of $1.7 million, reversing FY12 net loss of $16.4 million. The net profit is mainly attributed by the improvement of margin from 10.7 percent to 22.8 percent year-on-year (y-o-y) due to better operational controls and management of recycling and precious recovery businesses, and an increase in revenue by 11.2 percent y-o-y to $29.3 million. Metech holds a strong balance sheet with net cash poisiton of $6.1 million. The management expressed confidence that the business will continue to grow by tapping on the expanding market and increase shareholder value through its new “4R” initiative. This initiative involves the expansion of existing services plus the introduction of new complementary offerings to create a synergistic value-chain of services that includes recycling, recovery of precious metals, resale and repair capabilities.
Significance: In a report released by market intelligence agency, Research and Markets, the Global Collection Services market in the e-waste industry is forecasted to grow at a compounded annual growth rate of 14.3 percent from 2012 to 2016. The “4R” initiative would help Metech to ride on the positive trend and maximise value for the shareholders.
Sembcorp Adds Two New Sites To Its Wastewater Treatment Business
Sembcorp Industries announced the expansion of its water business in China’s Liaoning province with two new wastewater treatment projects in industrial parks in Panjin city’s Panjin Fine Chemical Industrial Park and Panjin Liaodong Bay New District. The first of the agreements will be a joint venture to build, own and operate a new Rmb117.3 million (approximately $24.3 million) industrial wastewater treatment plant. Sembcorp will hold a 95 percent share in the joint venture, with the remaining 5 percent held by Panjin Fine Chemical Industrial Park Development, a company wholly-owned by the Panjin Fine Chemical Industrial Park Administrative Commission. The second project, Sembcorp plans to develop an industrial wastewater treatment plant in the west of the Panjin Liaodong Bay New District with an initial capacity of 22,000 cubic metres per day. The plant will be capable of treating highly concentrated industrial wastewater, and is expected to cost around Rmb185 million ($38.4 million). It is targeted for completion by the first quarter of 2015.
Significance: The new sites would deepen Sembcorp’s foothold in Liaoning, increasing its presence in China’s economic development given that Liaoning will act as a centre to drive greater prosperity in the northeast.
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