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Stocks In Focus SG (Hiap Hoe, Otto Marine, SingTel) – 06/09/13

Hiap Hoe Fast-Tracks Overseas Expansion; Acquires Another Australian Property
Hiap Hoe announced its third strategic acquisition of 206 Bourke Street, a trophy-quality mixed use retail and office asset centrally located in the Central Business District of Melbourne, Australia for A$105 million. The development, with a total net lettable area of 11,922 square metres, enjoys a high occupancy rate backed by a strong and diverse tenant mix, which will help generate income security, given that the asset’s weighted average lease expiry by lettable area is approximately 4.8 years. Notably, the acquisition also comes with an approved planning permit for a 142-room hotel that will sit above the existing development, presenting an opportunity for Hiap Hoe to add significant improvements to the asset and leverage on the hotel rooms demand in the area. This news follows closely behind the company’s recent acquisition of 380 Lonsdale Street, Melbourne for A$43.8 million and the 6-22 Pearl River Road property for A$28.8 million.

Significance: Hiap Hoe is looking to grow a recurring income stream via investment in assets with long term lease agreements as well as in the overseas market, given the rising land costs and increasing risk of property prices softening in Singapore. DMG & Partners like Hiap Hoe for its execution track record and discipline in landbanking and maintains “Buy” with $0.86 target price.

Otto Marine Completes Newest AHTS Vessel; Secures More Shipbuilding Orders
Otto Marine (Otto), a leading offshore marine company, has announced the completion of another unit of Anchor Handling Tug Supply (AHTS) vessel named “Go Phoenix”. The highly complex Norwegian designed vessel, also considered one of the world’s largest, is the second of the four vessels completed by Otto. Consecutive construction of the third and fourth vessels will be completed between 2013 and 2014. Separately, Otto has also announced that it has secured orders for the newbuilding of five cement carriers. All five cement carriers will be constructed in Otto’s shipyard in Batam. Additional potential contracts in the pipeline include a carrier conversion order for two bulk carriers and one ocean towing tug. With the completion of its AHTS and cement carrier orders, Otto is set to focus on its shipyard operations on repairs, conversion and fabrication works, which could potentially see more orders being filled for their shipyard operations. Coupled with the growing number of activities in the offshore and marine industry and the strategic location of its shipyards, Otto is set to obtain more orders in the near future.

Significance: Robust business activities can be observed with Otto securing additional contracts, providing steady cash inflows to the company. Otto could also rein in more growth for the company and leverage on the increase in demand especially in Indonesia given the country’s requirement for majority ownership in vessels operating in its region.

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SingTel’s Unit Amobee To Acquire Gradient X
Amobee, a subsidiary of Singapore Telecommunications (SingTel) that focuses on digital advertising, has announced its decision to acquire Gradient X, the market-leading real-time bidding platform company for US$15 million. A successful acquisition would see Amobee providing an advanced real-time bidding functionality that is able to support multiple advertisement channels and formats. This allows advertisers to take an in-depth approach on their intended target audience and marketing agendas by tracking the performance of their advertisement. Therefore, the deal would provide Amobee a competitive edge to keep up with the immense competition in the market.

Significance: The proposed acquisition would see both companies pooling together their mobile marketing technology and talents to create an effective marketing channel and indirectly points towards an increase in Amobee’s business to capitalise on the fast changing technology landscape.



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