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Stocks In Focus SG (May Retail Sales, Keppel Corp, Oxley Hldgs) – 16/07/13
May Retail Sales Up 3.2% Y-o-Y
Retail sales in Singapore for the month of May reversed, rising 3.2 percent year-on-year (y-o-y), as most categories registered growth. Excluding motor vehicles sales, which increased 3.5 percent y-o-y, retail sales were up a comparable 3.1 percent. For the month of May, retail sales were led by telecommunications apparatus and computers, and watches and jewellery, which increased 8.1 percent and 7.2 percent respectively. Sales of furniture and household equipment, and sales at petrol service stations slipped 9 percent and 2.6 percent respectively. Commenting on retail sales for June, OCBC Bank’s head of treasury and strategy, Selena Ling highlighted that retail sales may see “some muted impact” due to the haze during the month, when the pollutant standards index count rose to a historic high by breaching the 400 level.
Significance: For 3Q13, Citibank’s economists predicts that consumption is likely to hold firm, thanks to the tight labour market, which should help to offset any potential pullback in gross domestic product growth. Car sales will likely be boosted by the 14.2 percent surge in COE supply for August to January due to more COE deregistrations which will also send deregistered car owners back into the market.
Keppel Wins US$206m Jackup Rig Order From Grupo R
Keppel FELS, a wholly-owned subsidiary of Keppel Offshore & Marine Ltd (Keppel O&M), was awarded a contract to build a KFELS B Class jackup rig worth US$206 million from repeat customer Grupo R, a Mexican drilling company. The order is scheduled for delivery by 4Q15, making it the ninth KFELS B Class jackup rigs orders from Mexican customers. The rig will be customised to Grupo R’s requirements, to be able to operate in water depths of up to 400 feet and drill to depths of 30,000 feet. “With this order, there will be 65 KFELS B Class rigs in the market by 2015, of which some 13 rigs are for Mexico. We are glad to be able to support Mexico’s exploration of its offshore energy reserves and look forward to providing them with on time, on budget and safe deliveries,” cited managing director of Keppel O&M and managing director of Keppel FELS, Wong Kok Seng.
Significance: Mexico’s President, Enrique Pena Nieto, unveiled investment plans of US$25.3 billion for 2013, of which US$20 billion is targeted at upstream activities. Hence, there might be more contracts to be awarded in the Gulf of Mexico to Keppel FELS, given its proven track record established in the region.
Oxley Establishes Partnership With Worldbridge Land
Oxley Holdings announced that the company had entered into a joint venture agreement with Worldbridge Land to establish a joint venture (JV) company to develop a land owned by Worldbridge situated at Sangkat Tonle Bassac, Khan Chamkamor, Phnom Penh, Cambodia. Under the agreement, both parties will hold 50% stake in the JV and Oxley shall pay for the first US$35 million of any expenditure incurred in connection with the proposed development. Similarly, Worldbridge would provide the land, an area of approximately 10,152 square metres, for a mixed property development with the relevant approvals from the authorities for the development. Any additional in excess to the payment will be paid by both parties equally. The sales proceeds will be used to pay off all cost incurred by both parties and a US$35 million to Worldbridge for the land, and the remaining will be split equally between both parties.
Significance: The JV is in line with its strategy of its purchasing of land announced on 13 July 2013, to develop the properties around adjoining land in Phnom Penh.
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