Stocks In Focus SG (Hisaka Hldgs, Pacific Century Regional Devts, Sembcorp Industries) – 20/12/13

Hisaka To Transform Into Property Developer

• Hisaka Holdings entered into an agreement for the proposed acquisition of Regal International Holdings for $127.3 million. Of the total purchase price, $20 million will be paid in cash with the balance satisfied via an issuance of 195 million new consolidated shares representing approximately 65 percent of the enlarged share capital of Hisaka. Prior to the purchase, Hisaka undergo a two for one consolidation of its shares.

• Regal International Holdings is an investment company and will acquire subsidiaries engaged in construction, property development, marketing of real estate, rental of machinery, mortgage consultancy as well as investment in properties and property development prior to the completion of the sale.

• The future plans of Regal include the expansion of its property development business in Kuching, Sarawak and other areas.

Significance: Hisaka believes that its existing industry – semi-conductor sector – has been volatile and challenging without any imminent signs of recovery and the proposed acquisition represents a good opportunity for the firm to expand and diversify its businesses and operations, which would allow it to achieve more consistent and sustainable financial growth.

Pacific Century’s Unit To Acquire Competing Mobile Player

• HKT, a subsidiary of PCCW, which is in turn partially-owned by Pacific Century Regional Developments, entered into an agreement to purchase CSL New World Mobility (CSLNW) for US$2.4 billion.

• Through its subsidiaries and JVs, CSLNW is engaged in the provision of mobile telecommunications (telecom) services through 4G, 3G and 2G networks, and the sale of mobile telecom products to customers in Hong Kong.

• Presently, HKT and CSLNW are two of the five network-based providers of mobile telecommunication services in Hong Kong. The proposed acquisition would significantly expand HKT’s customer base and enable HKT to more efficiently compete in the mobile market.

Significance: The proposed acquisition is in line with PCCW’s strategy to bolster its telecommunication business and enhance the distribution potential of HKT.

Sembcorp’s Industrial Wastewater Treatment Forays Into Hebei

• Through its subsidiary, Sembcorp (China) Holding, Sembcorp Industries has entered into an 80:20 joint venture (JV) with Tangshan Caofeidian Yongtai Industry to build, own and operate an industrial wastewater treatment plant, expected to commence operations in late 2015, to serve customers in the Caofeidian Chemical Industrial Park in Hebei, China.

• The JV company, Sembcorp Caofeidian Water (SCW), has secured a 30-year exclusive concession agreement to provide wastewater treatment services within a 32-square kilometre area in the chemical industrial park. Additionally, SCW has inked binding letters of intent from two key customers.

• The JV’s total investment in the project is approximately Rmb108.3 million ($22.4 million) with Sembcorp making a Rmb35 million equity investment for its stake.

Significance: Currently, Sembcorp’s industrial wastewater business has presence in six key industrial sites in China, including the Beijing and Tianjin regions.

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